Reinstate Your Tax Exempt Status with These Tips

Most tax-exempt organizations are required to file either a Form 990, 990-EZ, 990-PF or 990-N (e-Postcard) each year with the IRS to maintain its tax-exempt status. Organizations that fail to file the appropriate form for three (3) consecutive years are considered automatically revoked and lose its tax-exempt status immediately. An automatic revocation is effective on the original filing due date of the third annual return or notice.

Each month, an “Automatic Revocation of Exemption List” will be updated and made available for public records on the IRS website. This list will include the name, EIN, organization type, last known address that the organization has provided, effective date of revocation and the date the organization was added to the list. Organizations that apply for and receive reinstatement to tax-exempt status are also listed on this list with the date of reinstatement provided also.

How To Reinstate Your Exempt Status

Well since we’ve hit the area of reinstatement...let’s talk about it!

Although the law prohibits the IRS from undoing a proper automatic revocation or an appeal process, an organization that has been revoked can be reinstated. There are four ways an organization can be reinstated:

Streamlined Retroactive Reinstatement

This type of reinstatement is for organizations that usually file Form 990-EZ or 990-N (e-Postcard). Tax-exempt status can be reinstated if they have not previously had their tax-exempt status automatically revoked. Also Form 1023, Form 1023-EZ or Form 1024 must be completed and submitted with the appropriate user fee include no later than 15 months after the date listed on the organization’s Revocation Letter or the date the organization appeared on the IRS Revocation List.  For more information on where to send this form, click here.

Additionally, if an organization is retroactively reinstated, they will not be charged the failure-to-file penalty if this procedure and necessary files are completed correctly.

Retroactive Reinstatement Process

This process is for organizations that are required to file Form 990 or Form 990-PF. Similar to the streamlined retroactive reinstatement process, in order to be reinstated you must do the following:

• -Complete and submit Form 1023 or Form 1024 with the appropriate user fee not later than 15 months after the date listed on the Revocation Letter or the date in which the organization appeared on the IRS Revocation List. 
• -Include a statement with the application that establishes that the organization had reasonable cause for its failure to file for at least one of the three consecutive years in which it failed to file. 
• -Include with the application a statement confirming that it has filed required returns for those three years and for any other applicable taxable years. 
• -Properly file completed and executed paper annual returns for the three consecutive years that caused the revocation. Organizations should write “Retroactive Reinstatement” on these returns and mail them here. 

The failure-to-file penalty will not be charged if this procedure and necessary files are completed correctly.

Retroactive Reinstatement (after 15 months)

Any organization that applies for reinstatement more than 15 months after the later of the date on the organization’s revocation letter or the date the organization appeared on the IRS Revocation List may have their tax-exempt status retroactively reinstated by satisfying all of the requirements described under the “Retroactive Reinstatement (within 15 months)” procedure EXCEPT that the reasonable cause statement that the organization includes with the application must establish reasonable cause for its failure to file a required annual return for all three consecutive years.

No failure-to-file penalty will be applied if the organization is retroactively reinstated under this procedure.

Postmark Date Reinstatement

Last but not least, the final way to be reinstated is for organizations that apply for reinstatement effective from the postmark date of their application if they complete and submit Form 1023, Form 1023-EZ or Form 1024 with the appropriate user fee.

When completing the application write on the top of the form “Revenue Procedure 2014-11, Reinstatement Post-Mark Date” and mail the application here.

Filing Form 990 Series Online

Operating your nonprofit organization without tax-exempt status can be extremely challenging and quite difficult. Eliminate the worry and concern of losing your tax status or even regain tax-exempt status by filing your Form 990 series returns with us at ExpressTaxExempt. With affordable pricing and a safe, secure and easy-to-use e-filing system, organizations can quickly and accurately file their forms directly to the IRS. Need help during the filing process? No worries. We’re always here to help! Feel free to contact our support team of e-file experts at 704.839.2321 for any questions or help with the e-filing experience. We’re here to assist you Monday through Friday from 9 a.m. to 6 p.m. EST or feel free to reach us 24/7 via email at support@ExpressTaxExempt.com.

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10 Do's and Don'ts to Maintain Your Tax Exempt Status

Organizations worldwide have applied and received 501(c)(3) tax exempt status from the IRS for years. Groups such as private foundations along with churches, hospitals, educational institutions and charities are exempt from federal income tax under the Internal Revenue Code. Maintaining this status can be just as easy as it is to lose it. 

Each year, over 100 501(c)(3) organizations have their tax-exempt status revoked. The most common cause of revocation is due to organizations that do not file their annual information return with the IRS for three consecutive years. These organizations find themselves in distress after being revoked and find out that it can be quite the hassle to bounce back from. 

An automatically revoked organization loses the eligibility to receive tax-deductible contributions as well being removed from a list of tax-exempt organizations that most donors reference prior to giving. Eliminate the worry and concern of ever having to be revoked or losing your tax-exempt status by following these “do’s and don’ts” to ensure you stay on the right track: 

"DO'S AND DON'TS"

DO’s: 

• 1. File annual information returns with the IRS (Form 990, 990-EZ, 990-N, 990-PF and Form 1120-POL). 
• 2. Withhold and Pay Payroll Taxes
• 3. Keep Records
• -Financial Records (Money coming in and out, employment tax records & asset records)
• -Permanent Records
• -Minutes from Board Meetings
• -Copy of previous returns and attachments sent to the IRS from the the last three previous years. 
• 4. Give donors that make a donation of $250 or more a written acknowledgement. If your group is soliciting contributions from individuals, you should provide a written receipt and register and file them in your annual reports with the states. 

• 5. Serve the public - services and activities of a 501(c)(3) organization should be directed toward an exempt purpose and the overall betterment of the public. 

DONT’S: 

• 1. Fail to file for 3 consecutive years
• 2. Engage in Substantial Lobbying
• 3. Participate in political campaign activity
• -This includes campaign contributions, endorsements and public statements regarding candidates. 
• 4.Serve private interests
• -501(c)(3) organization activities should be directed toward an exempt purpose. 
• 5. Unrelated Business Income
• -Too much income received from activities not related to the purpose of the organization can become a threat for tax-exempt status to be removed.

By following these “do’s and don’ts” your organization can remain intact and effective. Losing tax-exempt status as a non-profit can strongly affect your organization in a negative way. If your organization does in fact get revoked at some point, there is still the opportunity available for you to be reinstated by the IRS. Although the law prohibits the IRS from undoing a proper automatic revocation, organizations can apply to have their exempt status reinstated. Reinstatement can happen four ways: 10 Streamlined retroactive reinstatement 2) Retroactive reinstatement process (within 15 months), 3) Retroactive reinstatement (after 15 months) and 4) Post-mark date reinstatement. 

Be sure to file those annual returns and stay in good standing with the IRS by quickly and securely e-filing with ExpressTaxExempt. As the number one authorized IRS tax e-file provider, ExpressTaxExempt offers simplified and easy-to-use versions of Form 990, 990-EZ, 990-PF, 990-N, and its newest form specifically designed for political organization returns, Form 1120-POL. So take a few minutes and file today to keep those taxes away! 

As always, feel free to contact our support team of e-file experts at 704.839.2321 for any questions or help with your e-filing experience. We’re here to assist you Monday through Friday from 9 a.m. to 6 p.m. EST or feel free to reach us 24/7 via email at support@ExpressTaxExempt.com.

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Lost Your Tax-Exempt Status? Here's How to Get it Back

Once you’ve gotten that coveted tax-exempt status for your nonprofit organization, it can be quite the job maintaining it. For some, it can even become a full-time job to ensure their organization remains tax-exempt, which is why it can be so devastating to learn that the IRS has revoked that status.

Losing Tax-Exempt Status
The most common reason organizations lose their tax-exempt status is failing to file a Form 990 return for three consecutive years. Of course, there are more insidious ways organizations can forfeit their status, but not filing for three years in a row can be indicative of these. And so organizations will automatically lose tax-exempt status, effective beginning the original due date of the third missed annual return.

When you lose tax-exempt status, the first thing the IRS will do is send a letter explaining the situation and how your organization is no longer exempt from federal income tax. Your organization will be added to the Automatic Revocation of Exemption List, which the IRS updates monthly.

During this time, your organization is no longer considered tax-exempt so normal federal income tax laws apply. Also during this time period, you’re no longer eligible to receive tax-deductible contributions however your donors can deduct contributions made before your organization is listed on the Automatic Revocation list. Keep in mind that there may also be separate repercussions with your state after your tax-exempt status is revoked.

If your organization is still operating while its tax-exempt status is revoked, you may also be required to file a federal income tax return and pay any applicable taxes with one of these forms:

• -Form 1120, US Corporation Income Tax Return, due the 15th day of the 3rd month following your tax year end date
• -Form 1041, US Income Tax Return for Estates and Trusts, due the 15th day of the 4th month following your tax year end date

And Getting it Back!
The most important thing to getting your tax-exempt status back is to act fast and thoroughly when going through the IRS’s reinstatement steps. It will really help here if you’ve been keeping detailed records of your organization’s revenue and expenses. So, first things first: to reinstate your tax-exempt status, you’re going to need to file another Form 1023 if applying under section 501(c)(3). If you’re applying under a different Code section, file Form 1024. Regardless of whether your organization was originally required to file one of these forms for tax-exempt status, you’ll need to file one again now.

You’ll also be required to pay the appropriate user fee the IRS will charge for your status reinstatement. The specifics of the amounts you owe will be explained in the letter the IRS sends to alert you of your status being revoked.

If needed, you can also petition for a retroactive reinstatement as part of your application. This is an important step to take if you believe your organization’s tax-exempt status being revoked was an error or unwarranted. If you don’t need retroactive reinstatement, pending your application’s approval, your organization’s new tax-exempt effective date will most likely be the date you submit Form 1023 or 1024 to the IRS.

Once you’ve been reinstated, it’s important to make every effort not to lose that status again! Be sure to file your 990 Form each year, keep meticulous records, and, of course, only use the benefits of your tax-exempt status for tax-exempt operations. And don’t forget that ExpressTaxExempt can help - like the Jackson 5, just call our name and we’ll be there!

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What Really Happens When You Lose Tax Exempt Status

A lot of organizations know they can lose their tax exempt status, but not many know the details of what happens during these periods.

So we’ve taken it upon ourselves to see what the IRS has to say about losing your tax exempt status.

How Do You Reinstate Your Tax Exempt Status?

How do you reinstate your tax exempt status reinstated if it was automatically revoked?

First, you must apply to have your organization’s tax exempt status reinstated. You still need to do this, even if you originally didn't have to.

According to the IRS, here’s what you need to do:

1. Apply for recognition of tax exemption by filing Form 1023 (if applying under section 501(c)(3)), or Form 1024 or a letter (if applying under a different Code section), regardless of whether the organization was originally required to apply for exemption; and
2. Pay the appropriate user fee.

An organization can also ask for retroactive reinstatement as part of its application.

What Happens When You Lose Tax-Exempt Status?

Well, first the IRS sends you a letter informing the organizations of the revocation!

When you lose your tax exempt status, you are automatically no longer exempt from federal income tax.

So you may be required to file one of the following federal income tax returns and pay the applicable taxes of said forms:

• Form 1120, U.S. Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of the organization’s tax year
• Form 1041, U.S. Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year

When your organization has its status automatically revoked, it is not eligible to receive tax-deductible contributions and will not qualify for the cumulative list of tax-exempt organizations, Publication 78.

For donors—they are able to deduct contributions made before an organization’s name appears on the Automatic Revocation List.

Be aware, there may be state and local laws as well as taxes that affect you once your exempt status is revoked.

What Happens When You Are Reinstated?

Most likely, your organization’s effective date of reinstated exemption will be the date that your application was submitted to the IRS.

Thankfully, you can request retroactive reinstatement for the effective date of revocation. However, the IRS only grants retroactive reinstatement of exemption under certain limited circumstances.

Once you’re back and running, be sure to e-file IRS Form 990 with ExpressTaxExempt!

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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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Reinstating Tax-Exempt Status

In the city of Taxtropolis, there are only two kinds of people… Those who file their tax return on time and those who do not. These city streets are unforgiving to any level of offenders. But… there is a change sweeping through. A hero, known only as Rev. Proc. 2014-11, is making it possible for offenders to streamline the process of regaining their tax-exempt status.

No one knows how or why Rev. Proc. arrived from the land of IRS-tron. But witnesses say that Rev. Proc. works in three main ways in which an organization that has lost its tax-exempt status can apply for retroactive reinstatement to the date of revocation.

Level 1 Offenders
The first level of offenders consists of those who have

• Lost their tax-exempt status for the very first time
• Failed to file a required Form 990-N (e-Postcard) or Form 990-EZ for three consecutive years
• Applied for retroactive reinstatement with a Form 1023, or a Form 1024, within 15 months from the day their status was revoked

For first level offenders, Rev. Proc. can permit you to regain your tax-exempt status as of the date of revocation without any questions asked. You will not be required to file a Form 990-N (e-Postcard) for the prior year or a Form 990-EZ for any year in which you were required.

Your organization can be reinstated, if you:

• Re-submit an Application for Exemption with “Streamlined Retroactive Reinstatement” written across the top
• Pay the applicable user fee

Level 2 Offenders
The second level of offenders are those who have

• Failed to file a required Form 990 (Long Form) for three consecutive years
• Applied for retroactive reinstatement within 15 months from the day their status was revoked

Section 5 of Rev. Proc. allows organizations in this predicament to make an argument for reasonable cause. If reasonable cause is established for any of the three consecutive years you failed to file, you can qualify for reinstatement by

• Applying for retroactive reinstatement within 15 months from the day your status was revoked
• Paying the applicable user fee
• Establishing your organization had reasonable cause why it failed to file for one of the three consecutive years
• Completing and file the proper tax returns for all the tax years in the consecutive 3-year period that you missed
• Including a statement with the reinstatement request confirming that you have filed the required annual returns

Level 3 Offenders
The third level of offenders are

• ANY tax-exempt organization, whether you’re required to file a Form 990-N, 990-EZ, or 990, that is applying for reinstatement AFTER 15 months from the day the status was revoked

Along with following the reinstatement steps for Level 2 Offenders, Section 6 of Rev. Proc. requires you to provide a reasonable cause for each of the three consecutive years you failed to file.

Second chances are sometimes hard to come by in any situation. Reduce the need to be rescued by Rev. Proc. in Taxtropolis by quickly and easily e-filing with Express990. We offer support for any of the 990 forms for tax-exempt organizations and you can e-file your Form 990-N (e-Postcard) FREE for the current tax year.

For any questions or assistance with our service to e-file, feel free to contact our live, expert help at our headquarters in Rock Hill, South Carolina.

Phone: (704) 839-2321 (Monday - Friday, 9am - 6pm, Eastern Standard Time)
Email: support@expresstaxexempt.com
Live Chat: www.expresstaxexempt.com

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