Preparing IRS Form 1023 applications manually requires extensive knowledge of tax-exempt requirements, meticulous attention to financial disclosures, and coordination across multiple organizational documents. Attorneys spend 6-8 hours gathering information, drafting narrative descriptions, compiling financial data, and ensuring compliance with IRS guidelines—time that could be spent on higher-value client counseling.
Preparing an IRS Form 1023 application for 501(c)(3) tax-exempt status is one of the most complex and consequential filings a nonprofit will make, typically requiring 15-20 hours of attorney time to analyze organizing documents, compile financial data, draft comprehensive activity descriptions, complete applicable schedules, and ensure compliance with stringent IRS requirements. Any inconsistencies, gaps, or compliance failures can result in denial of exempt status, costly delays, or requests for extensive additional information.
CaseMark automates the entire Form 1023 preparation process by analyzing your organizational documents, extracting financial data, generating compliant activity descriptions, determining applicable schedules, and producing a complete, submission-ready application that demonstrates compliance with all Section 501(c)(3) requirements. The system identifies potential issues, flags organizing document deficiencies, and provides strategic recommendations to maximize approval chances while reducing preparation time from days to minutes.
This workflow is applicable across multiple practice areas and use cases
Form 1023 preparation is a critical step in nonprofit corporate formation, required immediately after incorporation to obtain tax-exempt status.
Corporate formation attorneys handling nonprofit entities routinely need to prepare Form 1023 as part of the complete formation package, making this workflow essential for their practice.
Attorneys advising nonprofit boards on governance matters must ensure proper tax-exempt status through accurate Form 1023 preparation and compliance.
Corporate governance work for nonprofits includes establishing and maintaining tax-exempt status, which requires expertise in Form 1023 preparation and IRS compliance requirements.
Estate planning attorneys establishing private foundations or charitable trusts for clients need to prepare Form 1023 to secure tax-exempt status for these entities.
Many estate plans include creation of charitable organizations requiring 501(c)(3) status, making Form 1023 preparation a necessary component of comprehensive estate planning services.
IRS Form 1023 is the Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code, required for organizations seeking federal tax-exempt status as charitable, religious, educational, scientific, or literary organizations. Most organizations must file within 27 months of formation to obtain retroactive exemption to their formation date. The application requires comprehensive disclosure of organizational structure, activities, finances, governance, and compliance with statutory restrictions on political activity and lobbying.
The most common issues include organizing documents lacking required purpose or dissolution language, activities that appear to serve private rather than public interests, excessive compensation or related party transactions suggesting private benefit, substantial lobbying or any political campaign intervention, and inconsistencies between stated purposes and actual or planned activities. Applications are also delayed when financial data is incomplete, activity descriptions are vague or conclusory, or required schedules are missing. CaseMark identifies these issues during the drafting process and provides specific recommendations for resolution.
IRS processing times for Form 1023 applications typically range from 3 to 12 months, depending on application complexity, IRS workload, and whether the application raises issues requiring additional review or information requests. Applications that are complete, internally consistent, and clearly demonstrate compliance with all requirements generally receive faster processing. Organizations can check application status through the IRS Tax Exempt Organization Search tool or by contacting the IRS Exempt Organizations division directly.
If your articles of incorporation or trust instrument lack compliant purpose or dissolution clauses, the IRS will not grant exempt status until the documents are amended to include required language. CaseMark analyzes your organizing documents, identifies any deficiencies, and provides model language that meets Treasury Regulation requirements. You must then file amendments with your state incorporation authority before the IRS will approve your exemption application, though you can submit the Form 1023 with proof that amendments have been filed.
No, you only complete schedules that apply to your organization's specific characteristics and activities. Schedule A is for churches, Schedule B for schools, Schedule C for hospitals, Schedule D for supporting organizations, Schedule E for late filers, Schedule F for homes for the elderly, Schedule G for successor funds, and Schedule H for scholarship programs. CaseMark automatically determines which schedules apply based on your organizational documents and activities, ensuring you complete all required schedules while avoiding unnecessary ones.