Center for Non-Profits - IRS Releases Exempt Organization Revocation List

Center Logo

IRS Releases Exempt Organization Revocation List

posted 6/09/11

On June 8, 2011, the IRS released its first list of over 275,000 organizations whose tax exemptions were automatically revoked for failure to file the required Form 990 information return for three consecutive years.

The New Jersey revocation list includes over 7,800 organizations, more than 4,900 of which are 501(c)(3). The list is available for download in Excel format on the IRS Web site at http://www.irs.gov/autorevocationlist. The IRS has stated that it will subsequently update its non-filer revocation list on a monthly basis.

Under the federal Pension Protection Act of 2006, exempt organizations that fail to file required Form 990 annual information returns (or, in the case of small organizations, the Form 990-N e-postcard) for three consecutive years will have their tax exemptions automatically revoked by the IRS effective on the filing due date of the third year.

The Form 990 or e-postcard is required to be filed annually by the 15th day of the 5th month following the end of an organization's fiscal year. The effective date of the first round of automatic revocations is May 17, 2010 (the extra time is because May 15, 2010, fell on a Saturday).

If tax exemption is revoked:

An organization can be subject to corporate income tax requirements as of the effective date of the revocation.
Contributions made to the charity are no longer tax-deductible to the donor.
The only way to reinstate a revoked tax exemption will be to reapply to the IRS.

There are state-level implications to the revocation as well. You can contact the Center for Non-Profits to discuss these issues and for assistance in applying for reinstatement.

The National Council of Nonprofits has provided this information regarding revocation:

How do I know if my organization is on the list?
The IRS has posted excel spreadsheets by state at http://www.irs.gov/autorevocationlist. The Chronicle of Philanthropy has a searchable database at http://philanthropy.com/article/Browse-the-Database-Groups/127856/.

What should a nonprofit do now that it is no longer tax-exempt?
The National Council of Nonprofits has developed a special webpage and tip sheet on options available to organizations. Nonprofits that re-apply may request in a letter to the IRS that the reinstatement of their tax-exempt status be retroactive to the date of their original tax-exempt recognition, but the IRS will grant that request only if it determines that there was “reasonable cause” for the nonprofit to have missed the filing deadlines. Make sure to carefully follow the instructions on the IRS Web site for requesting “retroactive reinstatement” of your organization’s tax-exempt status.

Can a nonprofit raise funds while it is not tax-exempt?
Yes, but the nonprofit needs to be transparent and honest about the fact that it is not currently tax-exempt and, therefore, that contributions to it are not deductible to the donor.

Do we have other options for raising money?
Consider finding a fiscal sponsor: A nonprofit may want to explore partnering with a fiscal sponsor which can provide the nonprofit with the opportunity to continue to receive gifts that are tax deductible to the donor. Read about fiscal sponsorship.

For more Information:

IRS Press Announcement:
http://www.irs.gov/newsroom/article/0,,id=240239,00.html?portlet=7

IRS Automatic Revocation Landing Page:
http://www.irs.gov/charities/article/0,,id=239696,00.html

IRS - FAQ about automatic revocation:
http://www.irs.gov/charities/article/0,,id=221600,00.html

National Council of Nonprofits special revocation Web page:
http://www.councilofnonprofits.org/revocation

New Jersey organizations can contact the Center for Non-Profits for more information and individualized guidance.

This article is intended for general informational purposes and does not constitute legal advice or a legal opinion. For answers to specific questions concerning your situation, you should consult a knowledgeable attorney who can advise you regarding your particular circumstances.

Did you find this information useful? Support our work and access a host of cost-saving benefits by becoming a member!

Top

Return to Main Legal/Management Page

Return to Home Page