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Automatic Revocation of Exempt Status

Last modified: March 27, 2024
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DEFINITION

Automatic Revocation occurs when an organization fails to file an annual return (Form 990) with the IRS for three consecutive years.

BEST PRACTICE 

Most tax exempt organizations have a Form 990 filing requirement annually with the IRS, regardless of income for the previous year. If an organization has $0 in a fiscal year, a Form 990 is still required.

If an organization forms late in their first fiscal year, the short year still counts as a year which must be filed with the IRS for reporting purposes. The corporation existed and as such has a corporate filing obligation.

If an organization has not filed by the third consecutive year’s deadline, it cannot apply for an extension as it would have been able to for the previous years to get another 6 months from the IRS to file. Once the third consecutive year’s deadline is met with no filing of the appropriate Form 990 for the organization, it will be revoked.

Revocation is not immediately recognized by the IRS, but, rather occurs several months later, when the IRS sends revocation notices to organizations’ last known addresses based on previous filings, and posts the information on their website on the Exempt Organization Select Check page.

Once an organization is revoked, it will need to file for reinstatement following Revenue Procedure 2014-11.

 

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