Regain Your Tax Exempt Status

Sandy Deja(Revised 11/19/11)

Learning Objectives1. Understand the Automatic

Revocation Process2. Learn practical steps to regain

tax exempt status3. How to prevent future loss of

tax exempt status 4. Where to go for help

Automatic Revocations: Overview

If your organization was…- Required to file 990, and - Did not file for 3 years in a row

…then exempt status was revoked automatically

Automatic Revocations: Overview

- Initial List June 8, 2011: 279,599 - Updates: 7/13, 7/25, 8/11, 9/8, 10/7,

10/14 and 11/9- Currently 392,899 (as of 11-9-11)- Reinstatements not removed- 2,500 removed; not clear why

Revoked in Error: 990 Not Required

- Churches- Integrated auxiliaries- Church operated schools- Other church related- Government related [501(c)(1)]

990 Not Required: What to do

- Determination Letter- Exemption Application

1-877-829-5500- Re-instatement Application- Not Form 8940

Churches Remain Exempt…

…and eligible to receive tax deductible charitable contributions

But if you want it fixed, call 1-877-829-5500

Revoked In Error: Actually Filed990-N -

- E-Postcard Filing not IRS- Urban Institute- Less Than Ideal Inter-Agency

Communication

Actually Filed: What To Do

Send documentation to: Internal Revenue Service1973 North Rulon White BlvdM/S 6552Ogden, Utah 84404

FAX (801)620-555Phone 1-877-829-5500

Actually Filed: Group ExemptionsIRS FAQ: “When a central org is

revoked…”- 136 Central orgs revoked (11/9)- Only option is to apply for

reinstatementOther kinds of problems as well…

Applying for ReinstatementIf…

- there is (still) a need for your non-profit, and

- you can muster the human and other resources needed to sustain it

…then go for it

Applying for Reinstatement

IRS Guidance:- IRS Notice 2011-43

(Transitional Relief for small organizations)

- IRS Notice 2011-44(Requirements for retroactive reinstatement for larger organizations)

No mention of Notice 2011-43

Transitional Relief!

Transitional Relief: Benefits- Presumption of “Reasonable

Cause” for not filing- User Fee is reduced to $100

(Good through 12/31/2012)

Transitional Relief: Eligibility1. Annual gross receipts normally

$50,000 or less,2. Not required to file a paper Form

990 or 990-EZ before 2007, and3. Eligible to file 990-N for

2007, 2008 and 2009.

Transitional ReliefIneligible Organizations- Can still apply for reinstatement- Must pay regular User Fee- Must show reasonable cause for

not filing if seeking retroactive

Transitional Relief: What To Do- File an exemption application- Write “Notice 2011-43”

On top of ApplicationOn mailing envelope

- Attach Statement

Transitional Relief: Statement

[Name of Organization] was not required to file annual information returns for taxable years beginning before 2007; was eligible in each of its taxable years beginning in 2007, 2008 and 2009 to file a Form 990-N e-Postcard; and had annual gross receipts of normally not more than $25,000 in each of its taxable years beginning in 2007, 2008 and 2009..

File An Exemption Application- Form 1023 or 1024- Don’t need new EIN- File with usual address

(not the one in the form)

File An Exemption Application- Going concern

(If I were an agent, I would ask.)- Corporate status

(Is your group in good standing?)- Foundation Status - 501(c)(3)

(Check your public support.)

File An Exemption ApplicationResources:- IRS pubs, library, online courses- Classes, websites, referrals - Bar assn, CPA Society, United Way,

Nonprofit Assistance Center- Sandy Deja’s website and book

An Unexpected ResourceRecycle Your Old Application:- 1023’s dated 2004 or later- 1024’s dated 1998 - Use Form 4506-A to get a copy

Recycling An Old ApplicationUse “As Is”:- Unchanged governing documents *- Unchanged brochures, publications- Maps, photographs, floorplans and

similar items that remain the same* With proof of good standing

Recycling An Old ApplicationUpdate These: - Narrative- Description of Fundraising- Eligibility for services- Legislative or business activities

Recycling An Old ApplicationCreate New:- Lists of Board members, employees,

independent contractors- Financial Statements, including

Projected Budget

Final RecommendationsIRS Inquiry on previous application?

Not just for recyclers Describe how you plan to avoid

future problems

Avoiding Future Problems- Designate IRS officer & backup- Subscribe to IRS Update- IRS On-line or other training- Financial software or

knowledgeable professional

Avoiding Future Problems- Board Recruitment- Association of non-profits

(links)- Professional societies - Agenda Item

Reinstatement- Reinstatement applications

handled by agents who specialize- Favorable Ruling: Form Letter 947

or 948, with caveat, and effective date same as revocation date

- 100 days to reappear in Pub 78

Links

- Copy of IRS Notice CP120Ahttp://www.irs.gov/pub/notices/cp120a_english.pdf

- Current Auto-Rev Listhttp://www.irs.gov/charities/article/0,,id=240099,00.html- “Churches remain exempt…”http://www.irs.gov/charities/article/0,,id=240100,00.html

Links

- Copy of IRS Notice 2011-43http://www.irs.gov/pub/irs-drop/n-11-43.pdf

- Copy of Notice 2011-44http://www.irs.gov/pub/irs-drop/n-11-44.pdf

- Automatic Revocation FAQhttp://www.irs.gov/charities/article/0,,id=221600,00.html

Links

- IRS Form 1023http://www.irs.gov/pub/irs-pdf/f1023.pdfhttp://www.irs.gov/pub/irs-pdf/i1023.pdf

- IRS Form 1024http://www.irs.gov/pub/irs-pdf/f1024.pdfhttp://www.irs.gov/pub/irs-pdf/i1024.pdf

Links- How To Get Your Tax Exempt Status

Back (IRS 86 second You-Tube video)http://www.youtube.com/watch?v=hdrI1Swt1eI

- IRS “Stay-Exempt”http://www.stayexempt.irs.gov/ - IRS Publication 557http://www.irs.gov/pub/irs-pdf/p557.pdf