December 31 is the deadline to apply for transitional relief for those small organizations that lost their tax-exempt status in the first round of automatic revocations. Small organizations (organizations with annual gross receipts of not more than $50,000) are eligible for transitional relief if their tax-exempt status was revoked automatically for failing to file an annual electronic notice (Form 990-N e-Postcard). Beginning in 2007, organizations with gross receipts in excess of $25,000 (increased to $50,000 in 2010) are required to file an annual Form 990-N e-Postcard, a new requirement that many organizations failed to recognize.
Transitional relief allows these small organizations to have their tax-exempt status reinstated retroactively to the date of automatic revocation. In order to qualify, an organization must meet the following criteria:
- The organization was not required to file annual information returns (such as Form 990 or Form 990-EZ) for taxable years beginning before 2007.
- The organization was eligible to file a Form 990N e-Postcard in each of its taxable years beginning in 2007, 2008 and 2009. This typically applies to organizations with gross receipts normally not more than $25,000 in each year but excludes private foundations and most supporting organizations.
- On or before December 31, the organization submits to the IRS a completed application for reinstatement. Applications are made using Form 1023 (for 501(c)(3) organizations) or Form 1024 (for most other organizations seeking exemption under 501(a)).
For more information, see the Automatic Revocation of Exemption List and Notice 2011-43, both available at http://www.irs.gov/. Organizations subject to automatic revocation that do not qualify for transitional relief should review Notice 2011-44 for information on applying for reinstatement.