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Tax-Exempt Organization Automatic Revocation of Exemption

All tax-exempt organizations regardless of size are required to file an annual information return, generally referred to as the “Form 990,” with the IRS each year. Tax-exempt organizations that fail to file a Form 990 for three consecutive years automatically have their tax-exempt status revoked by the IRS. Recently, the IRS announced that 275,000 tax-exempt organizations in the United States have had their tax-exempt status revoked for failure to file their Form 990’s.



To assist organizations that have had their tax-exempt status revoked, the IRS issued Notice 2011-43, Notice 2011-44 and Rev. Proc. 2011-36. Notice 2011-43 offers some relief to small tax-exempt organizations with average annual gross receipts of $50,000 or less by allowing such organizations to reinstate their tax-exempt status at a reduced cost. Notice 2011-44 provides guidance to larger tax-exempt organizations that have had their tax-exempt status revoked by describing the process that must be followed in order to have their tax-exempt status reinstated.

Income earned by organizations that have had their tax-exempt status revoked will be taxable income and donations to such organizations will not be tax deductible by the donor. If your organization is on the list and the organization is still active, it will need to seek reinstatement of its tax-exempt status as soon as possible.

If you have any questions regarding this Alert, or need assistance with reinstatement of an organization’s tax-exempt status, please contact a member of Greenebaum's Tax and Finance Practice Group.


Even though the content of the above Greenebaum Doll & McDonald e-bulletin is primarily informative, state and federal law obligates us to inform you that THIS IS AN ADVERTISEMENT. You have received this advisory because you are a client or friend of the firm.

About Greenebaum Doll & McDonald PLLC
Greenebaum Doll & McDonald PLLC is a widely-respected business law firm with approximately 150 professionals in five offices, serving local, national and international clients in virtually every industry.

Copyright 2011 Greenebaum Doll & McDonald PLLC.  All Rights Reserved.

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