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Not-for-Profit Enews Update: The IRS Has Made Applying for Reinstatement of Tax-Exempt Status Easier

February 13, 2014


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In a continued effort to try to assist tax-exempt organizations that have had their tax-exempt status automatically revoked because they failed to file required annual returns for three consecutive years, the IRS has implemented new streamlined procedures for applying for reinstatement. The new procedures will be effective for applications for reinstatements filed after January 2, 2014.


By way of background, organizations that are exempt from tax are still required to file an annual return with the IRS (Form 990 or Form 990-EZ). If an organization’s annual gross receipts are normally less than $50,000, an annual notice or postcard filing is all that is required (Form 990-N or e-Postcard). Failure to file the required returns for three consecutive years will trigger the automatic revocation of an organization’s tax-exempt status. In order to have its exempt status reinstated, the organization must reapply to the IRS.


The new streamlined procedures are available to an organization that has not previously had its tax-exempt status automatically revoked. If eligible, the organization must complete items 1 and 2 if it should have been filing the 990-EZ or 990-N and all 5 steps below if it should have been filing the 990:


1. Complete and submit an Application for reinstatement not later than 15 months after the later of the date of the Revocation Letter or the date on which the IRS posted the organization’s name on the Revocation List.


2. Submit the appropriate user fee.


3. Include a Reasonable Cause Statement


4. Include a statement with the Application confirming that it has filed the required Annual Returns (see step 5)


5. File the properly completed and executed paper Annual Returns for all taxable years in the consecutive three-year period for which the organization was required yet failed to file Annual Returns (and for any other taxable years after such period and before the Post-Mark Date for which required returns were due and not filed).


For additional information on the new procedures, the IRS has issued Rev. Proc. 2014-11 which details out the entire process. Click here to view.


For a complete list of all organizations that have had their tax-exempt statuses revoked, the IRS publishes the Revocation List at http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.


If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at blue@blueandco.com or call us at 800-717-BLUE.