Over 320,000 Nonprofit Organizations Identified Under IR 2010-87 Were Listed To
LOSE THEIR TAX EXEMPT STATUS
ON OCT 15, 2010.

- MANY OF THEM ARE NOW HAVING IT REVOKED AND STILL DON'T KNOW IT -

Was yours on the list and did you do anything about it?

What Action Do You Take Now?

1.   Find out if you are on the list of thousands of organizations slated to lose their tax exempt status.

2.   Find Out if you did anything about it before the final deadline.

3.   If you did nothing to retain your status you will have to re-apply under the rules outlined in IR 2010-87.

Failure To Have Acted Means:

• Donations made to the organization will no no longer be allowed as charitable expenses as of a certain date. Donors may or may not be aware of this before filing their own returns.
• Revenues received by the organization will become taxable.
• The organization will have to re-file for tax exempt status in a lengthy and expensive process which includes IRS filing fees of up to $850. Retroactive action is not guaranteed.

FAQ's - Frequently Asked Questions - Links to IRS Guidance

 Q.  I made a contribution to a 501(c)(3) charity that now appeared on the List of Organizations At Risk of Automatic Revocation of Tax-Exempt Status. Can I still take a charitable tax deduction for my donation if the organization loses its exempt status?

A.  Donors who contribute to organizations on the At-Risk List can deduct contributions made until the organization’s name appears on the IRS published list of revoked organizations. This will begin to be published in early 2011 according to the IRS. There is no guarantee of earlier or later dates of publication, however.

Q.  Can we still receive tax-deductible donations?

A. For awhile you can. The IRS publishes a list of organizations it has determined are eligible to receive tax-deductible charitable contributions in Publication 78. Donors who contribute to organizations eligible to receive tax deductible contributions are generally entitled to rely on that determination until the IRS publishes an announcement that the organization’s tax-exemption has been revoked. The At-Risk List was not an announcement of revocation, so a donor can take a tax deduction for contributions made before the IRS publishes the name of the organization on the list of revoked organizations. The IRS will begin publishing the list of revoked organizations on the www.IRS.gov website early in 2011. If an organization becomes aware of pending revocation it should consider seeking advice from a tax adviser as well as from counsel, however. There are ramifications to consider and to potentially address.

Q.  What does it mean if my organization is automatically revoked?

A.  If your organization is automatically revoked, it is no longer tax-exempt and may be required to file one of the following forms with the IRS at the address listed in the instructions and pay any applicable income taxes:

• Form 1120, U.S. Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or
• Form 1041, U.S. Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year.

In addition, an organization that is automatically revoked is not eligible to receive tax-deductible contributions and will be removed from Publication 78. A list of revoked organizations will be published on IRS.gov in early 2011.  Donors who contribute to an organization can deduct contributions made until the organization’s name appears on the IRS list of revoked organizations.  The IRS will notify organizations of the revocation by letter.

Q.  How do I submit my application to have my organization’s tax-exempt status reinstated?

A.  If your organization is automatically revoked, it must apply in order to have its tax-exempt status reinstated, even if the organization was not originally required to file an application for exemption. For its tax-exempt status to be reinstated, it must:

• Apply for recognition of tax exemption (e.g., Form 1023 or Form 1024), regardless of whether the organization was originally required to apply for exemption; and
• Pay the appropriate user fee.   

Write "Automatically revoked" on top of the application and the envelope and send to:

Internal Revenue Service
P.O. Box 12192
Covington, KY  41012-0192

Q.  What is the filing fee for my organization’s application for reinstatement of tax-exempt status?

A.  The fee for an application for reinstatement is the same as an application for a new organization.  The amount of the fee generally is determined by the organization’s annual gross receipts for the preceding four years.

• less than $10,000 - $400 fee
• $10,000 or greater - $850 fee

Q.  Are there any special requirements for my organization’s application for reinstatement of tax-exempt status?

A.  Yes.  For all Forms 1023 and 1024 applications, write “Automatically Revoked” at the top of the application.

If you are filing Form 1023, you must check “yes” on Part VII, Item 2, to affirmatively answer the question, “Are you submitting this application more than 27 months after the end of the month in which you were legally formed?”

Q.  Can my organization receive expedited processing of our application for reinstatement of tax-exempt status?

A.  An organization that is automatically revoked can request expedited handling of its re-application just as any other applicant for exemption, by demonstrating a compelling reason for the IRS to approve such a request.  An organization wishing to make such an assertion should consider seeking advice of a tax adviser or counsel with respect to this. See Applying for Exemption: Expediting Application Processing for further information.

Q.  Must my organization obtain a new employer identification number (EIN) for its application for reinstatement of tax-exempt status?

A.  No.  Your organization should keep its same employer identification number.

Q.  On what date is automatic revocation effective? 

A.  The tax-exempt status of an organization that fails to file a required annual return or submit a required electronic notice for three consecutive years is automatically revoked, effective as of the filing due date of the third year.

The filing due date for an annual return or electronic notice is the 15th day of the 5th month after an organization’s tax year ends or the extended due date, whichever is later. For more information about how to determine the filing due date for an organization, see Return Due Dates for Exempt Organizations: Annual Returns.

Q.  Can the IRS “undo” my organization’s automatic revocation? 

A.  No. If an organization does not file an annual return or submit the notice for three consecutive years, the organization is automatically revoked by operation of law as outlined in the legislation, and not by a determination made by the IRS. Congress gave the IRS no discretion with respect to this.  The only administrative discretion allowed to the IRS was to grant an automatic extension as announced in IR 2010-87.  An organization that missed the Oct 15, 2010 extended deadline to take action is out of free and easy options.  To have its tax-exempt status reinstated, the organization must file an application for exemption.

Q.  If my organization, after being automatically revoked, applies for and has its tax-exempt status reinstated by the IRS, what is the effective date of the reinstated tax-exempt status? 

A.  If your organization's tax-exempt status is reinstated, the effective date of its reinstatement ordinarily will be the date the organization filed its application. Because there is no guarantee of retroactive re-instatement indicated in IR 2010-87 this means that there could be a gap during which time the organization is a taxable entity.

Q.  Is it possible to have my organization’s tax-exempt status reinstatement effective as of the date its status was automatically revoked?

A.  If an organization wishes to request its tax-exempt status be effective retroactive to the date of revocation, it must submit a letter with its application setting forth a detailed explanation of the organization’s reasonable cause for failing to file for three consecutive years.  If, after reviewing the explanation, the IRS determines the organization had reasonable cause for failure to file, the reinstatement will be considered retroactive to the date or revocation. An organization wishing to make such an assertion should consider seeking advice of a tax adviser or counsel with respect to this.

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