IRS EO Data Shows More of the Same: 86% Application Approval, 0.1% Examination Rate
May 24, 2023
- There are 1,971,532 tax-exempt organizations, nonexempt charitable trusts, and split-interest trusts (Table 14), a slight decline from the previous year, of which 1,817,332 are recognized under IRC section 501(c) (1,480,565 under section 501(c)(3)) and 45,325 under IRS section 527 (political organizations).
- The IRS closed 136,708 applications for recognition of exemption (Table 12), approving 81,583 (86.4%), an increase of about 40,000 from the previous year, disapproving 86 (0.06%), and resolving 16,694 (12.2%) in other ways (including withdrawal, lacking required information, or incomplete). The vast majority (131,669 or 96.3%) of the applications were under IRC section 501(c)(3), with the next closest categories being a little over a thousand applications each under section 501(c)(4) and section 501(c)(6).
- The IRS also received 3,407 notices of intent to operate under Section 501(c)(4) (Table 13), of which it rejected 474 for a variety of reasons, including that notice was not required because of a previously filed annual information return or application for recognition of exemption, or the organization was exempt under a section other than 501(c)(4).
- The IRS examined only 1,343 Forms 990, 990-EZ, and 990-N, an additional 170 Forms 990-PF, 1041-A, 1120-POL, and 5227, 748 Forms 990-T, and 301 Forms 4720 (Table 21) . This compares to 1,360,719 exempt organization returns filed in 2020, 1,757,064 filed in 2021, and 1,751,682 filed in 2022, which figures include all of the above forms except for Forms 1041-A and 1120-POL This means even taking into account examination lag the examination rate was only about 0.1%.
The IRS Statistics of Income office has also released exempt organizations statistical tables for Tax Year 2019, available here, based on Form 990 filings.
Lloyd Mayer
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