Ever since the Pension and Protection Act of 2006 (PPA ‘06), new filing requirements have been established for nonprofits, and the IRS has been more strict about enforcing the rules. Now almost all nonprofit organizations are required to file an annual return, and in the past few years, some organizations have seen their tax-exempt status revoked.
If you have been filing your form 990, 990-EZ, or 990-N each year, you are probably in good shape, but if you haven’t filed one of these forms in the past few years, your organization’s status may have been revoked via the automatic revocation process.
How do you know if your tax-exempt status has been revoked? You can check to see if your organization has been placed on the IRS exempt organization revocation list.
What does it mean if you’re on the list? If your tax-exempt status is revoked, you are required to file corporate income tax returns and pay taxes at the regular corporate rates. In addition, any donations will no longer be tax-deductible and your organization may no longer be eligible for grants.
What can you do if your status is revoked? You will have to apply for reinstatement and pay the required user fee. The IRS decides each case based on the individual situation. The process might take a while, since over 300,000 organizations have had their tax-exempt status revoked and many are in the process of applying for reinstatement.
Whether your tax-exempt status has been revoked or not, you can protect yourself in the future by signing up for the IRS exempt organization update. This way you can keep up with any changes in the years to come.
We can help you set up and maintain your nonprofit organization’s tax-exempt status by handling all the IRS reporting for you. We’ll complete and file your non-profit status application, provide training for your board on non-profit financial statement usage and effective budgeting practices, prepare and file the 990 and 990T tax forms, and prepare your initial start-up documentation, including incorporation, federal employee identification number (FEIN), and payroll setup with federal and state agencies.
We can also review and compile your financial statements, design, install, and maintain your accounting system, handle payroll preparation, and provide training for your accounting personnel. To learn more about how we can help you set up and maintain your tax-exempt status, contact us for a free consultation.