Automatic Revocation of Tax-Exempt Status August 24, 2011 ©2011 National Council of Nonprofits | www.councilofnonprofits.org Presenters Eve Borenstein Borenstein and McVeigh Law Office LLC www.taxexemptlaw.org Matthew Giuliano IRS Tax Law Specialist Exempt Organizations, Guidance Sharon Light Senior Technical Advisor IRS Exempt Organizations, Office of the Director ©2011 National Council of Nonprofits | www.councilofnonprofits.org Automatic Revocation Effective for years beginning after December 31, 2006 Filing requirement for organizations not required to file an annual information return § 6033(i) Loss of exemption by operation of law for organizations that fail to file a required return or notice for three years - § 6033(j) 990-N (e-Postcard) 990-N Automatic Revocation Revocation under § 6033(j) is by operation of law The IRS maintains an auto-revocation list on www.irs.gov The IRS sends notice letters to the last known address of each revoked organization May 18, 2010 “The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important taxexempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact. So I urge these organizations to go ahead and file — even though the May 17 deadline has passed. IRS Offers One-Time Special Filing Relief Program for Small Charities; Oct. 15 Due Date to Preserve Tax-Exempt Status WASHINGTON — Small nonprofit organizations at risk of losing their taxexempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program, the Internal Revenue Service announced today. Limited One-Time Filing Relief Programs Extension of Time to File for Organizations Eligible to Submit Form 990-N Voluntary Compliance Program (VCP) for Organizations Eligible to File Form 990-EZ Notice Tax period Notice date Employer ID number To contact us Department of Treasury Internal Revenue Service Ogden, UT 84201-0074 CP120A Month __, ____ Month, Day, Year 99-999999 Phone 1-877-829-5500 Page 1 of 2 NAME STREET CITY, STATE ZIP Important message about your failure to file an annual information return or electronic notice Your organization’s tax-exempt status has been revoked We haven’t received a response to the previous notice we sent asking you to file your annual information return or electronic notice. Because you haven’t filed for three consecutive years, your organizations tax-exempt status has been revoked as required by law, effective Month 99, 9999. You are no longer tax-exempt; therefore, you can’t receive taxdeductible contributions. Your organization’s name will be included on our list of organizations that are no longer tax-exempt. This list is published on www.irs.gov/eo and available to the public, state charity officials, and state tax officials. Next steps What you need to do Since your organization is no longer tax-exempt, you may be required to file the appropriate federal income tax return: – U.S. Corporation Income Tax Return (Form 1120), or – U.S. Income Tax Return for Estates and Trusts (Form 1041). For information on Who Must File or When To File, review the Instructions for Form 1120 and Form 1041. Download Instructions from www.irs.gov, or call 1-800-TAX-FORM (1-800-829-3676) to request a copy. Contact your state to determine how the revocation affects your state responsibilities and requirements. If you want to reinstate your tax-exempt status Apply for tax- exempt status by filing the appropriate application (Form 1023 or Form 1024) and pay the user fee: – 501(c)(3) organizations complete an Application for Recognition of Exemption Under Section 501(c)(3) (Form 1023) – 501(a) organizations (other than 501(c)(3) organizations) complete an Application for Recognition of Exemption Under Section 501(a) (Form 1024), and a User Fee for Exempt Organization Determination Letter Request (Form 8718) Note: An application is necessary for reinstatement even if you weren’t originally required to apply for tax-exempt status. Submit your completed application with a check or money order for your user fee to: Internal Revenue Service P.O. Box 12192 Covington, KY 41012-0192 Reinstatement of Exemption An organization revoked under § 6033(j) must apply to have its tax-exempt status reinstated, even if it wasn’t originally required to apply for exemption. If the application is approved, the effective date of exemption will be the date the application was submitted. If the applicant can show to the satisfaction of the IRS evidence of reasonable cause for failure to file for three consecutive years, reinstatement may be retroactive to the date of revocation. Transition Relief The IRS will treat a small organization (one that normally has annual gross receipts of not more than $50,000 in its most recently completed taxable year) as having established reasonable cause for failing to file a Form 990N e-Postcard or an annual return for its taxable years beginning in 2007, 2008, and 2009, and the organization will be eligible for a $100 (rather than $400/$850) user fee, if it meets each of the following criteria: The organization was not required to file annual information returns (such as Form 990, Return of Organization Exempt from Income Tax or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax) for taxable years beginning before 2007. The organization was eligible in each of its taxable years beginning in 2007, 2008, and 2009 to file a Form 990-N e-Postcard (rather than an annual information return). Generally organizations (other than private foundations and most section 509(a)(3) supporting organizations) with annual gross receipts that were normally not more than $25,000 in such taxable years would have been eligible to file a Form 990-N e-Postcard. On or before December 31, 2012, the organization submits to the IRS a properly completed and executed application for reinstatement of taxexempt status. For more information… Visit the IRS Charities & Non-Profits website at www.irs.gov/eo Call TE/GE Customer Account Services (877) 829-5500 (toll-free) Subscribe to EO Update to get the latest updates for Exempt Organizations Thank you for joining us! Stay informed and sign up for free e-newsletters at www.councilofnonprofits.org ©2011 National Council of Nonprofits | www.councilofnonprofits.org
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