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IRS to Speed Up Listing of Charities That Lost Status

irs-select-checkWe have discussed at great length the fact that all tax-exempt organizations are required to file some version of IRS Form 990 each year.  As we have also discussed, failure to file a Form 990 for 3 consecutive years results in an automatic revocation of a nonprofit’s 501(c) status.  Each month that passes adds to the list of charities that have lost their status due to auto-revocation.  The problem has been that the IRS has not been all that prompt about getting the list updated.  In fact, it is often as much as 6 months before a revoked charity hits the official list at the IRS Select Check page.  Well, it looks like that’s about to change.

Starting in March 2013, the IRS plans to significantly speed up its disclosure of revoked nonprofits, claiming that it will post revocations within one month.  This is a huge improvement that should aid donors.  Under the current lag time, donors can check on an organization’s status and find it intact when it has actually been yanked months prior.

It’s also better for the charity involved, as they can get about the business of remedying the situation much sooner.  Given the propensity for address changes not getting made correctly, many affected organizations may not realize they are revoked until they show up on the list.

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.

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