Regain Your
Tax Exempt Status
Sandy Deja
(Revised 11/19/11)
Learning Objectives
1. Understand the Automatic
Revocation Process
2. Learn practical steps to regain
tax exempt status
3. How to prevent future loss of
tax exempt status
4. Where to go for help
Automatic Revocations: Overview
If your organization was…
- Required to file 990, and
- Did not file for 3 years in a row
…then exempt status was
revoked automatically
Automatic Revocations: Overview
- Initial List June 8, 2011: 279,599
- Updates: 7/13, 7/25, 8/11, 9/8, 10/7,
10/14 and 11/9
- Currently 392,899 (as of 11-9-11)
- Reinstatements not removed
- 2,500 removed; not clear why
Revoked in Error: 990 Not Required
- Churches
- Integrated auxiliaries
- Church operated schools
- Other church related
- Government related [501(c)(1)]
990 Not Required: What to do
- Determination Letter
- Exemption Application
1-877-829-5500
- Re-instatement Application
- Not Form 8940
Churches Remain Exempt…
…and eligible to receive tax
deductible charitable
contributions
But if you want it fixed, call
1-877-829-5500
Revoked In Error: Actually Filed
990-N - E-Postcard Filing not IRS
- Urban Institute
- Less Than Ideal Inter-Agency
Communication
Actually Filed: What To Do
Send documentation to:
Internal Revenue Service
1973 North Rulon White Blvd
M/S 6552
Ogden, Utah 84404
FAX (801)620-555
Phone 1-877-829-5500
Actually Filed: Group Exemptions
IRS FAQ: “When a central org is
revoked…”
- 136 Central orgs revoked (11/9)
- Only option is to apply for
reinstatement
Other kinds of problems as well…
Applying for Reinstatement
If…
- there is (still) a need for your nonprofit, and
- you can muster the human and other
resources needed to sustain it
…then go for it
Applying for Reinstatement
IRS Guidance:
- IRS Notice 2011-43
(Transitional Relief for small
organizations)
- IRS Notice 2011-44
(Requirements for retroactive
reinstatement for larger
organizations)
No mention of
Notice 2011-43
Transitional
Relief!
Transitional Relief: Benefits
- Presumption of “Reasonable
Cause” for not filing
- User Fee is reduced to $100
(Good through 12/31/2012)
Transitional Relief: Eligibility
1. Annual gross receipts normally
$50,000 or less,
2. Not required to file a paper Form
990 or 990-EZ before 2007, and
3. Eligible to file 990-N for
2007, 2008 and 2009.
Transitional Relief
Ineligible Organizations
- Can still apply for reinstatement
- Must pay regular User Fee
- Must show reasonable cause for
not filing if seeking retroactive
Transitional Relief: What To Do
- File an exemption application
- Write “Notice 2011-43”
 On top of Application
 On mailing envelope
- Attach Statement
Transitional Relief: Statement
[Name of Organization] was not
required to file annual information
returns for taxable years beginning
before 2007; was eligible in each of its
taxable years beginning in 2007, 2008
and 2009 to file a Form 990-N ePostcard; and had annual gross
receipts of normally not more than
$25,000 in each of its taxable years
beginning in 2007, 2008 and 2009..
File An Exemption Application
- Form 1023 or 1024
- Don’t need new EIN
- File with usual address
(not the one in the form)
File An Exemption Application
- Going concern
(If I were an agent, I would ask.)
- Corporate status
(Is your group in good standing?)
- Foundation Status - 501(c)(3)
(Check your public support.)
File An Exemption Application
Resources:
- IRS pubs, library, online courses
- Classes, websites, referrals
- Bar assn, CPA Society, United Way,
Nonprofit Assistance Center
- Sandy Deja’s website and book
An Unexpected Resource
Recycle Your Old Application:
- 1023’s dated 2004 or later
- 1024’s dated 1998
- Use Form 4506-A to get a copy
Recycling An Old Application
Use “As Is”:
- Unchanged governing documents *
- Unchanged brochures, publications
- Maps, photographs, floorplans and
similar items that remain the same
* With proof of good standing
Recycling An Old Application
Update These:
- Narrative
- Description of Fundraising
- Eligibility for services
- Legislative or business activities
Recycling An Old Application
Create New:
- Lists of Board members, employees,
independent contractors
- Financial Statements, including
Projected Budget
Final Recommendations
IRS Inquiry on previous application?
Not just for recyclers
Describe how you plan to avoid
future problems
Avoiding Future Problems
- Designate IRS officer & backup
- Subscribe to IRS Update
- IRS On-line or other training
- Financial software or
knowledgeable professional
Avoiding Future Problems
-
Board Recruitment
Association of non-profits (links)
Professional societies
Agenda Item
Reinstatement
- Reinstatement applications
handled by agents who specialize
- Favorable Ruling: Form Letter 947
or 948, with caveat, and effective
date same as revocation date
- 100 days to reappear in Pub 78
Links
- Copy of IRS Notice CP120A
http://www.irs.gov/pub/notices/cp120a
_english.pdf
- Current Auto-Rev List
http://www.irs.gov/charities/article/0,,id
=240099,00.html
- “Churches remain exempt…”
http://www.irs.gov/charities/article/0,,id
=240100,00.html
Links
- Copy of IRS Notice 2011-43
http://www.irs.gov/pub/irs-drop/n-1143.pdf
- Copy of Notice 2011-44
http://www.irs.gov/pub/irs-drop/n-1144.pdf
- Automatic Revocation FAQ
http://www.irs.gov/charities/article/0,,id=2
21600,00.html
Links
- IRS Form 1023
http://www.irs.gov/pub/irs-pdf/f1023.pdf
http://www.irs.gov/pub/irs-pdf/i1023.pdf
- IRS Form 1024
http://www.irs.gov/pub/irs-pdf/f1024.pdf
http://www.irs.gov/pub/irs-pdf/i1024.pdf
Links
- How To Get Your Tax Exempt
Status Back (IRS 86 second YouTube video)
http://www.youtube.com/watch?v=hdrI1S
wt1eI
- IRS “Stay-Exempt”
http://www.stayexempt.irs.gov/
- IRS Publication 557
http://www.irs.gov/pub/irs-pdf/p557.pdf