If your favorite nonprofit hasn’t filed its tax returns for the last three years, it may have lost its tax exempt status, says recent IRS Information Release 2011-63. Indeed, some 275,000 such organizations have automatically lost their status due to failure to file.
2006 legislation imposed a filing requirement for the first time in 2007, in the case of the smallest of nonprofits. “During the past several years, the IRS has gone the extra mile to help make tax-exempt groups aware of their legal filing requirement and allow them additional time to file,” quoth IRS Commissioner Doug Shulman recently. “Still, we realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement. We are taking additional steps for these groups to maintain their tax-exempt status without jeopardizing their operations or harming their donors.”
In this vein, therefore, IRS has issued guidance on how organizations can apply for reinstatement of their tax-exempt status, including retroactive reinstatement. Further, for organizations with annual gross receipts of $50,000 or less for 2010, reinstatement comes along with payment of a reduced application fee of $100, rather than the typical $400 or $850 fee which might be otherwise applicable. (See Notice 2011-43, Notice 2011-44, and Revenue Procedure 2011-36 if this is you.)
And if you’re a prospective donor, and want to be sure your favorite charity isn’t one of these malingerers, check the IRS website for the list of organizations whose exempt status has been revoked for failure to meet the filing requirement. The list is searchable by state, and includes the effective date of the automatic revocation and the date it was posted to the list.