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501(c)(3) Reinstatement

Get Help with Your 501(c)(3) Reinstatement

Facing the Automatic Revocation of a 501(c)(3) Status

Has the IRS revoked your tax-exempt status? We know this can be a stressful situation, but do not worry; we can help you through it. At BryteBridge Nonprofit Solutions, we have helped thousands of Nonprofits get 501(c)(3) reinstatement, and over 30,000 receive their 501(c)(3) tax exemption status.

About half a million tax-exempt entities have had their 501(c)(3) statuses revoked based on failure to file their IRS Form 990 for three consecutive years. The procedure on how to reinstate tax-exempt status is different based on the organization’s unique circumstances, including what states they are in.

Understanding 501(c)(3) Reinstatement and Automatic Revocation

If a 501(c)(3) organization has not filed its annual tax returns for three consecutive years, they risk losing their tax-exempt status with the IRS. In some cases, the IRS will automatically revoke the status for non-compliance, which is often referred to as auto-revocation. If the organization wishes to be reinstated with the IRS as 501(c)(3) tax-exempt, it must file an updated application for exemption and pay the appropriate fees.

Reinstatement of 501(c)(3) Status

For your organization to be reinstated as tax-exempt, it must reapply for 501(c)(3) status with a new Form 1023, pay the filing fee, and backfile all missing tax returns since the tax-exempt status was revoked. There are four ways to reinstate a revoked organization’s 501(c)(3) tax-exempt status. While it may appear there are multiple options, the choice is dictated mainly by certain factors. Namely, how long ago the organization’s tax-exempt status was revoked, the type of organization, and the organization’s revenue.

There are four ways to be reinstated:

  1. Streamlined Retroactive Reinstatement –  The other primary requirement for Streamlined Retroactive Reinstatement is that revocation must be no longer than 15-months old. To qualify for Streamlined Retroactive Reinstatement, an organization must be eligible to file 990-N or 990-EZ tax returns for the three missing years and have less than $200,000 annually.
  2. Retroactive Reinstatement (within 15 months of revocation) – Retroactive Reinstatement (within 15 months) is similar to the Streamlined Retroactive Reinstatement. The critical requirement for Retroactive Reinstatement is annual revenue greater than $200,000
  3. Retroactive Reinstatement (over 15 months past revocation) – The options become very limited when an organization waits longer than 15 months after revocation to file for reinstatement. Retroactive Reinstatement (after 15 months) is available to all organizations, regardless of income level. All organizations must file either the complete form 1023 for charitable organizations or form 1024/1024-A for advocacy-based organizations.
  4. Post-mark Date Reinstatement – The final option for reinstatement of tax-exempt status is Post-Mark Date Reinstatement. Unlike the first three options, there are very few requirements as this option is available to all organizations. However, the key to this option is when reinstatement becomes effective. Whereas the retroactive options return tax-exempt status to the original date, Post-Mark Date Reinstatement issues reinstatement to the date the application is sent to the IRS. 

If the IRS determines the organization has fulfilled all compliance requirements to once again meet the tax-exempt status, they will issue a new 501(c)(3) determination letter. Your donors and others may rely upon the new IRS determination letter as of its stated effectiveness. 

How can BryteBridge Nonprofit Solutions help toward your 501(c)(3) reinstatement?

One of our dedicated nonprofit specialists will assess your organization’s tax-exemption revocation impacts at a state and federal level. Together we will:

  • Review and discuss your current situation.
  • Provide expert advice and a plan of action to reinstate tax-exempt status.
  • Prepare your 501(c)(3) reinstatement documents.
  • Prepare any IRS Form 990 not completed in the past and file them by mail.
  • Prepare all state documents to ensure compliance with your state(s).
  • Present your case to the IRS and answer any questions on your behalf.
  • Address any remaining compliance concerns.

501(c)(3) Reinstatement Education Center

What is the Automatic Revocation list?

The IRS automatic revocation list is an IRS official record of organizations whose tax-exempt status has been automatically revoked after they failed to file a required return or notice for three consecutive years. If your organization lost tax-exempt status, it will be placed on the automatic revocation list. For organizations that applied for, and received, reinstatement, the list gives the date of reinstatement.

Nonprofit documents being passed from one person’s hand to another

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Frequently Asked Questions

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.

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