Late last week the IRS announced that hundreds of streamlined applications for recognition of exemption (Forms 1023-EZ) were rejected. Most were rejected because of the same mistake: the applicant’s name and employer identification number (EIN) on the form did not match IRS records. This mismatch results in automatic rejection of an application. In order to use Form 1023-EZ, an applicant must meet all eligibility requirements, including use of its proper name and EIN.
Fortunately all is not lost for an applicant whose 1023-EZ is rejected. Rejection does not mean denial of exemption. Even though an applicant’s streamlined application is rejected, it may apply again using the standard exemption application, Form 1023. On a side note, the IRS has noted that it had received more than 7,000 Forms 1023-EZ since they became available July 1 of this year. This amounts to almost 45% of all exemption applications received.
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