Starting a Church & 501(c)(3)
Form 1023 vs. Form 1023-EZ for Churches: Which Applies to You
Short answer: for most churches this isn't really a choice. Form 1023-EZ is a short, streamlined application, and its eligibility worksheet excludes churches, so a church seeking a determination letter generally files the full Form 1023, including Schedule A. Read the current eligibility worksheet in the 1023-EZ instructions yourself before you assume anything, because eligibility rules change and yours is the only situation that matters.
Someone on your launch team found the short form. It's three pages, it's cheaper, and the processing time looks dramatically better than the long one. The obvious question follows: why would anyone file the forty-page version?
The answer is that the short form was never designed for you. And the more useful question, the one worth an evening, isn't which form to file. It's whether your church needs to file at all, and what the long form is really asking you to prove.
What are these two forms?
Form 1023 is the full Application for Recognition of Exemption under Section 501(c)(3) (IRS, About Form 1023). It's long, it's narrative, and it asks the organization to describe its activities, governance, finances and relationships in detail. Churches filing it also complete Schedule A, a set of questions aimed specifically at whether the organization is what the tax law means by a church.
Form 1023-EZ is a streamlined version introduced to clear a backlog of small, simple applications (IRS, About Form 1023-EZ). It's filed electronically, it's short, and, most importantly, it's largely an attestation. You're certifying that you meet a list of requirements rather than describing your organization and letting the IRS evaluate it.
That difference explains everything else. A short attestation form works when the organization is small and simple and the eligibility questions are easy to answer. A church's exempt status turns on facts a checkbox can't capture.
Why are churches generally excluded from the EZ?
Form 1023-EZ comes with an eligibility worksheet in its instructions. Answer "yes" to any of the disqualifying questions and you may not use the short form. Churches sit on that list, along with schools, hospitals and several other categories.
The reason isn't bureaucratic spite. Church status carries consequences the IRS doesn't hand out on an attestation:
- Churches are generally not required to file Form 990. Almost every other exempt organization files an annual return (IRS Publication 1828, Tax Guide for Churches). That's a significant exception, and the IRS wants to see the facts behind a claim to it.
- Churches have special protections around examination. There are procedural limits on how the IRS may inquire into a church's records that don't apply to other organizations.
- "Church" isn't self-declared. There's no single statutory definition. The IRS applies a set of characteristics (IRS, Definition of a church): a distinct legal existence, a recognized creed and form of worship, a definite ecclesiastical government, a formal code of doctrine, regular congregations, regular religious services, ordained ministers selected after prescribed study, and so on. No single factor controls, and no organization has to have all of them. That analysis needs description, not a tick-box.
Schedule A of the full form is where you address exactly that. It runs through the characteristics one by one and asks you to describe your situation.
Verify the current eligibility worksheet before you rely on any of this. The instructions are the authority and they're revised. A blog post isn't a substitute for reading the version in force when you file.
Do you even have to apply?
This is the question most new churches skip, and it's worth more to you than the form comparison.
Churches that meet the requirements of section 501(c)(3) are generally treated as tax-exempt without applying, and donations to them are generally deductible without a determination letter (IRS, Exemption requirements for 501(c)(3) organizations). That's unusual. Nearly every other exempt organization has to apply and be recognized.
So a church files Form 1023 not because it must, but because a determination letter is often practically useful:
- Grantmakers and foundations frequently require one before funding.
- Some banks, insurers and vendors ask for it as a condition of an account or a nonprofit rate.
- Some state exemption processes (sales tax, property tax, charitable registration) want the federal letter first.
- Larger donors sometimes want the reassurance, particularly for a new church.
- Certainty, if your organization sits at the edge of what a church is, or does other things alongside worship.
If none of those doors is closed to you today, applying may simply not be urgent. Should your church apply for 501(c)(3) if it doesn't have to works through that decision properly, and whether churches are automatically tax-exempt untangles the part most people get backwards.
How the two forms compare
| Form 1023 | Form 1023-EZ | |
|---|---|---|
| Length | Long: narrative, schedules, attachments | Short, largely an attestation |
| How filed | Electronically, with the required attachments | Electronically |
| Churches eligible? | Yes, this is the church route | Generally no; the eligibility worksheet excludes churches |
| Church-specific questions | Yes, Schedule A | None |
| What you must supply | Organizing documents, bylaws, activity descriptions, financial data, conflict-of-interest details | Certifications that requirements are met |
| IRS review | Substantive review of the facts you describe | Streamlined; far less examination up front |
| User fee | Higher | Lower |
| Typical processing | Considerably longer | Considerably shorter |
The user fees and processing times for both forms are published by the IRS and change periodically. Look them up at the time you file rather than trusting a figure from an article, including this one, which deliberately doesn't give you numbers to misremember.
What does the long form actually ask for?
It helps to know that the length is mostly evidence, not questions. In broad terms you'll be assembling:
Your organizing document. Articles of incorporation, or the equivalent, containing the required purpose clause and dissolution clause. If yours are missing either, that's a fix before you file, not after.
Your bylaws, if you have them. And you should: see what church bylaws are and what must be in them.
A narrative description of your activities. Present, planned and past. This is the heart of the application and the part most applicants underwrite. "We hold worship services" isn't a description. What happens, how often, who attends, who leads, how it's funded, how much of your time and money each activity represents.
Compensation and financial arrangements. Who is paid, how much, how the amount was decided, and whether any officer, director or their family has a business relationship with the organization.
Financial data. Actual figures if you have a history, reasonable projections if you don't.
Schedule A. The church questions. Fifteen of them, and they want specifics: your creed, your form of worship, your government, your membership, your services and their regularity, your ministers and how they're selected and trained, your literature, your facilities.
The application isn't hard in the sense of being technical. It's hard in the sense that it requires your church to state clearly what it actually is and does, which many young churches have never written down.
How churches get this wrong
- Filing the EZ anyway. Some churches have done it, either by misreading the worksheet or by describing themselves as something other than a church. A determination letter obtained on an application you weren't eligible to file isn't a comfortable thing to own, and the IRS has the ability to revisit it.
- Calling yourself a church on one form and a ministry on another. Your organizing documents, your website, your grant applications and your 1023 should describe the same organization. Inconsistency is what draws questions.
- A defective purpose or dissolution clause. The single most common cause of a rejected or delayed application, and the cheapest thing in the world to fix before filing.
- A thin activity narrative. Vague answers generate follow-up letters, and follow-up letters cost months.
- Not answering Schedule A honestly. If you don't hold regular services yet, say so. A new church plant with a genuine plan is a normal applicant. An organization that overstates its worship life to qualify has created a written record it has to live with.
- Assuming the letter does something it doesn't. A determination letter is federal recognition. It isn't state sales-tax exemption, property-tax exemption, charitable-solicitation registration, or a substitute for incorporating. Those are separate processes.
- Waiting for the letter before doing anything. Your church can operate, receive gifts and issue donor receipts while an application is pending. Don't put your ministry on hold for the mail.
Common questions
Is the EZ ever available to a church-related organization?
Possibly, for organizations that are genuinely not churches. A small religious nonprofit that doesn't hold itself out as a church, and that answers "no" to every disqualifying question on the current worksheet, may be eligible. The question is what your organization actually is, not what would be more convenient. Read the worksheet, answer it truthfully, and if the honest answer is unclear, that ambiguity itself is a reason to file the full form or take advice.
What if we already filed the EZ and we are a church?
Don't try to unwind it yourself. Talk to a licensed attorney or a CPA who works with exempt organizations. There are established routes for correcting or supplementing a filing, and the right one depends on facts a general article can't see.
Does filing Form 1023 mean we now have to file Form 990?
Not by itself. The church exception to the annual return requirement rests on being a church, not on which form you filed. But note that some church-affiliated organizations that aren't themselves churches do have filing obligations, and getting that wrong quietly for several years is a real problem. Confirm your specific position rather than assuming the exception covers everything with your name on it.
How long does the full application take?
Longer than the short form, and the current published processing times move. Two things you control: filing a complete application with a genuinely detailed activity narrative, and responding fast if the IRS asks a follow-up question. Incomplete applications and slow replies are the main cause of the outlier timelines people complain about.
Can we backdate our exemption to when we started?
Effective dates depend on when the organization was formed and when the application was submitted, and there are rules about the window. That's a real question with a real answer for your facts. Ask the person preparing the application, and don't assume either way.
Do we need a lawyer to file it?
Not necessarily. Many churches complete the application themselves. Take advice if your structure is unusual, if you run substantial activities alongside worship, if there are business relationships between the church and its leaders, or if a previous filing needs correcting.
The practical wrap
For nearly every church the comparison resolves itself. The EZ isn't open to you, so the real decision is whether to apply at all, and then, if you do, whether your organizing documents, your bylaws and your activity description are in a state you'd be happy for a stranger to read.
Start there. The form is the easy part. The paperwork behind it is what actually takes the time, and it's worth doing whether you file or not.
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