We blogged last month about the new Form 1023-EZ, a short-form application for recognition of 501(c)(3) status that certain smaller organizations are eligible to use. It appears that the IRS is processing these 1023-EZs in record time. Anecdotally, we’ve heard several different organizations report that their application was reviewed, and their determination letter issued, within about 4-8 days’ time.

It also appears that the IRS is making progress with its standard processing of applications, as well. For those organizations who do not qualify to file the Form 1023-EZ and must file a full Form 1023 (see our earlier post for more information on eligibility requirements), the wait time for application review has been excruciatingly long over the past few years—some organizations have waited 18 months or more. However, the IRS website currently shows the  average date for pending application inventory is February 2014, which means the backlog is only about six months at this time. Additionally, there is a separate expedited review process for certain 501(c)(4) applicants, which the IRS has recently tweaked.

While the jury is still out on some of the potential ramifications of the 1023-EZ process and the limited review that these organizations are getting on the front-end, there is no question that clearing the backlog of applications is a much-needed step in the right direction at the IRS. But it is important for all organizations in the tax-exempt sector (large and small) to remember that requirements around exempt status are ongoing, and that getting an exemption letter doesn’t mean they’re at the finish line—it is just the beginning!