Automatic revocation

Getting exempt status back

If an organization does not file its annual return or notice for three consecutive years, the IRS revokes its tax-exempt status automatically. It happens by operation of law on the due date of the third missed return — nobody at the IRS decides it, and there is no appeal.

What being revoked means in the meantime

• The organization is no longer exempt from federal income tax.
• It may have to file Form 1120 (corporations) or Form 1041 (trusts) and pay tax on its income.
• Contributions to it are no longer tax-deductible.
• Its name appears on the public Automatic Revocation of Exemption List.
• State-level exemptions and grant eligibility often follow federal status.

The four routes back

Which one applies depends on how long ago the revocation happened and what the organization was required to file. In outline:

Streamlined retroactive reinstatement

For organizations that were eligible to file Form 990-EZ or 990-N for each of the three missed years and have never had their exemption automatically revoked before, applying within 15 months of the later of the revocation letter or the date the IRS posted the revocation. Exemption is restored back to the revocation date. No prior-year return is needed for a year the organization could have filed Form 990-N; for a year it owed a 990-EZ, the IRS waives the late-filing penalty if that 990-EZ is filed on paper.

Retroactive reinstatement within 15 months

For organizations that do not qualify for the streamlined route. Needs a reasonable-cause statement for one of the three missed years, plus the missed returns.

Retroactive reinstatement after 15 months

The same, but reasonable cause has to be shown for all three years.

Reinstatement from the postmark date

The simplest, and the weakest: exemption starts again from the date the new application is filed, with no retroactive coverage for the gap.

Where filing here fits

Mostly, it doesn’t yet. The missed returns these routes involve go to the IRS on paper, marked “Retroactive Reinstatement” and mailed — not e-filed. So they are not something we can file for you, and our copy of a return is a record, not the IRS form, so it cannot be mailed in place of one. A year the organization could have filed Form 990-N needs no return at all under the streamlined route. And the part that actually restores exempt status, Form 1023 or 1024, we do not prepare either. For both, expect to work with an attorney or an accountant.

Where we fit is afterwards: once exemption is reinstated, the organization can be revoked again by another three missed years, counted from the year the IRS approves the reinstatement. Filing every year from then on is the part we do.

Check your own status first

Search the IRS Tax Exempt Organization Search before doing anything else. Revocation sometimes shows up for organizations that believed they were filing, and occasionally a listing is wrong — if the organization did file, the IRS can correct it without a new application.

This page is general information, not legal or tax advice. Reinstatement turns on dates and facts specific to the organization. The authority is the IRS’s automatic revocation pages and Rev. Proc. 2014-11.