Relief Available for Nonprofits That Lost Their Tax Exemption

We lost our tax-exempt status! What can we do?

Did you lose your tax-exempt status because you didn’t file an annual return (990, 990EZ or 990-n), for three years?

If so, don’t panic! The IRS has some procedures for getting back into compliance. For many organizations, you can even get your tax-exempt status backdated to the date when you lost it.

For small organizations (those that file 990-N or 990-EZ), an application for reinstatement can be backdated to the day when exemption was lost, so long as the application is filed within 15 months of the Revocation Notice date. 

For larger organizations, they must also file within the 15 month deadline, but must file missing 990s and show ‘reasonable cause’ for failing to file at least one of the three years. 

If you just discovered that your organization lost its tax-exemption years ago, then you must show ‘reasonable cause’ for all three years that they failed to file and file missing returns.

 The procedures are contained in this IRS document:

https://www.irs.gov/charities-non-profits/charitable-organizations/automatic-revocation-how-to-have-your-tax-exempt-status-retroactively-reinstated

Of course, there are more details and requirements to be aware of. If your organization has lost its tax exemption, seek help from an attorney familiar with nonprofit law as soon as possible.

Practice Area(s): Non Profit and Tax Exempt

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