1. Your nonprofit is no longer exempt from federal income tax. You may have to pay corporate income taxes on annual revenue. Your nonprofit may have to fill out one of the two following federal income tax returns: Form 1120 or Form 1041. Form 1120 is the U.S. Corporation Income Tax Return, and it is due by the 15th day of the 3rd months after the end of your organization’s tax year. Form 1041 is the Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year.
2. Your nonprofit may no longer qualify for any state tax exemption that was dependent on federal tax-exempt status. Your organization may now be required to submit both federal and state tax returns.
3. Your nonprofit is no longer listed in the IRS Publication of organizations eligible to receive tax-deductible charitable contributions. This list appears in IRS Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code.
4. Your nonprofit is unlikely to receive grants from private foundations. Your nonprofit’s revocation means that any grants provided may are now subject to an excise tax, which will probably turn away both previous and future donors.
5. Contributions to your organization are no longer deductible. Corporations and individuals that provide you funds no longer will recognize the reduction of their own taxes. This will also may turn away previous and future donors.
You may have received a notice from the IRS in the form of a letter, Notice CP120A. A copy of this notice is posted on the IRS web, where your group will also most likely be listed if it has automatically lost its tax-exemption. You can search the Exempt Organizations Select Check to check your organization’s tax exempt status at any time.
If you don’t find your nonprofit’s name on the list, it does not necessarily mean that it does not have its 501(c)(3). Sometimes the IRS list is not comprehensive. Call the IRS Customer Service for nonprofit organizations at 1.877.829.5500 and provide them with your organization’s name (and EIN if you have it). We have found that the best time to call the IRS is in the early morning.
You will need to complete the appropriate reinstatement package (with all corresponding forms) with the IRS. With our help, we can save you time and money by navigating the tricky process. In some cases, we are able to bypass the completion of the three missing consecutive tax returns.
In most cases, we are able to request that your organization is retroactively reinstated to the date of their original tax-exempt recognition, but the IRS will grant that request only if it determines that there was “reasonable cause” for the nonprofit to have missed the filing deadlines. Don’t worry, we include how to do this in our reinstatement package.
Reinstatement Package Request
1 (559) 354-8279