Washington, D.C. - The Internal Revenue Service said in mid-June that approximately 275,000 organizations have automatically lost their tax-exempt status under the law because they did not file legally required annual reports for three consecutive years.
The IRS believes that the vast majority of the organizations are defunct, but it also announced special steps to help any existing organizations to apply for reinstatement of their tax-exempt status.
For several years, the IRS has made an extensive effort to inform organizations of their filing requirements through multiple outreach and education avenues. Overall, the IRS believes the vast majority of small tax-exempt organizations are now in compliance.
"We realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement," IRS Commissioner Doug Shulman said in a statement. "We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors."
As part of this, the IRS issued guidance in mid-June on how organizations can apply for reinstatement of their tax-exempt status, including retroactive reinstatement. In addition, the IRS announced transition relief for certain small organizations - those with annual gross receipts of $50,000 or less for 2010 - that are subject to the new "postcard" filing. The relief allows eligible small organizations to regain their tax-exempt status retroactive to the date of revocation and pay a reduced application fee of $100, rather than the typical $400 or $850 fee. Full details are available in Notice 2011-43, Notice 2011-44 and Revenue Procedure 2011-36.
If an organization appears on the list of organizations whose tax-exempt status has been automatically revoked, it is because IRS records indicate the organization had a filing requirement and did not file the required returns or notices for 2007, 2008 and 2009. The list, which will be available on the IRS Web site at www.irs.gov, includes each organization's name, Employer Identification Number and last known address. It is searchable by state. The IRS will update the list monthly.
This listing should have little impact on donors who previously made deductible contributions to auto-revoked organizations, because donations made prior to an organization's appearance on the list remain tax-deductible. Going forward, however, organizations that are on the list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions, and any income they receive may be taxable.
Publication on the list of organizations whose tax-exempt status has been revoked serves as notice to donors and others that they may no longer rely on a prior listing in IRS Publication 78, Cumulative List of Organizations, as an indication of an organization's tax-exempt status or its eligibility to receive tax-deductible contributions. AT
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