By: Sharon Brooks
Several of our clubs have had the misfortune of having their non-profit status revoked by the IRS for not filing their 990 tax returns for three years in a row. The question at that point is what to do now!! The following are some steps you must take to meet the IRS requirements for reinstatement to either the 501(c)(4) or (c)(3) tax exempt status.
1. Check the date your revocation was posted to the IRS website. To do this go to the Exempt Organizations Select Check page on the IRS website (irs.gov). Then choose the Automatic Revocation of Exemption Search. Enter your club’s EIN (IRS Tax ID #) and enter. It will show your information along with the Revocation Posting Date. Keep a record of this date.
2. Determine how many months it has been since your Revocation Posting Date.
3. Be sure that your club qualified to file either the 990N (online Postcard) or 990 EZ tax return. (990N 0-$49,999 gross revenue, 990 EZ $50,000 to $199,999 gross revenue.)
4. If your revocation posting date is less than 15 months from today’s date you may use the Streamlined method for reinstatement.
a. If this is the first time your club has been revoked, you may file either the 1023EZ or 1023 (990EZ filers) application form for clubs having had a 501(c)(3) status. For those having had a 501(c)(4) status you will file the 1024-A application form. (All clubs that were in the PI 0669 tax group when revoked will have had a 501(c)(4) status.)Complete the form in its entirety following the instructions and put “Revenue Procedure 2014-11 Streamlined Retroactive Reinstatement” at the top of the form.
b. Include the required fee – $275 for the 1023 EZ and $600 for the 1024-A or 1023 applications with an 8718 User Fee for Exempt Organization Determination Letter Request
c. Mail the completed forms and the fee to: Internal Revenue Service, P.O. Box 12192, Covington, KY 41012-0192.
d. To avoid the penalty for not filing you must also send in the proper 990 for the years you did not file. If you were just required to file a 990N (online postcard return) you do not have to send in anything. If you were required to file the 990EZ (Clubs with total revenue of $50,000 – $199,999), you must send in a completed 990 EZ for each of the years you failed to file. You will need to put “Retroactive Reinstatement” at the top of each form. They should be mailed to: Department of the Treasury, Internal Revenue Service, Ogden, Utah, 84201-0027.
This streamlined procedure is what most clubs will be able to use. For Clubs with $200,000 or higher gross revenue or ones that have gone past 15months there are additional steps that must be taken. To see those steps please go to the IRS website(irs.gov) and search for Automatic Revocation – How to Have Your Tax-Exempt Status Retroactively Reinstated. All the instructions above and those for the clubs with higher revenue may be found there. All the forms mentioned, and form instructions may also be found on that same website.
Becoming reinstated is a costly and time-consuming process but is doable and necessary to stay a tax-exempt organization. If your club does not become reinstated, it becomes a for-profit entity and will be subject to income tax on the years after revocation. The best advice is to never let your club get in this position. File your 990 tax return every year by the November 15th deadline. The government gives you leeway in that it is only after 3 consecutive years of non-filing that organizations are revoked. Please set up a process where your club makes sure the 990 is filed every year. It will save you money and effort!!!!