Has Your Association Received This Notice?
We Can Reinstate Your Nonprofit Tax-Exempt Status.
What is the effect of my nonprofit losing its tax-exempt status?
It means that your nonprofit is no longer exempt from federal income tax and may have to pay corporate income tax on annual revenue.
Your nonprofit may be required to file one of the following federal income tax returns and pay any applicable income taxes: Form 1120, U.S. Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or 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.
It may mean that any state tax exemption your nonprofit received that is dependent on federal tax-exempt status is also now revoked.
It means that your nonprofit will not be listed in IRS Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, which is a list of organizations eligible to receive tax-deductible charitable contributions.
It means that private foundations are unlikely to give a grant directly to your nonprofit that has lost its tax-exempt status, because federal tax law imposes an excise tax on grants made to organizations that are not tax-exempt.
How do I know if our organization has lost its tax-exemption?
You may have received a notice from the IRS in the form of a letter, Notice CP120A. A copy of this notice is posted on the IRS web. Also, your group likely will be listed here if it has automatically lost its tax-exemption. You can search the Exempt Organizations Select Check to check your organization’s status at any time.
If you don’t find your nonprofit’s name on the list, it does not necessarily mean that it does not have its 501(c)(3). Sometimes the IRS list is not comprehensive. Call the IRS Customer Service for nonprofit organizations at 1.877.829.5500 and provide them with your organizations name (and EIN if you have it). We have found that the best time to call the IRS is early morning.
What do we do now?
You will need to complete the appropriate reinstatement package (with all corresponding forms) with the IRS. With our help, we can help save you time and money by navigating the tricky forms. In some cases we are able to bypass the completion of the missing three consecutive tax returns.
What about retroactive reinstatement?
In most cases we are able to request that your organization is retroactively reinstated to the date of their original tax-exempt recognition, but the IRS will grant that request only if it determines that there was “reasonable cause” for the nonprofit to have missed the filing deadlines. Don’t worry, this is included in our reinstatement package.
Call one of our reinstatement specialists.