Managing a nonprofit can sometimes become overwhelming. Regardless, don’t forget to file your annual returns with the IRS, otherwise not doing so will cause the IRS to automatically revoke your nonprofit status!
Stay (Filing) Woke to Avoid Revoke
Tax-exempt nonprofits must file annual informational returns. If not filed for 3 consecutive years, tax-exempt status becomes automatically revoked. The IRS publishes on their website a list of those automatically revoked organizations. It lists details like revocation date, Employer Identification Number (EIN), and other information. Definitely not a list you want your nonprofit to wind up on.
Lost and Rebound
If the worst happens and your organization loses its nonprofit status, all is not lost. Your organization’s status can be reinstated! However, you will have to re-apply and start from the beginning with form 1023 or form 1024. The IRS provides 4 ways of reinstatement:
- Streamlined Retroactive Reinstatement – For tax-exempt nonprofits who file a 990-EZ or 990-N. The organization must not have previously lost its status. It must also be less than 15 months since automatic revocation. Complete form 1023 or 1024 and send to the IRS with appropriate fees.
- Retroactive Reinstatement (Within 15 months) – Similar to the above process, but with some additional work. Organizations who cannot file a 990-EZ or 990-N, or have had their status previously revoked must use this route. They will need to file all form 990s for the missing tax years. Additionally, they must attach a statement establishing a reasonable cause why they could not file for one tax year.
- Retroactive Reinstatement (After 15 months) – Similar to the previous two, but now reasonable cause must be established for ALL three years.
- Post-Mark Date Reinstatement – organizations may apply for reinstatement after the post-mark date of their application by completing the form 1023 or 1024, attaching appropriate user fees, and send to the IRS.
We regularly post articles like these on our website and social media pages. Our clients and readers find these articles useful for their own business needs or to further their own “good to know” knowledge. We are not just interested in informing others, but also supporting them with their particular business needs. MiklosCPA is a California-based accounting firm that has helped many businesses with their tax and accounting needs using our cloud-based services united with regular and personalized communication. If you would like to learn more about our services, contact us!