"Your exempt status has been revoked." That sentence is the last thing a tax-exempt organization wants to read. Yet, the IRS sent out a wave of letters in late October 2020 indicating the revocation of tax-exempt statuses to unexpecting organizations. While the revocation notices were cause for initial concern, it was quickly discovered that these were generated due to a system limitation.
As background, if an exempt organization does not file an information return (Form 990 series) for three consecutive years, the IRS has a method to automatically notify the organization of the revocation of their exemption. The due date for filing an exempt return is May 15 for a calendar-year filer.
Unique to the 2020 tax season was an additional extension of time to file until July 15, 2020. The extensions for many tax forms, including Form 990, were announced through IRS Notices 2020-23 and 2020-35 as part of pandemic relief efforts. Despite this allowable extension, auto-revocation notices were automatically generated due to the inability to change the due date in the IRS system.
If you filed your return or extension on or before July 15, 2020, but received a notice, not to worry! The IRS has announced that organizations can send documentation of their timely filed returns to a dedicated fax number: (855) 247-6123. They are also continuing to process paper filings and bring organizations’ accounts back into compliance.
If you have any questions about auto-revocation or other IRS notices your nonprofit organization may have received, contact our exempt organization experts.
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.
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