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Don’t Let Another Nonprofit Become Revoked

Posted by attorney Curtis Harrington

The IRS set up a system for automatic revocation of tax exempt organizations other than churches and church related organizations in 2011 and posted for the first time its “List of Automatically Revoked Organizations" on June 8, 2011.

The automatic revocation was due to a failure of an exempt organization to file an information return, (Form 990, 990 EZ, 990 PF or Form 990 N (e Postcard for organizations having less than $50,000 in annual receipts) for three consecutive years. The List of Automatically Revoked Organizations is found at

The List of Automatically Revoked Organizations gives the name (seen here partially in many cases where the name is overly long and the computer cannot pick it up entirely), employer identification number (EIN), organization type, last known address and effective date of revocation.

Organizations have been added to the list since June 8, 2011. If this is old news and publicly available information, why bring it up now? The annual information return is required to be filed by the 15th day of the 5th month after the nonprofits accounting year ends. The bulk of nonprofit organizations, especially the small ones have an accounting year ending on December 31, which means that its form 990 information return will be due on May 15, 2012 which is only a few days away.

Once the exemption is lost, there is no appeal process, and the only way to get it back is to re-apply to have its exempt status reinstated, even if the organization was such that it was not originally required to file an annual return based upon its size when it applied. The law has changed a lot since then.

One of the changes is the fee for requesting exemption. If the nonprofit’s budget will exceed $10,000 to start, the cost for the Federal Exemption Application will include an $850 processing fee and where the budget is less than $10,000, a $400 application fee will be required. There is a “user fee break" from the above figures for an application for a small (less than $50,000 budget) nonprofit which would normally file a post card 990-N annual return, of $100.

Most reinstatements relate back only to the date of re-application unless retroactive reinstatement is requested along with a letter explaining reasonable cause for the organization’s failure to file its annual 990 return. Loss of exemption means loss of deductibility for donors, AND opens the possibility that the nonprofit will be taxed as a for-profit corporation.

The IRS List of Automatically Revoked Organizations also has the following disclaimer:

“The federal tax exemption of each organization listed below was automatically revoked for its failure to file a Form 990 series return or notice for three consecutive years. The revocation date listed below for each organization is historical; it reflects an organization's effective date of automatic revocation for not filing a Form 990 series return or notice for three consecutive years, but not necessarily its current tax exempt or non exempt status. The organization may have applied to the IRS for recognition of exemption and been recognized by the IRS as tax exempt after its effective date of automatic revocation. Click on an organization's name to see more details on that organization. To check whether an organization is currently recognized by the IRS as tax exempt, call Customer Account Services at (877) 829 5500 (toll free number)."

Lets use my town, Long Beach, CA, as an example. A complete listing of organizations for Long Beach was generated by searching for the zip code “9080" which automatically included zip codes 90802, 90803, 90804, 90805, 90806, 90807, and 90808. A search for the zip code “9081" automatically includes Long Beach zip codes 90810, 90813, 90814, and 90815. This covers all of Long Beach (except for 90822 which appears to apply only to the VA Medical Center and has only two on the list). I found that a search of “Long Beach" and “CA" did not keep the results focussed only on Long Beach and was picking up many other nonprofit organizations from other cities.

The total number of historical nonprofits which appeared on the government’s List of Automatically Revoked Organizations numbered 688. Some of those listed by have re-obtained their nonprofit status by now. Other nonprofits will be added to the list over the next year, with a large majority volume coming as a result of having a calendar year accounting year, and missing the upcoming May 15, 2012 deadline.

If you want to check the List of Automatically Revoked Organizations, you can go straight to the search page at:

Or you can simply go to the IRS.GOV site and search for the “List of Automatically Revoked Organizations." You can click the middle button to set the search to the List of Automatically Revoked Organizations and use the two “9080" and “9081" zip codes to generate complete listings. Keep in mind that there may be other Long Beach based organizations which may have a P.O. Box address out of the area for the convenience of persons associated with the nonprofit. You can search your nonprofit by name as well. I found that when I used the city and state designations on the search page, that many results outside of my city showed up. I found that the zip codes were a lot more precise in rejecting extraneous (non-Long Beach) results.

Searchers may be surprised at the nonprofits which show up on the List of Automatically Revoked Organizations, both now and in future. When organizations undergo budget reduction, the first perceived “luxury" to go is tax compliance. The only problem is that tax compliance is a necessity, not a luxury.

I urge anyone associated with any nonprofit to re-urge the officers and management to insure that it has complied with the annual return requirements (as well as employment tax requirements) needed to keep the nonprofit healthy and in compliance. The cost of non-compliance will include upset donors both due to a lost deduction as well as the time and effort that will need to be spent to re-acquire the nonprofits exempt status which would otherwise be spent upon the exempt purpose for which the donations were given.

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Filed under: Employment Tax law Appeals