On February 24, 2011, the IRS announced the impending publication of the Nonfiler Revocation List. The list will identify nonprofits whose tax-exempt status has been revoked because they were required to file an annual information return (Form 990, 990-N, 990-EZ, or 990-PF) but failed to do so for three consecutive years. Revocation for failure to file is mandatory under the Pension Protection Act of 2006; the list that will soon be published represents the first time this provision of the law has been implemented.
The IRS has provided the following information about the Nonfiler Revocation List:
- The list will be updated monthly.
- The list will be available in Adobe Acrobat and Microsoft Excel formats.
- Separate lists will be published for each state, the District of Columbia, and all other territories and countries.
- A single list of all organizations on the Nonfiler Revocation List will be available in ASCII delimited text format.
- The list will provide each revoked organization's name, Employer Identification Number (EIN), subsection code, last known address, and effective date of the revocation.
- "Effective date of revocation" is defined as "the original filing due date, without regard to extensions, of the third annual required return or notice that was not filed."
Consequences of Losing Tax Exemption
A nonprofit whose tax-exempt status has been revoked:
- Must file income tax returns.
- Must pay income tax.
- Cannot accept tax-deductible contributions. If a donor gives to the organization, the donor cannot deduct the contribution.
Which Nonprofits May Appear on the List?
In December 2010, the IRS identified 321,091 nonprofits at risk of losing their exemptions for failure to file. Some 122,450 of those organizations do not appear in the February 2011 IRS Exempt Organizations Master Listing. Over half—56 percent—of the remaining 198,641 nonprofits are 501(c)(3) public charities.
The vast majority—82 percent—were not required to file an annual return before the Pension Protection Act was passed, which indicates that their annual incomes were $25,000 or less.
To learn more about automatic revocation of tax-exempt status, visit our nonprofit resource center. Go to the resource center
Suzanne E. Coffman, March 2011
© 2011, GuideStar USA, Inc.
Suzanne Coffman is GuideStar's editorial director and editor of the GuideStar Newsletter.