On June 8, 2011, the Internal Revenue Service (IRS) announced the revocation of nearly 275,000 nonprofit organizations’ tax exemption.  Of those, approximately 1,300 are in the Greater Cincinnati area.  These organizations did not meet the legal requirements to file annual tax forms for three consecutive years and consequently lost their tax-exempt status. 

Congress passed the Pension Protection Act in 2006, which required most tax-exempt organizations to file annual information returns (Form 990, 990-N, 990-EZ or 990-PF).  The law automatically revokes the tax-exempt status of any organization that does not file required returns or notices for three consecutive years. 

What does this mean for the nonprofit organization?  They must file a federal tax return and pay federal income taxes. Also, those that previously could accept tax-deductible contributions are no longer eligible to do so. (They can still accept donations but the donations will not be deductible for the donor.)  The revocation will appear on Guidestar on the search results page and at the top of the organization’s details page in bold red print. 

The IRS has published the list of organizations whose tax-exempt status has been revoked on their website at www.IRS.gov.  The list includes each organization’s name, Employer Identification Number (EIN), last known address, the effective date of the automatic revocation and the date it was posted to the list. The IRS will update the list monthly to include additional organizations that lose their tax-exempt status.

The IRS has issued guidance on how organizations can apply for reinstatement, which includes completing an application for exemption (Form 1023) and paying the appropriate user fee (typically $400 or $850). 

For more information or assistance on applying for reinstatement or any other concerns related to these revocations, contact your Barnes Dennig representative at (513) 241-8313.