501(c)(3) Revocation FAQ

The new tax-exempt status is granted as of the day the old tax exemption was revoked so that there is no lapse in tax exemption.

We recommend they seek retroactive reinstatement to ensure they do not have a past tax liability.

If you have earned income and do not get retroactive reinstatement, then they are considered taxable during the lapse. Contributions received during the lapse are also not tax-deductible for your donors.

Per the IRS, a Nonprofit organization must apply to have its tax-exempt status reinstated.

Steps to getting reinstated:

  • Apply for recognition of tax exemption by filing Form 1023 or Form 1023-EZ, as applicable.
  • Complete updated tax returns to submit with the 1023 application.
  • Pay the appropriate user fee for the IRS 1023 application through pay.gov.

Helpful tip!

To avoid late filing penalties, you should file completed tax forms 990-EZ for all missed years

  • Your nonprofit is no longer considered charitable.
  • Donations to your nonprofit are no longer tax-deductible to the donor.
  • You may lose donors.
  • Your nonprofit will now be taxed and treated as a for-profit company.
  • May risk penalties and unnecessary fees to be reinstated.

Yes. The Automatic Revocation List is an IRS official record of organizations whose tax-exempt status has been automatically revoked for failing to file a required return or notice for three consecutive years. For organizations that applied for and received reinstatement, the list gives the date of reinstatement.

Just as individual taxpayers and for-profit corporations must file annual tax returns, so must nonprofits. To prevent being revoked, you must file your annual tax returns or 990s.

Yes, there is a streamlined retroactive option for nonprofits less than 15 months old. To be eligible for the streamlined reinstatement process, you must meet the following criteria.

  • It is your first automatic revocation.
  • Your nonprofit is less than 15 months old.
  • Your annual operating income is less than 50k annually.
  • Include with the application a statement establishing that the organization had reasonable cause for its failure to file a required annual return for at least one of the three consecutive years in which it failed to file.