IRS Identifies Organizations That Have Lost Tax-Exempt Status and Provides Guidance on Attaining Reinstatement

June 10, 2011Alerts Nonprofit Organizations Practice Alert

On June 8, the Internal Revenue Service announced in a press release that approximately 275,000 organizations automatically lost their tax-exempt status because they failed to file legally required annual reports for three consecutive years.

The annual reports are required under the Pension Protection Act of 2006, which mandates that most tax-exempt organizations file an annual information return or notice with the IRS. The law automatically revokes the tax-exempt status of any organization that does not file the necessary returns or notices for three consecutive years.

While the IRS believes the majority of these organizations are defunct, it did announce special steps to help existing organizations apply for reinstatement of tax-exempt status. Full details are available in Notice 2011-43 , Notice 2011-44 and Revenue Procedure 2011-36.