ExpressTaxExempt Blog

Reinstating Tax-Exempt Status

In the city of Taxtropolis, there are only two kinds of people… Those who file their tax return on time and those who do not. These city streets are unforgiving to any level of offenders. But… there is a change sweeping through. A hero, known only as Rev. Proc. 2014-11, is making it possible for offenders to streamline the process of regaining their tax-exempt status.

No one knows how or why Rev. Proc. arrived from the land of IRS-tron. But witnesses say that Rev. Proc. works in three main ways in which an organization that has lost its tax-exempt status can apply for retroactive reinstatement to the date of revocation.

Level 1 Offenders
The first level of offenders consists of those who have
  • Lost their tax-exempt status for the very first time
  • Failed to file a required Form 990-N (e-Postcard) or Form 990-EZ for three consecutive years
  • Applied for retroactive reinstatement with a Form 1023, or a Form 1024, within 15 months from the day their status was revoked
For first level offenders, Rev. Proc. can permit you to regain your tax-exempt status as of the date of revocation without any questions asked. You will not be required to file a Form 990-N (e-Postcard) for the prior year or a Form 990-EZ for any year in which you were required.

Your organization can be reinstated, if you:
  • Re-submit an Application for Exemption with “Streamlined Retroactive Reinstatement” written across the top
  • Pay the applicable user fee

Level 2 Offenders
The second level of offenders are those who have
  • Failed to file a required Form 990 (Long Form) for three consecutive years
  • Applied for retroactive reinstatement within 15 months from the day their status was revoked

Section 5 of Rev. Proc. allows organizations in this predicament to make an argument for reasonable cause. If reasonable cause is established for any of the three consecutive years you failed to file, you can qualify for reinstatement by
  • Applying for retroactive reinstatement within 15 months from the day your status was revoked
  • Paying the applicable user fee
  • Establishing your organization had reasonable cause why it failed to file for one of the three consecutive years
  • Completing and file the proper tax returns for all the tax years in the consecutive 3-year period that you missed
  • Including a statement with the reinstatement request confirming that you have filed the required annual returns

Level 3 Offenders
The third level of offenders are
  • ANY tax-exempt organization, whether you’re required to file a Form 990-N, 990-EZ, or 990, that is applying for reinstatement AFTER 15 months from the day the status was revoked
Along with following the reinstatement steps for Level 2 Offenders, Section 6 of Rev. Proc. requires you to provide a reasonable cause for each of the three consecutive years you failed to file.

Second chances are sometimes hard to come by in any situation. Reduce the need to be rescued by Rev. Proc. in Taxtropolis by quickly and easily e-filing with Express990. We offer support for any of the 990 forms for tax-exempt organizations and you can e-file your Form 990-N (e-Postcard) FREE for the current tax year.

For any questions or assistance with our service to e-file, feel free to contact our live, expert help at our headquarters in Rock Hill, South Carolina.

Phone: (704) 839-2321 (Monday - Friday, 9am - 6pm, Eastern Standard Time)
Email: support@expresstaxexempt.com
Live Chat: www.expresstaxexempt.com

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