Get Help With IRS Form 1023

Act I of IRS Form 1023 – The Good


My dad’s love of Clint Eastwood was legendary.  If Eastwood was somewhere on the television playing Monco in For a Few Dollars More, Joe in A Fistful of Dollars or, his absolute favorite, Blondie in The Good, the Bad and the Ugly, dad would find him – and us – and make a movie night out of watching these old classic films he knew word for painful word.  He was a great man.


Having watched Play Misty for Me a few nights ago, Eastwood and my father were clearly on my mind as I started outlining this post.  In thinking of a title that best describes IRS Form 1023, I just couldn’t resist incorporating The Good, the Bad and the Ugly into the next series of posts on deconstructing IRS Form 1023.  Here’s to you, dad and The Man With No Name!


This post focuses on – The Good – otherwise known as the most congenial segments of IRS Form 1023.  Part I, II and III of this form address identification, organizational structure and required provisions.   Let’s take a closer look at the good parts of IRS Form 1023.


Part I

Part I gathers identifying information on you the founder and your non-profit. In addition to inserting names and addresses (physical, email and website), you will need to provide:


  • The EIN – Employer Identification Number
  • Formation date
  • Annual accounting period end date (i.e. 12/31 or 6/30)
  • Primary contact
  • Paid consultants you retained to help form the nonprofit
  • Representatives authorized to act on behalf of the nonprofit


Most questions in Part I are pretty straightforward and usually only take a small amount of time to complete.


However, the one question that can cause confusion and delay appears on line 5:


Which month does the accounting period end?



The end date you choose is really up to you and your organization. Many non-profit boards opt to close out their programming year on December 31 since that date also represents the end of the calendar year. However, non-profits aligned with schools often use June 30 as the end of the accounting period so that the non-profit’s end date honors the completion of the academic calendar, which typically occurs by the end of June.


Whichever date you choose, make sure it is one that will simplify the accounting responsibilities of the non-profit; your goal should always be to make the bookkeeping aspect of running a non-profit as clean, transparent and easy to manage as humanly possible. Given that the treasurer – a volunteer position – will be the keeper of the books, you want to make sure this position doesn’t become difficult or impossible to fill due to the unnecessary complexity of the organization’s accounting system.


Keep it simple.  That simplicity starts with choosing the easiest to adhere to end date for your accounting period.


Part II

Part II is all about the organizational documents you received from your state agency for your non-profit corporation, trust, or unincorporated association. Remember, these are the only three business structures that are eligible for tax exemption under section 501 (c)(3) of the tax code. Most non-profits will choose to incorporate.  As a result, your organizational documents will most likely be articles of incorporation.


Information contained within your organizational documents is required in order to complete Part II of IRS Form 1023.


The main hiccup in Part II often occurs courtesy of line 5. Line 5 inquires about the non-profit bylaws. Most nonprofits will create bylaws during the formation stage of the business structure. However, if you failed to do so prior to starting the process of completing IRS Form1023, you will need to gather your board together and hammer out your bylaws.


Bylaws are different from articles of incorporation in that bylaws are internal rules and regulations of your organization. In essence, bylaws guide you in running board meetings, forming committees, electing officers, etc.


Take the time to create a solid set of bylaws that will not only pass muster with the IRS screening process, but will also serve as a clear and sound roadmap presently and in the future for your organization.


Part III

Completing Part III is stress-free as long as your organizational documents pass the test.


The organizational documents you received from the state, i.e. articles of incorporation if the non-profit is a corporation, should include a purpose and dissolution clause.  These two clauses are required in order for a non-profit to qualify for tax exemption.


Most articles of incorporation will include these two clauses. If so, completing Part III is as simple as extracting the page number, paragraph and article number from the articles of incorporation and recording the information on lines 1 and 2b of Part III of IRS Form 1023.


However, if you incorporated in a state like Nevada, you may be missing a required clause or two. In that case, you will need to formally amend the organizational documents to include both the purpose and dissolution clause. Once amendments have been made and approved by your board, you will record the location of each clause within the amended document on lines 1 and 2b of Part III on IRS form 1023.


Dependent upon the rules of your state, amendments may require approval from both your board and the state agency overseeing non-profits. Be sure to check with your state agency.


I’ve said it before, but I’ll say it again. Your IRS Form 1023 tax exemption application will not be approved without a purpose and dissolution clause. Make sure they are included in the organizational documents, listed in Part III, and submitted in full to the IRS.

All Good Things Must Come to an End

That’s it for Act I – Part I, II and III of IRS Form 1023. As you can see, these segments are really about pulling information from documents that you already have and inserting that information into the appropriate lines on IRS Form 1023.


Unfortunately, the rest of IRS Form 1023 isn’t as simple and straightforward.


In fact, the next two posts – The  Bad and The Ugly –  require a lot more creativity, attention to detail, and courage.


Don’t you dare shrink back in fear!  You’re on this horse now.  And in the spirit of all things Eastwood, you might as well hunker down, break that horse in and show him who’s boss.


Get Help With IRS Form 1023


Now that you have your courage back, it’s time to prepare for The Bad.


Sleep with one eye open as you remain on the lookout for Act II of IRS Form 1023. It’s on the horizon and will be in your inbox before you know it.


Until then, keep your head up and keep fighting the good fight for those in need.


~ Reet


“I’m a non-profit expert with 20 years in the trenches. Having seen, time and time again, new non-profit organizations struggle to get off the ground and compete with established charities for monies and other resources, my primary objective is to level the playing field for emergent non-profits and other charitable start-ups so they are better equipped for long-term sustainability, increased community impact and overall financial success.” Reet Alexander


P.S. If you’re tired of reading and you’re ready to get busy doing, click here to be notified when enrollment opens for my new crash course – Get Non-Profit Tax Exemption In 10 Days. In my online workshop, I’ll help you complete the application process and qualify for tax exemption in 10 days. Yep, you read that correctly – 10 days. Click here to get on the list.


*”The Good, the Bad and the Ugly” artwork by artist Billy Perkins.