What is Automatic Revocation of Exemption?

Several reasons can cause an organization's tax-exempt status to be revoked. The most common sense is failure to file an Annual Return for three consecutive years. Here's everything you want to know about Automatic Revocation of Exemption.

Whether you’re an individual with an IRS revocation application or an organization with a 501c3 application status, you may be wondering what the best course of action is. There are a few different options for dealing with a revocation, and it’s important that you understand which one you’re eligible for.

After an organization has lost its tax-exempt status, it must reapply for a new application. A reinstatement process can help a nonprofit get back its status. Depending on the type of organization, reinstatement options vary.

How to Have Your Tax-Exempt Status Reinstated?

Obtaining a tax-exempt status is essential to the operation of many nonprofit and charitable organizations. Failure to comply with tax obligations can result in the revocation of your organization’s tax-exempt status. However, you can regain your exempt status if you comply with the correct procedures.

The first step is to find out if you have been revoked. The IRS keeps a list of all organizations that have lost their tax-exempt status. You can retrieve your exempt status if your organization is on this list.

Next, you’ll need to apply for reinstatement. Normally, you’ll need to file Form 1024Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code. You’ll also need to provide proof of your status revocation. You’ll also need to pay an appropriate user fee.

Depending on your organization’s circumstances, you may also be able to reclaim your tax-exempt status by requesting retroactive reinstatement. This is particularly helpful for organizations that have lost their tax-exempt exemption because they did not file the required IRS forms. In order to qualify, you must file a Form 990-EZ or Form 990-N for at least three consecutive years.

The IRS recently issued a new fact sheet that explains how to reinstate your tax-exempt status. The new procedure is called Revenue Procedure 2014-11. You can find out more about the procedure by visiting the IRS website.

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