On February 24, 2011, the Internal Revenue Service
announced that it will soon publish a Nonfiler Automatic Revocation List. The list, which will be maintained and updated monthly by the Service, will contain the names of tax-exempt organizations that have had their federal tax-exempt status revoked due to their failure to file information returns.
The Pension Protection Act of 2006
enacted annual tax filing requirements for small tax-exempt organizations effective for tax years beginning on or after January 1, 2007. Tax-exempt organizations are required to file an annual information return (Form 990, 990-EZ, 990-N or 990-PF). The Service granted filing relief until October 15, 2010 for organizations that were required to file but had not for the past three consecutive years (2007, 2008, 2009). Under the Pension Protection Act of 2006, revocation of tax-exempt status is mandatory for organizations that failed to file an annual return for the past three consecutive years.
The Revocation List
According to the IRS, the Nonfiler Revocation List will:
- Identify the organization name, employer identification number (EIN), organization type, last known address and the effective date of revocation
- Provide monthly updates regarding revocations
- Be available in two formats: Adobe Acrobat and Microsoft Excel
- Be divided into separate lists for each state, the District of Columbia and all other territories and countries
- Make available a single list of all organizations in ASCII delimited text format
The revocation effective date is the original filing due date of the third annual required return (Form 990 or 990-EZ) or notice (Form 990-N) that was not filed.
According to www.Guidestar.org, the IRS identified in 321,091 nonprofits that were at risk of losing their exemption for failure to file.
Organizations that have lost their exempt status will have to reapply to the IRS which entails completing Form 1023 and paying a filing fee. Contributors will not be able to deduct donations made to a listed organization effective with the date of the revocation notice. Furthermore, private foundations will be required to exercise expenditure responsibility over grants made to these organizations. An organization that lost exempt status will be treated as a taxable entity and will be required to file federal income tax returns and pay federal income tax until tax-exempt status is once again formally recognized.
If you have any questions or concerns nonprofit tax compliance, please feel free to contact Susan M. Kirsch, Debra A. Ries, Sarah R. Piot or Beth A. Mellon of the Schneider Downs Nonprofit Tax Team.
Schneider Downs provides accounting, tax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.