IRS Auto-Revocation of Tax Exempt Status for Failure to File
Be sure your filing is up-to-date – and maybe save your tax exemption!
Every month, thousands of New Jersey non-profit organizations are in danger of losing their tax exemptions because they haven’t submitted required information filings to the IRS. Make sure that yours isn’t one of them!
Under the federal Pension Protection Act of 2006, exempt organizations that fail to file required Form 990 annual information returns (or, in the case of small organizations, the Form 990-N e-postcard) for three consecutive years will have their tax exemptions automatically revoked by the IRS effective on the filing due date of the third year. The Form 990 or e-postcard is required to be filed annually by the 15th day of the 5th month following the end of an organization’s fiscal year.
The first round of revocations began on May 17, 2010, and auto-revocations are now implemented on a monthly basis. If tax exemption is revoked, the only way to reinstate it will be to reapply.
Small organizations or all-volunteer groups can be particularly vulnerable, since prior to 2008 organizations with less than $25,000 in annual revenues were not required to submit annual filings to the IRS, and all-volunteer groups with frequently-changing leadership may not be aware of the requirement.
To find out if an organization has been automatically revoked:
- Visit the IRS website to find a list of organizations that have been automatically revoked. Take special note of the search tips. (The IRS no longer provides an advance list of organizations that are in danger of auto-revocation.)
- If your organization has been revoked, visit this IRS page for more information. In some cases, tax-exempt status may be reinstated retroactively.
- The IRS has published a list of Frequently Asked Questions regarding auto-revocation that will provide more guidance for charities and donors.
Some important things to remember:
- Religious organizations are still exempt from Form 990 and related IRS annual filings. See http://www.irs.gov/Charities-&-Non-Profits/Churches-&-Religious-Organizations for a basic description of the filing exceptions.
- The Form 990-N e-postcard is not for everyone. If your organization’s gross receipts are normally in excess of $50,000, you must file a Form 990 or 990EZ and not the e-postcard. See https://www.irs.gov/Charities-&-Non-Profits/Annual-Reporting-and-Filing for links to other resources.
If your organization’s exemption is revoked, the only way to reinstate it will be to reapply for tax exemption at a fee of as much as $850. You can save your tax-exempt status by filing! For more information, see the IRS’ Basics of Auto-Revocation page.
The National Council of Nonprofits also has information on IRS Auto-revocation of Tax Exempt Status.
Please SPREAD THE WORD to other non-profits!
For more information:
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This article is intended for general informational purposes and does not constitute legal advice or a legal opinion. For answers to specific questions concerning your situation, you should consult a knowledgeable attorney who can advise you regarding your particular circumstances.
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