Automatic Revocation of Exemption for Failure to File Information Return
Frequently Asked Questions
Congress enacted the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780, § 1223 (2006), adding section 6033(j) to the IRC. Section 6033(j) provides for the automatic revocation of tax-exempt status of any organization that fails to file a required annual information return for three consecutive years.
The law also requires the IRS to generate, publish, and maintain a list called the Auto-Revocation List of organizations that are revoked for non-compliance.
Tax-exempt organizations are required to e-file an annual return. This annual reporting is filed by using the IRS Form 990. The type of Form 990 to be filed largely depends on assets and gross receipts of the organization.
Failure to file for three consecutive years will result in the revocation of the said organization’s tax-exempt status.
The Tax Payers First Act enacted on July 1, 2019, now requires the IRS to send out a notification after two years, before proceeding on revocation on year three.
Automatic revocation of tax-exempt status
1What organizations are subject to automatic revocation?
Not all nonprofits are required to file annual returns as a result are not subject to automatic revocation. Generally, the following do not have to file a Form 990:
- Most faith-based organizations, religious schools, missionary organizations
- Subsidiaries of other nonprofit organizations (those that may be
- covered under a group return filed by the parent organization)
- Several governmental corporations
- State institutions that provide essential services
If you are unsure, please contact on or our experts who can determine if your organization needs to file a return.
2How would my organization know that its tax-exempt status has been revoked?
The IRS will send your organization a first notice after two years of not filing and a third indicating that your tax-exempt status has been revoked. The IRS send this notice to the last known address. If you did not receive this notice, contact us and we can verity your tax-exempt status or you can do so directly by visiting the IRS website. If you choose the latter, note that information listed there is historical. In other words, it reflects an organization’s effective date of automatic revocation, but not necessary its current tax-exempt status.
3On what date is automatic revocation effective?
The effective date of automatic revocation is the due date of the third consecutive year of failure to file. The due date for a return is the 15th day of the 5th months after the end of the organization’s taxable year. For organizations that use the calendar year, the due date is May 15th.
Note that if the 15th falls on a weekend or legal holiday, the actual effective date is the next business day. In other words, if the due date falls on a weekend or legal holiday, the effective date of revocation is the next business day.
4Does the IRS publish a list of organizations ‘at risk’ of losing their tax-exempt status?
No. Your organization will only be listed when it actually fails to file for three consecutive years. The names will only be published on the Auto-Revocation List, which is updated monthly on the IRS website.
Names of section 501(c)(3) organizations revoked pursuant to an audit can be found on the Internal Revenue Bulletin.
Consequences of Automatic Revocation
1How does automatic revocation of the tax-exempt status affect your organization?
Losing your tax-exempt status has a number of effects on your nonprofit, principal amongst which is the fact that your organization will be liable to pay federal income taxes on annual revenue. Your donors will not be eligible to receive a tax deduction for their donations to your organization if the donations were made after the effective date of automatic revocation. In addition, private foundations are unlikely to make grants to your organization. This will most likely spell the end of your nonprofit.
2What steps must my organization take to have its tax-exempt status reinstated?
Your organization may be required to file one of the following federal income tax returns and pay application income taxes:
- Form 1120 or U.S. Corporate Income Tax Return, due by the 15th ay of the 3rd months after the end of an organization’s tax year, or,
- Form 1041 or U.S. Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of an organization’s tax year.
3How long does it take to have your 501(c)(3) status reinstated?
Pursuant to Revenue Procedure 2014-11, which sets forth new procedures for reinstating the tax-exemption after automatic revocation, your organization must apply for retroactive reinstatement (back to the date of automatic revocation, so that in effect, there is no revocation) to the IRS within 15 months.
4How does automatic revocation affect a tax-exempt organization in the states in which its operations?
States have state specific laws how organizations that find themselves on the Automatic Revocation List are subject to. In most states, the loss of tax-exempt status may also result in the loss of various state tax exemptions, including income, sales, and property taxes.
5How does automatic revocation affect donor’s contributions?
A 501(c)(3) organization whose tax-exempt status has been automatically revoked is not eligible to receive tax-deductible contributions. As such donor’s contributions will no longer be eligible for tax deductions.
However, contributions may be deducted by donors unaware of a change in an organization’s status until the IRS publishes its Automatic Revocation List. Tax deductible contributions may be made again once the tax-exempt status has been reinstated.
Prospective donors, especially large donors, grantors, etc. are advised to check the IRS database to ascertain an organizations tax-exempt status before making any contribution.
6Is my organization liable to pay excise, income or other taxes the IRS assessed before it appeared on the Auto-Revocation List?
Yes, your organization is liable for all applicable taxes and penalties that it may owe at the time its tax-exempt status was automatically revoked. Note that your nonprofit is also liable to pay any future tax liabilities that accrue as a result of your organization’s loss of its tax-exemption.
7Will the IRS assess late filing penalties for the three years my organization failed to file its Form 990?
The IRS does not impose late filing penalties on organizations that find themselves on the Automatic Revocation List for the three consecutive years they fail to file, or for any prior years.
In addition, your organization may not file any information return that was past due at the time of automatic revocation. However, your organization will incur future penalties if it fails to comply with all filing requirements after automatic revocation.
Pursuant to Notice 2011-44, under sections 6033(j)(2) and (3) of the IRC, larger organizations that have had their tax-exempt status automatically revoked under section 6033(j)(1) of the code, in seeking retroactive reinstatement, must submit their applications along with delinquent annual information returns beginning with the three-year period for which they were automatically revoked.
Group Exemption Subordinates
1Can a subordinate in a non-church group ruling, that was automatically revoked for failing to file for three consecutive years get its tax-exempt status reinstated by having the group ruling holder add it back onto their group exemption roster filed with the IRS?
No. Regardless whether or not a subordinate of a non-church group was originally was required to apply for exemption, the only way to have its tax-exempt status reinstated is to apply for exemption.
2Does a subordinate of a non-church group that was automatically revoked and subsequently received reinstatement after filing to be granted a tax-exempt status need to be added back into the group exemption by the group ruling holder?
No. Once you apply and receive a tax-exempt status, you do not need to be put back into the group exemption ruling because your organization now has its own individual tax exemption.
Organizations That Are Erroneously Listed as Revoked
1Can an erroneous revocation be corrected or undone by the IRS?
Yes. If your organization possesses documentation (an IRS receipt for a filed return), that shows that it has not failed to file its Form 990-series for three consecutive years, the IRS will remove its name from the Auto-Revocation List.
If your organization possesses a ruling or determination letter from the IRS stating that it does not have an annual filing requirement, send a copy of the ruling or determination letter, along with a written request to be removed from the Auto-Revocation List.
2Can my organization appeal its automatic revocation?
No. The law does not provide appeals for automatic revocations. Automatic revocation is an operation of law and not a determination made by the IRS. To have your tax-exempt status reinstated, your organization must apply for tax exemption. Your organization may also request retroactive reinstatement as part of the its application.
Federal and State Credit Unions Exemption from Automatic Revocation
1Are credit unions that are tax-exempt, exempt from automatic revocation?
Two types of credit unions are tax-exempt under section 501(a):
- Federal Credit Unions (Exempt under Section 501(c)(1): Federal credit unions that are under the supervision of the National Credit Union Association (NCUA) are not required to file.
- State Credit Unions (Exempt under section 501(c)(14)(A)): State credit unions chartered under state credit union laws and operate without profit for the mutual benefit of their members are required to file an annual information return.
Note that whether required to file or not it is not uncommon for federal as well as state credit unions to appear on the Auto-Revocation List. When this happens, contact the IRS immediately and provide documentation to be removed from the list.
Regaining Your Tax-Exempt Status
1How do I get my organization’s tax-exempt status reinstated?
First your organization must apply for tax exemption by filing Form 1023 or Form 1024, regardless of whether the organization was originally required to apply for exemption and pay all applicable fees.
You have the option to request retroactive reinstatement as part of your application.
2Do I need a new employer identification number (EIN) to apply for reinstatement of tax-exempt status?
No. You must use the EIN previously assigned to your organization.
3Can my organization expedite the application for reinstatement of tax-exempt status?
Generally, applications are processed in the order received by the IRS. However, if your organization has compelling reasons that could include:
- A pending grant, where failure to secure the grant will have an adverse impact on your organization’s survival.
- A newly created organization providing disaster relief to victims of emergencies.
Make sure that you write “Automatically Revoked” at the top of your application and on the mailing envelope to ensure that the application goes to the right specialist. This request must be made in writing. Note that granting expedited processing is at the sole discretion of the IRS, so make sure you explain fully the compelling reason why.
You may use Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the IRC.
If you are using Form 1023, you should not complete Schedule E, Organizations Not Filing Form Within 27 Months of Formation. If your organization receives reinstatement of its tax-exempt status after automatic revocation, it will have an effective date of reinstatement exemption as of the date the exemption application was filed unless your organization applied for and received retroactive reinstatement.
4Am I required to start filing annual returns before the IRS reinstates my tax-exempt status?
Only organization with gross receipts of $50,000 or less who would otherwise file Form 990-N are not required to file an annual return while their application for reinstatement of tax-exempt status approval is pending.Certain larger organizations seeking retroactive reinstatement must file all delinquent returns along with their application for reinstatement.
5What is the effective date once my organization’s tax-exempt status is reinstated?
The effective date once your application for reinstatement is successful will be the date your organization filed its application.
6Can I request that my organization’s tax-exempt status be reinstated back to the date of automatic revocation?
Yes. To have request to have its tax-exempt status reinstated back to the date of automatic revocation, you must attach a letter to your application for reinstatement of exemption explaining why your organization failed to file for three consecutive years. You requested may be granted if the IRS determines that your organization had reasonable cause for not filing your annual returns.
7What does the IRS consider as ‘reasonable cause’ for failure to file an annual return?
Reasonable cause must explain what prevented the organization from complying with the law, including:
- what prevented the organization from requesting an extension of time to file its return, if the organization did not request such an extension;
- what prevented the organization from requesting an extension of time to file its return, if the organization did not request such an extension;
8Will my organization remain on the Auto-Revocation List once our tax-exempt status has been reinstated?
Unfortunately, yes. The Automatic Revocation List is an IRS official record and it is accessible to all stakeholders.
9Since organizations that have had their tax-exempt status revoked remain on the Auto-Revocation List, how can I confirm an organization’s tax-exempt status has been reinstated?
There are three ways to determine if an organization’s tax-exempt status has been reinstated:
- You may call the IRS customer service line at (877) 829-5500
- The determination letter from the IRS granting reinstatement of tax-exempt status will show and effective exemption date that is the same as or later than the effective date of revocation as shown on the list
- You can also verify the organization’s tax-exempt status on the IRS website on the Tax-Exempt Organization Search (formerly Select Check). Click Here for Tax-Exempt Status Verification
10I received a delinquency or penalty notice for the period that my organization was no longer exempt. Now that the IRS has reinstated my organization’s tax-exempt status, how can I request a refund or abatement of penalties on income tax for that period?