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Regain Your Tax Exempt Status

Regain Your Tax Exempt Status. Sandy Deja (Revised 11/19/11). Learning Objectives. 1. Understand the Automatic Revocation Process 2. Learn practical steps to regain tax exempt status 3. How to prevent future loss of tax exempt status 4. Where to go for help.

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Regain Your Tax Exempt Status

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  1. Regain Your Tax Exempt Status Sandy Deja (Revised 11/19/11)

  2. Learning Objectives 1. Understand the Automatic Revocation Process 2. Learn practical steps to regain tax exempt status 3. How to prevent future loss of tax exempt status 4. Where to go for help

  3. Automatic Revocations: Overview If your organization was… • Required to file 990, and • Did not file for 3 years in a row …then exempt status was revoked automatically

  4. Automatic Revocations: Overview - Initial List June 8, 2011: 279,599 - Updates: 7/13, 7/25, 8/11, 9/8, 10/7, 10/14 and 11/9 - Currently 392,899 (as of 11-9-11) • Reinstatements not removed • 2,500 removed; not clear why

  5. Revoked in Error: 990 Not Required - Churches - Integrated auxiliaries - Church operated schools - Other church related - Government related [501(c)(1)]

  6. 990 Not Required: What to do - Determination Letter - Exemption Application 1-877-829-5500 - Re-instatement Application - Not Form 8940

  7. Churches Remain Exempt… …and eligible to receive tax deductible charitable contributions But if you want it fixed, call 1-877-829-5500

  8. Revoked In Error: Actually Filed 990-N - - E-Postcard Filing not IRS - Urban Institute - Less Than Ideal Inter-Agency Communication

  9. Actually Filed: What To Do Send documentation to: Internal Revenue Service 1973 North Rulon White Blvd M/S 6552 Ogden, Utah 84404 FAX (801)620-555 Phone 1-877-829-5500

  10. Actually Filed: Group Exemptions IRS FAQ: “When a central org is revoked…” - 136 Central orgs revoked (11/9) • Only option is to apply for reinstatement Other kinds of problems as well…

  11. Applying for Reinstatement If… - there is (still) a need for your non-profit, and - you can muster the human and other resources needed to sustain it …then go for it

  12. Applying for Reinstatement IRS Guidance: • IRS Notice 2011-43 (Transitional Relief for small organizations) • IRS Notice 2011-44 (Requirements for retroactive reinstatement for larger organizations)

  13. No mention of Notice 2011-43 Transitional Relief!

  14. Transitional Relief: Benefits • Presumption of “Reasonable Cause” for not filing - User Fee is reduced to $100 (Good through 12/31/2012)

  15. Transitional Relief: Eligibility 1. Annual gross receipts normally $50,000 or less, 2. Not required to file a paper Form 990 or 990-EZ before 2007, and 3. Eligible to file 990-N for 2007, 2008 and 2009.

  16. Transitional Relief Ineligible Organizations • Can still apply for reinstatement • Must pay regular User Fee • Must show reasonable cause for not filing if seeking retroactive

  17. Transitional Relief: What To Do - File an exemption application - Write “Notice 2011-43” • On top of Application • On mailing envelope - Attach Statement

  18. Transitional Relief: Statement [Name of Organization] was not required to file annual information returns for taxable years beginning before 2007; was eligible in each of its taxable years beginning in 2007, 2008 and 2009 to file a Form 990-N e-Postcard; and had annual gross receipts of normally not more than $25,000 in each of its taxable years beginning in 2007, 2008 and 2009..

  19. File An Exemption Application - Form 1023 or 1024 - Don’t need new EIN - File with usual address (not the one in the form)

  20. File An Exemption Application • Going concern (If I were an agent, I would ask.) • Corporate status (Is your group in good standing?) • Foundation Status - 501(c)(3) (Check your public support.)

  21. File An Exemption Application Resources: • IRS pubs, library, online courses • Classes, websites, referrals • Bar assn, CPA Society, United Way, Nonprofit Assistance Center • Sandy Deja’s website and book

  22. An Unexpected Resource Recycle Your Old Application: - 1023’s dated 2004 or later - 1024’s dated 1998 • Use Form 4506-A to get a copy

  23. Recycling An Old Application Use “As Is”: • Unchanged governing documents * • Unchanged brochures, publications • Maps, photographs, floorplans and similar items that remain the same * With proof of good standing

  24. Recycling An Old Application Update These: • Narrative • Description of Fundraising • Eligibility for services • Legislative or business activities

  25. Recycling An Old Application Create New: - Lists of Board members, employees, independent contractors - Financial Statements, including Projected Budget

  26. Final Recommendations IRS Inquiry on previous application? Not just for recyclers Describe how you plan to avoid future problems

  27. Avoiding Future Problems - Designate IRS officer & backup • Subscribe to IRS Update • IRS On-line or other training • Financial software or knowledgeable professional

  28. Avoiding Future Problems • Board Recruitment • Association of non-profits (links) • Professional societies • Agenda Item

  29. Reinstatement • Reinstatement applications handled by agents who specialize • Favorable Ruling: Form Letter 947 or 948, with caveat, and effective date same as revocation date • 100 days to reappear in Pub 78

  30. Links - Copy of IRS Notice CP120A http://www.irs.gov/pub/notices/cp120a_english.pdf - Current Auto-Rev List http://www.irs.gov/charities/article/0,,id=240099,00.html • “Churches remain exempt…” http://www.irs.gov/charities/article/0,,id=240100,00.html

  31. Links - Copy of IRS Notice 2011-43 http://www.irs.gov/pub/irs-drop/n-11-43.pdf - Copy of Notice 2011-44 http://www.irs.gov/pub/irs-drop/n-11-44.pdf - Automatic Revocation FAQ http://www.irs.gov/charities/article/0,,id=221600,00.html

  32. Links - IRS Form 1023 http://www.irs.gov/pub/irs-pdf/f1023.pdf http://www.irs.gov/pub/irs-pdf/i1023.pdf - IRS Form 1024 http://www.irs.gov/pub/irs-pdf/f1024.pdf http://www.irs.gov/pub/irs-pdf/i1024.pdf

  33. Links • How To Get Your Tax Exempt Status Back (IRS 86 second You-Tube video) http://www.youtube.com/watch?v=hdrI1Swt1eI - IRS “Stay-Exempt” http://www.stayexempt.irs.gov/ • IRS Publication 557 http://www.irs.gov/pub/irs-pdf/p557.pdf

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