REVOKED! Reinstating Your Tax Exempt Status

Last time we discussed what to do if you file your Form 990 series return late, and briefly touched upon what to do if you lose tax exempt status.

Now, we’re going to peel back the layers a bit more and get into the steps for reinstating revoked tax exempt status.

So You've Been Revoked

How do nonprofit organizations lose their tax exempt status? The easiest way is failing to file Form 990 for three consecutive years. That leads to you ending up on the Exempt Organization Select Check list published every month by the IRS.

The good news? You can search the EO Select Check list for your Employer Identification Number to find out if you’ve been revoked! The list is updated monthly, and features the name, EIN, organization type, last known address the organization provided to the IRS, effective date of revocation, and the date the organization was added to the list.

How to Get Reinstated

If an organization wants to get their tax exempt status reinstated, they must file a new application for exemption and pay the appropriate user fee.

The IRS then determines if the organization meets the requirements, and can issue a new determination letter.

The IRS will also include the reinstated organization in the next update of EO Select Check and indicate in other publications (like the Business Master File).

In most situations, the effective date of reinstated exemption is the date the current application was submitted, but organizations can request for a retroactive reinstatement.

Can You Get Retroactive Reinstatement?

But retroactive reinstatements have limited circumstances attached to them, and it is up to the organization to supply the IRS with the needed information.

To request reinstatement back to the date of automatic revocation, organizations need to attach a letter to the application for reinstatement explaining why they failed to file required returns for three consecutive years.

After that, the IRS will determine if your organization had a reasonable cause for not filing your return for three years.

Once you’re reinstated, you need to keep up to date on your tax exempt returns! When you e-file your Form 990 series return with ExpressTaxExempt, you can expect a secure, easy-to-use system designed to have you done in no time.

If you have any questions about e-filing, contact us by phone at 704.839.2321 or by email at Support@ExpressTaxExempt.com.

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Form 990 Rejection: Surviving Bumps in the Road

Everything is going great—your nonprofit is growing in the community, volunteers are showing up for events, and you see people are getting the help they need. But then it happens. A bump in the road.

Your Form 990 return is rejected by the IRS.

What do you do? Who do you turn to? Well, you trusted us with video production, social media, and email marketing, so trust us when we tell you this isn’t the end. Take a deep breath, exhale, and keep reading.

First up, let’s examine Form 990 rejection:

• This may sound obvious, but you need to obtain tax exempt status from the IRS before filing Form 990. If you try to file without tax exempt status, you will be rejected. You can get tax exempt status by filing Forms 1023 or 1024.
• If you’ve already applied for exempt status as a 501(c)(3), your return may be rejected by the IRS unless you check the applicable option.
• If you file your Form 990 return with the incorrect tax period for your organization, the IRS will reject it. This is a pretty common error! Many organizations believe they run on a calendar tax year, even though they don’t. Don’t know your operating period? You’ll have to contact the IRS to find it out.
• If your tax exempt organization hasn’t filed for three consecutive years, the IRS can cancel your status. Not only will your 990 be rejected in this case, but you’ll also need to re-file a Form 1023 or 1024.

So what do you do if your 990 is rejected? Well, if you filed with ExpressTaxExempt, we will notify you right away if your form was rejected, explaining the reason so you can quickly correct any needed information.

After the corrections are made, you can re-transmit your return at no extra cost!

So what do you do if you’ve lost your status as a nonprofit? Your tax exempt organization will need to apply to have their tax-exempt status reinstated, even if you were not originally required to file an application.

What Do You Do If You Lose Tax Exempt Status?

You need to get it back, come on! To do this, you simply need to apply for tax exemption recognition by filing Form 1023, Form 1024, or a letter if applying under a different Code section, regardless of whether the organization was originally required to apply for exemption. Finally, you need to pay the appropriate user fee.

Want to reduce the chance of 990 rejections? By e-filing with ExpressTaxExempt, you replace the confusing and frustrating tax forms with the streamlined e-filing process of ETE.

If you run into any questions while e-filing, give our awesome customer support team a call at 704.839.2321. They can also be reached by email at support@ExpressTaxExempt.com.

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Amending Form 990-N: Changing the Fiscal Year

No one likes to hear they’ve made a mistake. But, hey, it happens. Still, when the IRS is the one telling you that you’ve messed up, things can get unnecessarily stressful. You were so sure you did everything right, yet here’s your rejected Form 990-N (“ePostcard”) reporting that the fiscal year on your return doesn’t match the IRS’s records. If you’re like me, your brain’s probably flooding with questions: How could I get a year wrong? Don’t they all start in January? How can I fix this? How much will it cost me to fix this? Is the IRS mad at me? Did I leave the oven on?

First, inhale deeply. Remember that Express990 is here to help. Aaaand exhale.

Recording your fiscal year as the calendar year is a common mistake, and no, the IRS isn’t mad at you for it. Once you verify with your organization the actual start date of your fiscal year, correcting this error is easy and, with Express990, free! Just follow these simple steps to amend the fiscal year for your submitted Form 990-N:

Step 1. Begin by logging into your Express990 account.

Step 2. Once at your Dashboard, click the “Edit” button next to the tax period that’s currently listed. This will take you to the point in your return where you’ll select your actual fiscal year.

Step 3. Select the “Fiscal Tax Year” button. It will turn green to indicate it’s been selected.

Step 4. Click the blue calendar icon next to “Tax Year Begin Date.” Select the beginning month and year by accessing the drop down menus, then click the day your fiscal year began. (In this example, the fiscal year began May 1, 2014.)

Step 5. Once you click the day, the calendar will go away, the program will fill in your “Tax Year Begin Date” and “Tax Year End Date,” and your due date will update. Verify that all of this is correct, and click “Next.”

Step 6. After you click “Next,” your fiscal year will update on Express990, but you still need to resubmit your Form 990-N to the IRS. To do this, continue to click “Next” until you reach the Summary page of your 990-N, shown below. Confirm that it’s correct and click “Review.”

Express990 will then generate an Audit Report to check for any obvious errors; if no errors were found, click “Next” until you come to the option to “Authorize and Transmit to the IRS.” Until you select this, your amended return will not be sent to the IRS.

So there ya go - your mistake has been fixed! The birds are still chirping, the world is still turning, and you can go check that oven if you haven’t already.

And if you have any other questions or need further assistance, our live experts in Rock Hill, South Carolina can be reached Monday-Friday from 9 a.m. to 6 p.m. EST by phone (704-839-2321) and live chat (www.expresstaxexempt.com) or through our 24/7 email support service (support@expresstaxexempt.com).

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Reasons for Form 990 E-File Rejection

Have you filed your Form 990, only to find out after all that hard work it has been rejected by the IRS? Now, the next step is to find out why it was rejected so you can re-file and avoid losing your tax-exempt status (easier said then done). Here are the most common reasons the IRS may reject a Tax-Exempt Organization's Form 990:

1. The organization must obtain exempt status from the IRS.

• Before an organization may file a Form 990, it must file for tax-exempt status from the IRS by using Forms 1023 or 1024.

2. If the filer belongs to a 501(c)(3), there are chances that they have already applied Form 1023 (Application for recognition of exemption under 501(c)(3) of the Internal Revenue Code). 

• If you have already applied for exempt filing status but have not received a confirmation, there will be an option to select. If you do not check this box, the IRS will reject your return.

3. The filer should not file a return by changing the organization's tax year, The Tax Period must match the IRS database unless the organization was terminated in the reporting tax year. 

• This is the most common error we see. It is vital that you know what the IRS has on record for your organization’s tax period. Many filers believe they operate on a calendar-year basis but actually do not. In order to determine your operating period, you can simply call the IRS and inquire about your organization. You will need your organization’s EIN and possibly other information like its address, phone number, and principal officer(s).

4. The IRS can cancel user's exempt organization status due to various reasons. User must find the reason with IRS before filing the return.

• This generally happens when an organization hasn't filed for three consecutive years. Should this be the case, the IRS will automatically revoke your tax-exempt status. You will need to re-file a Form 1023 or 1024 in order to regain your status with the IRS.

The reasons listed above are just a few of the most common reasons for an organizations Form 990 to be rejected. When you e-file your Form 990 through Express990.com, we will notify you right away if your form was rejected with the reason so you can quickly correct any needed information. After the corrections are made, you can re-transmit your return at no extra cost. You can always contact the IRS Tax Exempt Organizations Hotline for more information.

For more information on tax-exempt status, check out our blogs:

How To Reinstate Tax-Exempt Status

What Can Cause Your Tax-Exempt Status To Be Revoked?

All about the EO Select Check

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