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Getting your nonprofit status revoked by the IRS can feel like a bad breakup. You thought everything was going smoothly, then suddenly—REVOCATED! But just like a breakup, it doesn’t have to be the end. Here’s how to avoid being “that nonprofit” and fix things if it happens. What does revocation even mean?
Revocation occurs when the IRS removes your nonprofit’s tax-exempt status. Without this status, your organization loses valuable tax exemptions and other benefits. Common reasons for revocation include:
- Failure to File Form 990: Not filing Form 990 (or a variation) for three consecutive years results in automatic revocation of tax-exempt status.
- Failure to Comply with Disclosure Requirements: Nonprofits must make key documents (like Form 990) available to the public. Failure to do so can lead to revocation.
- Engaging in Unrelated Business Activities: Generating significant income from activities unrelated to the nonprofit’s mission may result in revocation.
- Failure to Operate Exclusively for Exempt Purposes: Nonprofits must operate for charitable purposes only. Any diversion to non-charitable purposes (like private gain) risks revocation.
- Not Keeping Accurate Records: Inadequate record keeping and financial transparency can trigger revocation.
- Failure to Respond to IRS Notices: Not responding to IRS inquiries regarding your nonprofit’s status may lead to revocation.
How to Fix a Revoked Status
If your nonprofit is revoked, don’t panic. Here’s what to do:
- Check Your Status: confirm your exempt status is revoked by the IRS.
- File for Reinstatement: Submit Form 1023 or 1023-EZ to apply for reinstatement.
- File Form 990: Going forward, ensure your organization files the appropriate Form 990 on time.
- Documentation: Ensure proper documentation and record-keeping going forward.
How to Prevent Revocation
- Stay on Top of Filings: Make sure your Form 990 is filed annually to maintain tax-exempt status.
- Keep Your Info Updated: Ensure the IRS has your current contact details and maintain proper documentation.
Tax990 Can be the solution you have been looking for:
- Tax990 offers the entire suite of 990 forms
- Streamline your filing with an easy user-friendly application
- Provides reminders when your deadline approaches
- Provides you with real-time updates on your forms and status
- Has a live support team and chat option to help you through the tough stuff
In Conclusion
No one wants to be “that nonprofit” that got revoked, but if it happens, it’s fixable. By staying on top of filing deadlines and ensuring all your records are in order, you can repair your relationship with the IRS. Let Tax990 help keep your nonprofit compliant and your relationship with the IRS intact.
Create a free account today at Tax990.com
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