Maybe you received a letter from the IRS stating that your organization’s tax exemption was revoked.
Or maybe your organization applied for a grant and you were told by the grantor that you do not qualify because your organization is not tax-exempt. Or possibly one of your donors told you he will not be donating to your organization this year because the donation won’t be deductible since your organization lost its tax-exempt status.
No matter how you find out that your organization’s tax exemption was revoked, it’s not good news. You’re probably left with many questions. Will we owe taxes? Failure to file penalties? Interest? How will this affect our donors? Have we dropped the ball on other areas of compliance? How do we explain this to our supporters? How do we get the organization reinstated? How long will it take? Do we need to file the returns we didn’t file?
Over the years I have helped hundreds of organizations to address these questions and regain their tax-exempt status. There is no other attorney in the country with the experience and depth of knowledge helping organizations get their tax exemption reinstated.
The IRS understands that this happens, and they have laid out a clear path to reinstatement. Unless there are indicators of fraud or wrongdoing, the organization can often obtain retroactive reinstatement of its tax-exempt status.
Retroactive Reinstatement of tax exemption is the best outcome that a revoked organization can hope for. The IRS will not reverse the revocation. However, if the exemption is retroactively reinstated, then in many ways, it’s like it never happened. There will be no gap in your tax-exempt status. All your donors’ contributions will be deductible in the same way as if you had not lost the exemption. The IRS will waive penalties and interest on the unfiled returns. In some instances, the IRS will even waive the requirement that you prepare and submit the returns that you did not file for three years.
In order to have your organization retroactively reinstated, you need to meet all of the IRS’s requirements. This entails sorting through rules that are often confusing and complicated. Taylor Legal, PC has guided hundreds of organizations through this maze and gotten them back on the list of tax-exempt organizations so that they can get back to doing the good work that they do.