IRS – 275,000 Revoked Nonprofits and Guidelines to Reinstatement

The IRS announced that approximately 275,000 nonprofits nationwide had their tax exempt status revoked because they failed to file their 990 form for three consecutive years.  In North Carolina there are about 6, 300 nonprofits with their tax exempt status now revoked.  

Many of these organizations are likely defunct or have revenue of less than $50,000.  None filed their IRS 990 tax form for three consecutive yearsas required by law beginning in 2007.   

For nonprofits who are operating and did not file as required, the IRS issued guidelines on how to seek  reinstatement of their tax exempt status.  Nonprofits must file before December 31, 2012 to establish “reasonable cause for its filing failures” to eligible for reinstatement of their tax exempt status.

The IRS will post an ongoing list of revoked nonprofits that do not file their 990 forms for three consecutive years.  Nonprofits on the IRS revocation list are no longer eligible to receive tax-deductible contributions with donations creating potential taxable income to the nonprofit.  Donors giving to nonprofits on the IRS list may not receive a charitable contribution deduction and may not rely upon the determination letter to substantiate their donation.

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About Marty Martin, JD MPA

Marty Martin, JD MPA, Martin Law Firm, Raleigh, North Carolina, provides legal, tax, and training services related to nonprofit, tax-exempt, and social enterprise organizations serving local, regional, state, national, and international constituencies. He works with them throughout their lifecycle including start up, operations and management, board governance, merger, and closing down. He is an instructor with the Duke Nonprofit Management, Intensive, and Advanced Certificate in Nonprofit Leadership programs. He is a BoardSource Certified Governance Trainer. Martin is affiliated with North Carolina State University's Institute for Nonprofits. Martin served for three years on the IRS Advisory Committee for Tax Exempt and Government Entities ("ACT"). He was awarded the IRS TEGE Commissioner's Award which "is the highest honor of the Tax Exempt and Government Entities Division, and the highest honor we can personally bestow" for his service. He received a Master in Public Administration (MPA) degree with a concentration in managing nonprofit and public sector organizations from the Harvard Kennedy School and Juris Doctorate (JD) degree from Western New England University School of Law. He completed advanced training in nonprofit organizations from: Harvard Business School's Initiative on Social Enterprise; Harvard Kennedy School's Hauser Center for Nonprofit Organizations; Duke University's Nonprofit Management Program; University of California Berkeley Haas School of Business; Center for Creative Leadership; BoardSource; and the TCC Group.
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