|
Did your
organization receive a letter from the IRS stating that its
tax-exempt status has been revoked? Is your organization on the
IRS Automatic
Revocation of Exemption List ? This
is a list of organizations whose tax-exempt status was revoked
by the IRS?
In 2006 the
Congress passed the Pension Protection Act, requiring most
tax-exempt organizations to file an annual information return or
notice with the IRS.
Automatic
Revocation of Exemption:
Each month, the
Internal Revenue Service updates the listing of organizations
that under the law have automatically lost their tax-exempt
status because they have not filed as legally required for the
past three years.
What does this
mean for our organization?
Loss of
tax-exemption could have disastrous consequences for a nonprofit
organization. For example, your nonprofit may not be
eligible to accept tax-deductible and contributions. Every nonprofit leader, whether board or staff,
should be familiar with the annual filing requirements and
activities that should be avoided in order to protect and
maintain tax-exempt status.
Alert:
In California (and other states) a nonprofit corporation must
notify the state when the IRS revokes tax-exempt status
501(c)(3). The State of California can then revoke state
tax-exempt status. The corporation
(that is not tax-exempt) is then a taxable entity and subject
each year to an $800 minimum CA franchise tax plus other state
taxes, income tax, property tax, and sales/use tax.
The organization may also be
subject to back taxes and penalties for failure to pay corporate
income taxes as of the effective date of revocation.
How we can help!
Typically, it
takes us 5 to 7 days to complete the required paperwork for
reinstatement. Recently, one of our clients was reinstated
3 weeks after applying for reinstatement.
Contact us for
assistance with reinstating your nonprofit corporation’s
tax-exempt status. |
