News and analysis
September 12, 2013

IRS Tests Interactive Charity Application Form

The Internal Revenue Service is asking nonprofits to test an interactive application for charity status that may take the agency a step closer to an electronic review system, an idea tax lawyers and others have sought for more than a decade.

As applicants fill in the form online, pop-up windows give examples, clarifying instructions, or links to further information. Officials hope this will result in fewer mistakes, reduce processing time, and speed up approvals.

“The idea is to place the form into a database format that will hopefully eliminate many of the common errors that occur in filings,” said Marty Martin, a lawyer who serves on the Advisory Committee on Tax Exempt and Government Entities, a body that has pressed the IRS to take such a step in every annual report it has filed since 2003.

The committee says 55,000 organizations seek tax-exempt status in a typical year

Still Must Be Mailed

The IRS hopes to complete tests by the end of 2013. Nonprofits will not be able to print or submit the testing version, but they will be able to examine all of its features.

Still, even when the online process is formally available, groups will still have to print it out and mail it just as they do now.

Interactive applications will not apply to social-welfare, or 501(c)(4), organizations. The IRS has faced Congressional investigations over how it has handled its vetting of such applications from conservative and other groups.

But Mr. Martin said an electronic version of the social-welfare application could easily be modeled after the ones for charities.

The interactive application is available at StayExempt.irs.gov, an IRS Web site that provides educational materials for charities. Comments about the form can be sent to tege.eo.ceo@irs.gov.

Send an e-mail to Doug Donovan.