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What to do if tax exempt status is revoked

revoked stampI received a question from Brenda in Michigan, and I think that the answer will be helpful to other readers, as well:

Question:

I filed my 2012 Form 990 late and the IRS revoked my status. They said my attorney put my start date as 2007. I filed for NPO status in 2010. So I fell into the 3 years. They said I have to start all over again (1023) for reinstatement. I filed for Michigan exemption only in 2007; not federal. Please advise.

Answer from Lisa Potter:

Thanks for your question.  Every nonprofit organization has an annual filing requirement (except churches), and if any organization fails to file one of the three types of 990 forms for three years in a row, their exempt status is automatically revoked.  Additionally, there are no extensions available for the Form 990-N, which is not widely known.  If you extend your return, you must file either the 990-EZ or the long Form 990.

Unfortunately, there is no way to magically undo this.  The only way to regain exempt status is to file Form 1023 again.  If the organization is still doing the same thing you should be able to basically copy your original Form 1023 onto the latest version of the form, and update it for the current information and programs.

Michigan has its own annual filing requirements, such as renewing a charitable solicitation license annually, and it must file an annual report.  I am not certain of your organization’s specific filing requirements in Michigan. However, it is possible your organization is not required to register.  I suggest you contact your legal counsel to find out if you need to re-file for exemption in Michigan.  It is possible your Michigan status has not changed if you have kept up with all the required state filings.

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