Exempt organization inflation adjusted items for 2023

TAX ALERT | October 19, 2022

Authored by RSM US LLP

Executive summary

Rev. Proc. 2022-38 provides annual inflation adjustments for tax year 2023, including those applicable to exempt organizations. Exempt organizations with fundraising, lobbying expenses, or annual dues paid by agricultural or horticultural organization members may be affected.

The IRS announced the annual inflation adjustments applicable to tax years beginning in 2023 (typically, returns filed in 2024) for more than 60 tax provisions, including those affecting exempt organizations, in Rev. Proc. 2022-38 and IR-2022-182.

Of particular interest to exempt organizations are the following items:

• The exemption of annual dues paid by members to agricultural or horticultural organizations increases from $178 (2022) to $191 (2023)
• Low cost articles, for purposes of defining an unrelated trade or business, increases from $11.70 (2022) or less to $12.50 or less (2023)
• Insubstantial benefits that may be received by a donor without reducing the value of the charitable contribution deduction increases from $11.70, $58.50, and $117 (2022) to $12.50, $62.50, and $125 (2023)
•  The dues limitation to qualify for the reporting exception for nondeductible lobbying expenditures increases from $124 or less (2022) to $132 or less (2023)
• The penalty associated with a failure to file a 2023 Form 990-T within 60 days of the due date shall not be less than $485 or 100 percent of the amount required to be shown as tax 
•  The penalty associated with a failure to file a 2023 Form 990, Form 990-EZ, or Form 990-PF increases as follows:
  • Organizations with gross receipts of $1,208,500 or less: $20 per day, not to exceed the lesser of $12,000 or 5 percent of gross receipts
  • Organizations with gross receipts exceeding $1,208,500: $120 per day, not to exceed $60,000