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IRS Automatic Revocation of Nonprofit Tax Exemption

Organizations that are required to file an IRS Form 990, 990-EZ or 990-PF or submit an annual electronic notice on Form 990-N are subject to automatic revocation if the exempt organization fails to file for three consecutive years.  The consequence of automatic revocation can be economically devastating for struggling non-profit organizations since the organization may be required to file a Form 1120 corporate income tax return or Form 1041 Estates & Trusts return and pay applicable taxes on income received.

 

Organizations previously eligible to file Form 990-EZ or Form 990-N for each of the three prior consecutive years that have lost their tax-exempt status may be eligible for retroactive reinstatement by filing for recognition of tax exemption on the required Form 1023 or Form 1024 and paying the appropriate user fee no later than 15 months of the date on the organization’s Revocation Letter (CP-102A) or the date the organization appeared on the Revocation List on the IRS Website, whichever is later.   This process is called the “Streamlined Retroactive Reinstatement Process”. 

 

The IRS will not impose a penalty for failure to file annual returns for the three consecutive taxable years that caused the revocation if the organization is successfully reinstated under the Streamlined Retroactive Reinstatement Process and files paper Forms 990-EZ for all 3 previous taxable years.  For organizations eligible to file Form 990-N, the organization is not required to file a prior year Form 990-N or Form 990-EZ to avoid penalties if reinstated.  

Organizations should contact a qualified attorney as soon as possible if they do not qualify for or need assistance complying with the requirements under the Streamlined Retroactive Reinstatement Process.  

Expanding Your Capacity

SP Consulting, A division of The Scott Practice, LLC provides technical, legal and consulting services all designed to help nonprofit organizations expand capacity and reach while remaining in compliance with federal regulatory requirements. This web ad provides information on our NPO compliance services.

Untold Stories

As you read our blog you will learn of the journey we have had in our pursuit to make the world healthier as we interact and/or discover people engaged in this effort.  We will periodically post on the work and accomplishments of various non-profit organizations.  These are the people whose tremendous work makes a difference in health outcomes.  We want you to know what they and SP Consulting are doing behind the scenes.  We hope that this blog will tell many untold stories. We, at SP Consulting are here to be a second voice in this collective journey for a healthier world.

We aim to help health and human service organizations in their mission to advance the health of people around the United States and beyond.  A healthier world is shaped by not only our physical and mental status, but the well-being of our families, communities and physical environments.  Thus, we at SP Consulting will work to expand the impact non-profit health and human service organizations have on populations served by providing services aimed to expand non-profit capacity.

Volunteer Benefits

Yesterday, I sat with a client and was reminded of the reason I am working to see the Senior Environmental Corps become a prototype for other regions.  The trend I see in working with the aging community is that as people age, isolation becomes a huge issue.  Seniors retire and either lose contacts with professional acquaintances or deaths take away their close friends, family members or significant others.  I am beginning a research project with a specific focus on the Pennsylvania Senior Environmental Corps to examine the benefits volunteering has on members of the aging community.  There are several research questions that I hope to review including using quantitative methods to measure the relationship between social connections and health.   I also hope to examine whether a volunteer program with persons who share a common interest and age demographic make one more likely to continue volunteering.  Finally, the PSEC main focus is outdoor water sampling, which requires participants to walk at least 30 minutes.  I did preliminary research in the past on whether volunteers of an older demographic are more physically active than others.   I hope to find answers and will update you here on my research.    – Debra Scott, Principal of SP Consulting

WELCOME TO OUR BLOG

Welcome to our first blog post. We hope you enjoy this journey as we report on the progress, impact and outcomes of non-profits around the United States and beyond who make this world a healthier place.  As a deep freeze spreads across the country, non-profit organizations are working around the clock to help homeless individuals have a place of warmth.  In Memphis, One Heart Ministries volunteers such as Lisa Martin are passing out sack lunches to the homeless at shelters set up during this extreme cold. One volunteer was homeless just three years ago, and is now giving back by volunteering her time.  We hope to tell many more of these untold stories of individuals who work without recognition to make our communities healthier.