On June 8, 2011, the IRS announced that it revoked the tax-exempt status of approximately 275,000 organizations that failed to file information returns for three consecutive years. Beginning in 2007, the Pension Protection Act (Act) obligated most organizations to file annual information returns with the IRS. The penalty for failing to file information returns for three consecutive years is automatic revocation of tax-exempt status. If the tax-exempt status of an organization has been revoked, donors may no longer rely upon an IRS determination letter that the organization received prior to the revocation date.
To reacquire tax-exempt status, most organizations will need to reapply in the normal manner by filing form 1023 and paying the $400 or $850 filing fee. The IRS has created a process for the tax-exempt status of smaller organizations to be reinstated. To be eligible for reinstatement, the organization must have become subject to the “postcard” filing requirement under the Act and must have received less than $50,000 in revenue during its 2010 fiscal year. The advantages to using this procedure are a reduced filing fee of $100 and reinstatement retroactive to the revocation date. Please contact us if we can be of assistance in helping you reinstate your organization or reapply for recognition of tax-exempt status.
The foregoing article was provided for general information. Seek specific legal advice for your situation. The attorneys of David L. Bea & Associates are experienced in representing tax-exempt organizations. If you have any questions, please do not hesitate to contact us.
© 2011 David L. Bea & Associates