How to reinstate tax-exempt status if revoked?

If an organization wants to reinstate its tax-exempt status after automatic revocation, it must make an application for exemption and pay the necessary user fee (even if it was not obliged to apply for exempt status in the first place).

Based on the type of return required to be filed by the organization and the time when the reinstatement is being requested, the reinstatement process varies as follows:

• Streamlined retroactive reinstatement process (Form 990-EZ and Form 990-N)

• Retroactive reinstatement process (within 15 months)

• Retroactive reinstatement process (after 15 months)

• Post-mark date reinstatement

1. Streamlined retroactive reinstatement process

• Applicable for organizations that were required to file Form 990-EZ or Form 990-N during the three-year period before automatic revocation and haven’t had their tax-exempt status revoked previously.

• These organizations can reinstate their tax-exempt status retroactively to the date of revocation by filing Form 1023, Form 1023-EZ, Form 1024, or Form 1024-A and pay the relevant user fee within 15 months from the organization's Revocation date.

 2. Retroactive reinstatement process (within 15 months)

Applicable for organizations that were required to file Form 990 or Form 990-PF during the three-year period before automatic revocation and for organizations that had their tax-exempt status revoked previously.

These organizations can reinstate their tax-exempt status by:

• Filing Form 1023, Form 1024, or Form 1024-A within 15 months from the organization's revocation date, as mentioned in the letter or the auto-revocation list.

• Attach a reasonable cause statement that describes a legitimate reason for failing to file the annual return for at least one of the three consecutive years.

3. Retroactive reinstatement process (after 15 months)

The organizations are required to provide a declaration with the reasonable cause of failure for all three years, along with filing Form 1023, Form 1024, or Form 1024-A

4. Post-mark date reinstatement:

Instead of retroactive reinstatement, organizations can apply for reinstatement effective from the post-mark date of their application by filing Form 1023, Form 1023-EZ, Form 1024, or Form 1024-A and paying the applicable user fee.

After receiving the reinstatement request, if the IRS concludes that the organization fulfills the standards for tax-exempt status:

• A new determination letter will be issued to the organization.

• The reinstated organization will be added to the list of tax-exempt organizations (Pub. 78 databases).

• Indicates that the organization is eligible to receive tax-deductible donations in the IRS Business Master File (BMF) extract.
   

Note: Erroneous Automatic Revocation If an organization has filed the 990 returns annually without fail and had their tax-exempt status revoked by mistake, they can contact the IRS Consumer Account Services at (877) 829-5500 for further assistance.