Over 10,000 Ohio-based nonprofit organizations have lost their tax-exempt status due to failure to file legally required IRS Forms 990 for three consecutive years. This week, the IRS published a list of approximately 275,000 organizations whose tax-exempt status was automatically revoked (the "Revocation List") because of failure to file a required Form 990, 990-EZ, 990-PF or Form 990-N (e-Postcard) for three consecutive years. This requirement was part of the Pension Protection Act of 2006 which made it mandatory for all tax-exempt organizations (except church and church-related organizations) to file annual returns and imposed an automatic loss of tax-exempt status for failure to file for three consecutive years.
The complete state-by-state Revocation List can be found on the IRS website.
However, all organizations must file an application for recognition of exemption to reinstate their tax-exempt status (IRS Form 1023 or 1024). The IRS also released guidance for those organizations wishing to reinstate their tax-exempt status retroactively:
- Organizations on the Revocation List may obtain retroactive reinstatement. Notice 2011-44 provides instructions on the additional information these organizations must submit to request retroactive reinstatement. The request for retroactive reinstatement and the application for reinstatement of its tax-exempt status must be filed with the IRS within 15 months of the later of: the date of the IRS revocation letter or the date on which the IRS posts the name of the organization on the Revocation List.
- For certain small organizations (i.e., with annual gross receipts of $50,000 or less for 2010) Notice 2011-43 provides that these organizations may obtain retroactive reinstatement without submitting the additional information requested under Notice 2011-44, so long as they can demonstrate that they were not required to file the Form 990 or 990-EZ for tax years before 2007 and that they were eligible to file the Form 990-N e-postcard for 2007, 2008 and 2009. Additionally, Rev. Proc. 2011-36 provides that a reduced application fee of $100 (instead of the standard $400 or $850 fee) is available for the small organizations eligible under Notice 2011-43. These eligible organizations must postmark their applications to reinstate tax-exempt status no later than December 31, 2012.