IRS Revocation of 501 (c)(3) Status

The IRS announced on June 8. 2011 the 275,000 tax exempt entities whose federal tax exempot status have been revoked as of May 15, 2011 for failure to submit required reports.  Most of these entities probably no longer exist or are part of merged entities which failed to legally dissolve and/ olr notify IRS of their discontinuation.  BUT many are small to mid-size organizations who failed to comply with IRS requirements.
 
21,466 are Texas based entities.  Of these 14,178 are 501 (c)(3)s and 2,074 are 501 (c)(4)s.  By comparison, there were approximately 72,000 501 (c)(3)s in Texas prior to this announcement.  This is a reduction of approximately 20% bringing the total number of charitable nonprofits to approximately 58,000.
 
TANO staff is available to help organizations who are on the list to assess their options and follow the IRS mandated process for being reinstated.  For further information contact Barry Silverberg, TANO President & CEO, at barry@tano.org. 
 
Full list of Texas Nonprofits whose federal tax exempt status has been revoked:
  • By Organization sorted alphabetically PDF (698 pp)
  • By Subsection Code sorted by Organization alphabetically  PDF (698 pp)
  • By City sorted by Organization alphabetically PDF (698 pp)
Summary listing showing:
 
The IRS' list has almost 5,000 fewer Texas entities than the 26,000 that were on the October 2010 list of entities in danger of having their tax exempt status revoked.  TANO and others worked hard to get the word out at that time.  We achieved some success.
 

I.R.S. Ends Exemptions For 275,000 Nonprofits (New York Times, June 8, 2011)

 
Resources from the National Council of Nonprofits, of which TANO is a proud member.
 

    

What should a nonprofit do now that it is no longer tax-exempt?

The National Council of Nonprofits - TANO's national association - has developed a special webpage and tip sheet on options available to organizations. Nonprofits that re-apply may request in a letter to the IRS that the reinstatement of their tax-exempt status be retroactive to the date of their original tax-exempt recognition, but the IRS will grant that request only if it determines that there was "reasonable cause" for the nonprofit to have missed the filing deadlines.  Make sure to carefully follow the instructions on the IRS website for requesting "retroactive reinstatement" of your organization's tax-exempt status.

 

Can a nonprofit raise funds while it is not tax-exempt?

Yes, but the nonprofit needs to be transparent and honest about the fact that it is not currently tax-exempt and, therefore, that contributions to it are not deductible to the donor.

 

Do we have other options for raising money?

Consider finding a fiscal sponsor: A nonprofit may want to explore partnering with a fiscal sponsor which can provide the nonprofit with the opportunity to continue to receive gifts that are tax deductible to the donor. Read about fiscal sponsorship.

 

The IRS has announced a special procedure for eligible small nonprofits to be reinstated.  In addition, The Chronicle of Philanthropy has a searchable database.

 

 

For assistance in dealing with any challenges you may have as a result of the above, or to glean further information, contact TANO CEO Barry Silverberg at barry@tano.org.

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