In our daily practice, we receive many inquiries from nonprofits that have their 501c3 status revoked. Below are the three most frequent questions and answers we provide to the clients:
Why is my 501c3 status revoked?
If you’re one of those 700,000 nonprofit organizations that received a letter from the IRS stating that their 501c3 status has been revoked, the reason is simple: your nonprofit failed to file nonprofit’s tax returns for 3 consecutive years.
Here is the most common case scenario: Nonprofit “ABC” was incorporated in the state of Georgia in 2013, however it didn’t get its 501c3 status approved until June 2014. The organization didn’t have any activity until the beginning of 2016. On August 15th, 2016, “ABC” received a letter from the IRS stating their 501c3 status has been revoked. The Board members are very surprised to find out that they missed filing their tax returns for 3 years – 2013, 2014, and 2015. They mistakenly thought that as they didn’t have any activity for any of the 3 years – 2013, 2014 and 2015, they didn’t have to file a nonprofit’s tax return with the IRS. They also missed the fact that the IRS backdated the corporation’s exemption date to the date of incorporation in 2013.
How to Get My 501c3 Status Reinstated?
The only way to get your 501c3 reinstated is to go through the process of applying for a 501c3 one more time. This is what we call “double trouble” – not only the 501c3 status is revoked, but you have to go through the 501c3 process again and pay all the governmental filing fees again. The good news is that your nonprofit may qualify for the expedited retroactive reinstatement procedure and reinstate its 501c3 tax-exempt status in less than 6 weeks.
How to Avoid Getting Your Nonprofit’s 501c3 Tax-Exempt Status Revoked?
- Pay a close attention to the effective date of exemption on your Determination letter of approval for the 501c3 tax-exempt status. If the date is June 15th, 2015; your nonprofit needs to file a tax return (f990s) for 2015; the first tax return is usually a short one (from the period of incorporation until the end of the reported period).
- Remember the tax year end (also included on the determination letter of approval) and don’t miss the deadline for filing. If the tax year end is 12 (December 31st); the deadline for filing your nonprofit’s tax return is May 15th.
- Don’t skip a year and always file a tax return. Remember, that your nonprofit organization might be audited at any time and the IRS might request a copy of your nonprofit’s tax returns.
Do you need our assistance with the 501c3 reinstatement? Or do you have any other 501c3 questions? Please e-mail us at firstname.lastname@example.org or call our main line at 770-457-2550. We’d love to help you!