August 19, 2010

Revocation of Exempt Status

The IRS has revoked the tax-exempt status of an organization based on its finding it was not operated exclusively for exempt purposes because it engaged in the illegal diversion of prizes and proceeds from raffle ticket sales for the personal use of its officers, employees, and/or other private individuals. Letter Ruling 201032048

Relief for Non-Filing Small Tax Exempt Organizations

Tax-exempt organizations that fail to satisfy annual filing requirements for three consecutive years automatically lose their tax-exempt status. The IRS is providing one-time relief that will allow small exempt organizations to come back into compliance and retain their tax-exempt status even though they failed to file for three consecutive years. If an organization loses its exemption, it will have to reapply to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.
This one-time relief benefits Form 990-N (e-Postcard) and Form 990-EZ filers only. Organizations required to file Form 990 or Form 990-PF are not eligible and are automatically revoked if they fail to file for three consecutive years. Click here.