skip to Main Content

Bill to Require More Advanced Revocation Notice

Bill To Require More Advanced Revocation Notice

We recently discussed a new bill which would require the IRS to give nonprofit organizations more advanced notice before revoking their tax-exempt status. Sens. Dan Coats and Ben Cardin coordinated the “Notice for Organizations That Include Charities is Essential (NOTICE) Act,” which  would require the IRS to notify charities within 300 days that it has not completed requirements to maintain tax-exempt status.  Furthermore, the bill states that organizations can be reinstated without re-applying for tax-exempt status if they do not receive the advanced notice from the IRS.

While advanced notices may help some organizations that are unaware of the filing requirements, there are problems with revocation process that are not addressed in this bill. Rick Cohen, spokesman for the National Council of Nonprofits, brings up two of these possible issues. Some organizations relocate, and board members (along with officers) change periodically. If revocation notices “[are] going to the wrong addresses it doesn’t solve the issue,” Cohen says. Cohen also references the limitations the IRS is faced with due to low funding and resources. Cohen states that “The IRS is needed to perform an oversight role, process exempt status applications and Form 990s as they come in. [Congress] has cut and cut and cut, and what we need is Congress to step up and give the IRS the resources they need to do the job they have.”

For more information, check out this article by the NonProfit Times.

Greg McRay, EA

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

This Post Has 2 Comments
  1. I have a question that perhaps someone reading this article may be able to answer. We had our 501(c)4 status automatically revoked and are applying for retroactive reinstatement. Is it possible to apply for reinstatement as a 501(c)3 instead, or do we need to get reinstated as a c4 first and then apply for a change in status to a c3?

    1. Hi, Shane. Unfortunately, the answer is “no”. Organizations can switch subcategory under a particular 501(c) code section (e.g., public charity to private foundation), but cannot switch primary category (e.g, c4 to c3) directly. It requires a new, successor organization to be established and 501(c)(3) status sought for it. Once established, the original entity can be wound-down. This is true regardless of revocation or lack thereof.

Comments are closed.

Back To Top
Before you go, get a free copy of our helpful e-book...
Successfully Starting a New Nonprofit
  • Defining Your Nonprofit's Purpose
  • Nonprofit Ownership
  • Board of Directors
  • Executive Compensation
  • Fundraising & Compliance Basics
Start a 501(c)(3) Nonprofit
Introducing the SureStart nonprofit formation system.
Cost-Effective. Turnkey. Guaranteed!

Don’t compromise your vision. Discover just what you can accomplish with the right assistance!
Free eBook Download!
Understanding IRS Form 990
  • What is this Filing?
  • Which Version do I File?
  • When is it Due?
  • And Much More!
Free eBook Download!
Understanding Charitable Solicitations
  • What is this Filing?
  • Who Requires It?
  • Website Donations
  • And Much More!