by Donya Curry | Feb 19, 2016 | Non Profits
I recently wrote about organizations losing their nonprofit status. I’m following up with some more information on how to restore it. If your organizations tax exempt status was automatically revoked, you must apply to have its nonprofit status reinstated. This rule applies to an organization even if they weren’t originally required to file an application for exemption. The IRS determines if the organization meets certain requirements for tax-exempt status. The IRS will issue your organization a new determination letter. Your reinstated organization should appear in the next update of the Exempt Organizations. Let’s see how we can get back to that nonprofit exempt status.
If you had a nonprofit organization that was eligible to file either Form 990–EZ or 990–N for each of the three consecutive years that it failed to file, and had not previously had its tax-exempt status automatically revoked. You can apply to have the tax-exempt status retroactively reinstated effective from the Revocation Date.
Complete and submit Form 1023 Application for recognition of exemption under section 501 (C)(3), 1023 EZ, or Form 1024 Application for recognition of exemption under section 501 (a). The application should be completed before the 15 months after the date of the Revocation Letter or the date on which the IRS posted the organization’s name on the Revocation List, whichever is later. On the top of the form write “Revenue Procedure 2014–11, Streamlined Retroactive Reinstatement”. Ensure you mail it to the proper location. IRS has a ton of addresses and PO Boxes. Wrong addresses can extend an already long wait. If you are not sure check Irs.gov before mailing it off.
Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192
Finally Include the appropriate user fee along with the Application. You have to pay the same application fees you did when you first filed for the tax exempt organization. The IRS has a user fee chart have the amount you need to pay. Expect to pay at least $400-$850.
Under Section 4 of Revenue Procedure 2016-11 you must demonstrate reasonable cause by attesting that the organization’s failure to file was not intentional and that your organization now has procedures in place to file in the future. After such date, reasonable cause may be demonstrated through that attestation. The organization can avoid the IRS penalty under section 6652(c) for failure to file Annual Returns for three consecutive taxable years. Look at the chart below to see the amounts you could be penalized for. It is also a penalty for the managers in charge of filing as well.
| Scenario |
Daily Penalty |
Maximum Penalty |
| Organization (§ 6652(c)(1)(A)) |
$20 |
Lessor of $10,000 or 5% of gross receipts of the organization for the year. |
| Organization with gross receipts exceeding $1,015,500 (§ 6652(c)(1)(A)) |
$100 |
$50,500 |
| Managers (§ 6652(c)(1)(B)) |
$10 |
$5,000 |
If you can be retroactively reinstated under Section 4 it’s a good idea. Your organization must still file properly completed Forms 990–EZ for all the past taxable years. The organization should write “Retroactive Reinstatement” on the Forms 990–EZ. Any year the the organization was eligible to file a Form 990–N, your organization is not required to file a prior year Form 990–N or Form 990–EZ for that year. The prior year returns are sent to a different IRS address than the application. This is the address provided on the IRS website. If you are not sure check Irs.gov before mailing it off.
Department of Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
by Donya Curry | Jan 18, 2016 | Non Profits
I have met various non profits that didn’t know they can lose their tax exempt status. They were great at getting the non profit set up. Non profit owners eager to help others sometimes forget to take care of their self. Tax exempt organizations are required to file an annual return with the IRS. If a non profit fails to file for three consecutive years. The tax exempt status is automatically revoked.
Your non profit will be added to the IRS automatically revoked non profit list. This could surely spell disaster for a non profit. Your company will no longer be able to receive tax deductible contributions. You might have to file an income tax return as a corporation or trust. Donors will not feel secure with giving to an organization that fails to manage itself. The IRS doesn’t have an appeal process for an automatic revocation if it was properly done. The company will have to apply for its tax exempt status again. Keep you tax exempt organization off of the revoked list by staying up to date on filings. Let IATC help you if you are having issues.
by Donya Curry | Dec 9, 2015 | Non Profits
As a small non profits with gross receipts less than $50,000 annually you may qualify to file a 990N or e-postcard. Form 990-N must be completed and filed electronically, since there is no paper form to send in. Form 990-N filers still have the option to file a complete Form 990 or Form 990-EZ if they choose to. Non profits need to remember gross receipts is defined as all sources of income before any of the expenses are deducted. There is a little flexibility in the %50,000 requirement for non profits. Your organization’s gross receipts are considered to be $50,000 or less if
- You have been in existence for 1 year or less and received, or donors have pledged to give, $75,000 or less during its first taxable year.
- Your non profit has only existed between 1 and 3 years and averaged $60,000 or less in gross receipts during each of its first two tax years.
- Your non profit is at least 3 years old and averaged $50,000 or less in gross receipts for the immediately preceding 3 tax years. The 3 years includes the current year for which calculations are being made.
The three requirements above however exclude any organization that are included in a group return. Churches, conventions or associations of churches, and any non profit organizations required to file a different return.
This is the simplest form for non profits to complete and many do this without any help. If you are a do it yourself new non profit just remember the 990-N still has a deadline. It is due on the 15th day of the 5th month after the close of your tax year.
by Donya Curry | May 15, 2015 | Business, Individuals, Non Profits
I get asked one difficult question frequently. How long do I have to keep my records? Depending on the size and type of your business you might have to pay storage fees or send them to a government agency. Important records aren’t only needed by the IRS. You have OSHA, SEC, EEOC, and others. Going out of business can even be an exhausting experience. I always tell clients to use caution before disposing of records.
I’m going to run down a list of some records and how long I recommend you keep them. This list is not definite as rules change and states can have different time requirements. This list might not work for everyone, but take a look. There are electronic storage options that reduce the clutter of having paper records. Going paperless is saving trees, but can help with your record keeping requirements.
Permanent
Any Legal Contracts – Keep permanently
Annual Financial Statements – Keep permanently
Asset Ledgers and Depreciation Schedules – Keep permanently
Audit Reports – Keep permanently
Documents for major asset purchases – Keep permanently
Employee Medical Records related to exposure of toxic substances – Keep permanently
Entity Structure/ Organizational Documents – Keep permanently
Insurance Policies workers comp, life- Keep permanently
Intangible Asset Records- Keep permanently
Tax Records Income tax returns, income documents like 1099’s, W-2’s, etc. – Keep permanently regardless of what the IRS says
Wills and Trust- Keep permanently
Long Term
Employee Accident Documents after a settlement – 11 years
Employee Procedures Manual – 11 years
Employee Job Descriptions – 11 years
Workers Compensation Documentations – 11 years
Bank Statements – 7 years
Check Ledger – 7 years
Customer & Vendor Invoices -7 years
Inventory Records -7 years
Payroll Checks- 7 years
Personnel Files after termination – 7 years
Sales Records- 7 years
Subsidiary Ledgers for A/R, A/P etc. – 7 years
Time Cards- 7 years
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