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Good day ladies and gentlemen and welcome to the Internal Revenue Service Did You Lose Your Tax Exempt Status webinar. I'll now turn the floor to Tracy. Hello, welcome to this presentation. We have a few announcements before we get started. The information contained in this presentation is current as of the day it was presented and should be considered official guidance. No identification with actual persons living or deceased, places, buildings, products is intended or should be inferred. This program is being recorded and will be maintained under federal record-keeping laws. Let's get started. Thanks, Tracy.

This presentation focuses on three primary areas. How and why an organization may have its tax exempt status automatically revoked. What to do to get the organization's tax exempt status reinstated after having been automatically revoked and provide tips on how to stay exempt after reinstatement to ensure your organization maintains tax exempt status. Throughout this presentation, we'll identify some helpful resources. You'll find an appendix listing these resources at the end of the session. You're probably viewing this presentation because your organization has received an IRS letter saying your tax exempt status has been automatically revoked, that, according to IRS records, means your organization didn't file a required annual return or notice for three consecutive years. With limited exceptions, all tax exempt entities must file a return or a notice every year, regardless of income. This includes organizations that don't need to apply for tax exempt status, otherwise known as self-declarers.

We'll review the filing requirements that apply to various types of organizations in an upcoming slide. Remember, current tax law requires every organization that's tax exempt to file an annual return or notice. This slide contains the filing requirements. Prior to 2011, tax exempt organizations with less than $25,000 in gross receipts were required to file a form 990 return each year. This change in 2006, when Congress amended internal revenue code section 6033, which expanded the return filing requirement for most tax-exempt organizations.

There are limited exceptions to the filing requirement. Generally, an organization must have a ruling by the service that they aren't required to file a return. This slide shows the filing requirements for most exempt organizations. Exempt organization returns are processed by the service center located in Ogden Utah. Rather than a normal return, some tax exempt entities whose annual income falls below a certain threshold are required to annually file a form 990N, electronic notice for tax-exempt organizations not required to file form 990 or form 990EZ. Also known as the epost card. The epost card notice must be completed and filed electronically. There's no paper form. First-time filers must register through the IRS's website using the link provides on the charities and non-profits page. You can't file the epost card until after your tax year ends. The three-year period is calculated systematically, using the employer identification number establishment date. However, the effective date of exemption is the beginning of the first three-year period. The only information we have about the formation date of a self-declaring organization is the date it obtained its employer identification number. Organizations that apply for exemption tell if there's specific formation date. Subordinate organizations whose tax exempt status is covered under a group ruling are required to file their own annual return, unless the parent organization has consented to file a group return. The requirement to file an annual return or notice starts when the organization is created. This slide shows the formation date for various legal entity forms. Some common misconceptions regarding when the filing requirement begins include when the organization gets its determination letter, when the organization finishes its start-up activities and begins its specific programs, or when the organization gets money. None of these start the filing requirements. To reiterate, the filing requirement and the three-year consecutive period begin when the organization is legally formed. In other words, the date of formation. A partial year counts as a full year. This has caused some organizations to be automatically revoked, especially if the first year is short. Even if the first year is only a couple weeks, such as in the case of a calendar year organization that forms in November or December, it still counts as the first tax year. Another note about group rulings, if a parent organization is automatically revoked, the sub order -- subordinates will no longer be covered. number one on this slide. An organization was formed in June of 2012 with a fiscal year-end of December. The organization's first required return will be for a partial year.

From June 15th, 2012 to December 31, 2012. Automatic revocation happens if three years of returns were missed, however... don't treat the three consecutive year automatic revocation appeared as a requirement to file a return or notice every three years. The filing requirement is annual. Missing that annual return, filing due date for three consecutive years results in automatic revocation. Automatic revocations cannot be appealed. Even if the organization had a great reason for missing the due date for the third year, missing that deadline triggers the operation of the automatic revocation provisions. The IRS doesn't have the discretion to excuse a late filing in the third year. We've been talking about the requirement to file a return or notice each year and the consequence of failing to file for three consecutive years. We've also talked about how that three-year period is measured. Now we're going to talk about what the organization should do if it failed to file for three consecutive years and finds itself automatically revoked. We mentioned that some organizations do not have to apply for exemptions. We call these organizations self-declarers. After 2007, self declarers that are automatically revoked because they didn't file a required annual return for notice for three consecutive years must apply for reinstatement. That is, they can no longer self declare. This rule is in internal revenue code section 6033J2. Our next slide will outline the four different ways to handle reinstatement. Before we get to that, let's review some points you need to be familiar with. So the processes we discuss will be easier to follow.

The first point deals with dates. An automatic revocation is effective on the original filing due date of the third missed annual return or notice. That date will be provided in the letter we send, ZPE120A, informing the organization that it lost its exempt status for failing to file the required return or notices. Notice ZPE120A will have a date on it that indicates when we sent the letter. That date is the revocation letter date. The third date is when we posted the automatic revocation on the auto revocation list database, maintained on IRS.gov.

We'll talk more about these dates on the next slide. The second point deals with the effective date of reinstatement. When an automatically revoked organization seeks reinstatement of exemption, reinstatement will be effective as of the date of revocation or the post-marked date of application for reinstatement. An organization will almost always want reinstatement to be effective, retroactive to the date of the automatic revocation. Except for the fact the organization will be listed on the auto revocation list, retroactive reinstatement treats the organization as if it never lost exemption. Retroactive reinstatement isn't an option, then we'll talk about when that will be the case, reinstatement will be effective as of the postmarked date on the application. In that case, the organization will be treated as not exempt for the period between the effective date of revocation and the post-marked date of application. This slide outlines revenue pressure 2014-11. The revenue procedure describes the requirements for reinstatement as well as the effective date, depending upon various factors. Section four of the revenue procedure describes the streamlined retroactive reinstatement that is available, if the organization was eligible to file form 990EZ or form 990N for each of the consecutive years it failed to file. Only small organizations are going to qualify. Also, it has not previously had its tax exempt status automatically revoked. Finally, it must apply within 15 months after the later of the date of the revocation letter or the date on which the IRS posted the organization's name on the revocation list. This process is streamlined compared to other procedures for seeking reinstatement, because we don't provide the organization to provide good cause for failure to file missing returns or notices. We don't require the organization to file missing returns for years when it would have needed to file form 990EZ rather than form 990N notice and we don't impose a penalty for failure to file.

Notice the dates we mentioned, the organization that qualifies to use this process for reinstatement must file its application for reinstatement within 15 minutes of two specific dates. The date of revocation letter, the date in the upper right-hand corner of notice CP120A or the date the automatic revocation is posted on the auto revocation list. Whichever is later.

Note the 15-month period isn't measured relative to the effective date of revocation. The procedure described in section 5 applies to an organization that wasn't eligible to file either form. The organization must provide good cause for its failure to file, for at least one of the years it failed to file. It must file any missing form 990 or 990EZ returns. It must file its application for reinstatement within 15 months from the later of the date of the revocation later or the revocation list posting date. An organization that can use the procedure in section 5 gets reinstatement as of the revocation date. The procedure in section 6 is similar to the procedure in section 5. Except... the section 6 procedure is available for organizations that missed the 15-months filing deadline that applies to sections four and five.

The section 6 procedure requires the organization provide reasonable cause for its failure to file in each of the three years. The procedures in section 6 can be used by an organization that could have filed form 990N or 990EZ, but missed the 15-month filing deadline.

If the organization could have filed form 990N, it doesn't have to file the missing returns, although it must explain why the organization failed to file any form 990N notices. An organization that can use the procedure in section 6 gets reinstatement as of the revocation date. Then the organization may apply under section 7 for reinstatement effective the postmarked date of the application. Generally, if an organization can qualify for retroactive exemption, they'll want to do that, instead of applying for reinstatement effective the postmarked date. We have discussed only the basic procedures in revenue procedure 2014-11. An organization filing for reinstatement should review the revenue procedures carefully. This slide shows the forms that may be used to apply for reinstatement of tax exempt status. Only those organizations formerly exempt under section 501C3 may be eligible to file a form 1023EZ. Before you submit and file form 1023EZ, you need to use the eligibility check sheet. If you file a 1023EZ, but weren't eligible to use that form, we'll treat you as not filing any application. And a 15-month period will continue to run. You must submit a fully-completed application, including the appropriate user fee payment. Copies of your organizing document and all supplemental information as required by the form must also be submitted. The application is treated as a new application, it isn't a registration form.

We talked about the requirements to file a return or notice, how automatic revocation works and how to seek reinstatement of exemption. Now... let's talk about staying exempt. An organization that seeks reinstatement of exemption must demonstrate a qualify for exemption, like any new organization. The fact we have previously removed the organization to qualify for exemption doesn't matter. Having received a new exemption remember, the organization must comply with the rules that apply to it, just the same as any other exempt organization of its kind. To avoid automatic revocation or a second automatic revocation for those organizations that got reinstatement of exemption, you need to know whether you have any filing requirement. If you have a filing requirement of some kind, know whether the form 990N will satisfy your filing requirement. Not satisfying your filing requirement, know which return you need to file. Filing the wrong form is like filing no form at all. Make sure you file the appropriate return or notice on or before the due date, including in the extensions. Make sure you have proof of filing, such as certified mail receipt or proof of electronic filing.

Let's talk about annual return due dates for exemption organizations. Exempt organization returns are due by the fifth month, 15th day after the ending day of its tax year. The slide shows some examples of common due dates. If a due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. A six-month automatic extension of the return due date may be requested by filing form 8868, application for extension of time to file an exempt organization return. The extension is available for forms 990EZ, 990, and 990PF, but not 990N. An organization will only be allowed an extension of six months for a return for a tax year. If you apply for tax exempt status more than three years after your formation date and in some circumstances, you may be automatically revoked manually. Your application will be treated as a request for reinstatement of your tax exempt status.

Erroneous revocation may occur. If you believe the organization has been revoked in error, you could either, you think documentation you file at least one during the three-year period or have a letter from the IRS stating you're not required to file, call customer account services at the number shown on the slide. Or send the documentation directly to the exempt organization account unit in Ogden. If you file at least one during the three-year period. If you have a letter stating you aren't required to file, send the documentation to the exempt organization's determination unit in Cincinnati. This slide provides information about the IRS search tool on the IRS website. This is known as the tax exempt organization search which can be found on the charities and non-profit webpage on IRS.gov. When researching automatic revocation information with a tax exemption organization search tool, select the auto revocation list database for your search. Then... you can search by either employer identification number or organization name. The resources on this slide can assist you.

Click on the links to visit these sites. On behalf of everyone in IRS exempt organizations, thank you for attending this presentation.

Charities & Non-Profits Stay exempt Annual Filing & Reporting TEOS