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Business Tax

IRS Acknowledges it Prematurely Issued Auto-Revocation Notices to Exempt Orgs

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

The IRS has released a statement acknowledging that it prematurely issued auto-revocation notices to some tax-exempt organizations.

Background.

Form 990, Return of Organization Exempt From Income Tax, is an information return that tax-exempt organizations, nonexempt charitable trusts and Code Sec. 527 political organizations use to provide the IRS with information about their gross income, receipts and disbursements and other such information as the Code and regs require. (Form 990, Instructions)

Generally, an exempt organization’s Form 990 is due by the 15th of the fifth month after the end of its tax year. Therefore, for calendar year exempt organizations, the due date for Form 990 is usually May 15. However, due to the President’s emergency declaration on March 13, 2020, the IRS extended the Form 990 due date from May 15 to July 15, 2020. (Notice 2020-35, 2020-25 IRB; See COVID-19 deadline relief for employment taxes, employee benefit plans, etc. (05/29/2020)).

The IRS is required to revoke the tax-exempt status of any organization that fails to file a Form 990 for three consecutive years (“auto-revocation”). (Code Sec. 6033(j)(1)(A))

Information about auto-revocation.

In its statement, the IRS says that “due to systemic limitations” it was “unable to update the [Form 990] deadline in the program that automatically issues auto-revocation notices. This caused some auto-revocation notices to be issued prematurely.”

The IRS goes on to say that it is processing paper filings, which will allow it to reverse an auto-revocation for any organization that has complied with its filing requirement.

The IRS states that it is corresponding with organizations that received a premature auto-revocation notice and has set up a dedicated fax number (855) 247-6123 to receive correspondence from organizations that want to protest a premature auto-revocation and present proof of their Form 990 filings.

To continue your research on retroactive reinstatement of tax-exempt status after auto-revocation, see FTC 2d/FIN ¶ S-2802.1D.

 

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