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Automatic Revocation of Tax-Exempt Status August 24, 2011

Automatic Revocation of Tax-Exempt Status August 24, 2011. Presenters. Eve Borenstein Borenstein and McVeigh Law Office LLC www.taxexemptlaw.org Matthew Giuliano IRS Tax Law Specialist Exempt Organizations, Guidance Sharon Light

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Automatic Revocation of Tax-Exempt Status August 24, 2011

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  1. Automatic Revocation of Tax-Exempt Status August 24, 2011

  2. Presenters Eve Borenstein Borenstein and McVeigh Law Office LLC www.taxexemptlaw.org Matthew Giuliano IRS Tax Law SpecialistExempt Organizations, Guidance Sharon Light Senior Technical AdvisorIRS Exempt Organizations, Office of the Director

  3. Automatic Revocation

  4. Effective for years beginning after December 31, 2006 • Filing requirement for organizations not required to file an annual information return -§ 6033(i) • Loss of exemption by operation of law for organizations that fail to file a required return or notice for three years - § 6033(j)

  5. 990-N (e-Postcard)

  6. 990-N

  7. Automatic Revocation • Revocation under § 6033(j) is by operation of law • The IRS maintains an auto-revocation list on www.irs.gov • The IRS sends notice letters to the last known address of each revoked organization

  8. May 18, 2010 “The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact. So I urge these organizations to go ahead and file — even though the May 17 deadline has passed.

  9. IRS Offers One-Time Special Filing Relief Program for Small Charities; Oct. 15 Due Date to Preserve Tax-Exempt Status WASHINGTON — Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program, the Internal Revenue Service announced today.

  10. Limited One-Time Filing Relief Programs • Extension of Time to File for Organizations Eligible to Submit Form 990-N • Voluntary Compliance Program (VCP) for Organizations Eligible to File Form 990-EZ

  11. Reinstatement of Exemption • An organization revoked under § 6033(j) must apply to have its tax-exempt status reinstated, even if it wasn’t originally required to apply for exemption. • If the application is approved, the effective date of exemption will be the date the application was submitted. • If the applicant can show to the satisfaction of the IRS evidence of reasonable cause for failure to file for three consecutive years, reinstatement may be retroactive to the date of revocation.

  12. Transition Relief The IRS will treat a small organization (one that normally has annual gross receipts of not more than $50,000 in its most recently completed taxable year) as having established reasonable cause for failing to file a Form 990-N e-Postcard or an annual return for its taxable years beginning in 2007, 2008, and 2009, and the organization will be eligible for a $100 (rather than $400/$850) user fee, if it meets each of the following criteria: • The organization was not required to file annual information returns (such as Form 990, Return of Organization Exempt from Income Tax or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax) for taxable years beginning before 2007. • The organization was eligible in each of its taxable years beginning in 2007, 2008, and 2009 to file a Form 990-N e-Postcard (rather than an annual information return). Generally organizations (other than private foundations and most section 509(a)(3) supporting organizations) with annual gross receipts that were normally not more than $25,000 in such taxable years would have been eligible to file a Form 990-N e-Postcard. • On or before December 31, 2012, the organization submits to the IRS a properly completed and executed application for reinstatement of tax-exempt status.

  13. For more information… • Visit the IRS Charities & Non-Profits website at www.irs.gov/eo • Call TE/GE Customer Account Services (877) 829-5500 (toll-free) • Subscribe to EO Update to get the latest updates for Exempt Organizations

  14. Thank you for joining us! Stay informed and sign up for free e-newsletters at www.councilofnonprofits.org

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