What to Know About IRS Changes Around Form 1024 Exemption Application

The Internal Revenue Service (IRS) has made revisions to Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code, to permit electronic submission, and has mandated electronic filing.

Effective January 3, 2022, applications for recognition of exemption on Form 1024 must be submitted electronically online at Pay.gov. Accordingly, organizations that are described in Section 501(c) (other than 501(c)(3) and 501(c)(4)) and 501(d) applying for tax-exempt status must now use the electronic Form 1024. Organizations subject to this new requirement include trade associations, chambers of commerce, labor organizations, agricultural organizations, social clubs, fraternal organizations, and voluntary employee benefit associations (VEBAs). Now, like Form 990, applications for tax exemption must be filed electronically, if required.

Charitable organizations that are tax-exempt under Section 501(c)(3) must continue to use Form 1023 or Form 1023-EZ and file them electronically. Section 501(c)(4) social welfare organizations must continue to file for tax-exemption using Form 1024-A and submit Form 8976 within 60 days of their formation, as well. Those forms also must be filed electronically.

According to the IRS, electronic filing makes it easier to complete an application for tax-exempt status while reducing errors and shortening IRS processing time, so applicants won’t wait as long for a response.

For those organizations that might have been in the process of submitting a Form 1024 paper filing, there is a 90-day grace period during which the IRS will continue to accept paper versions of Form 1024 (Rev. 01-2018) and letter applications.

Organizations requesting determinations under Section 521 can also use the new electronic Form 1024 instead of Form 1028, Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code.

The required user fee for Form 1024 remains $600 for 2022 and is due when submitting the form.