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Help Desk FAQ: What to Do if Your Nonprofit Status Has Been Revoked

by Molly O'Connell

Nonprofit boards – especially those of small, volunteer-driven organizations – can be caught off guard to learn that their tax-exempt status has been revoked. Most tax-exempt nonprofits must file an annual return or notice with the IRS, and failure to file for three consecutive years results in the automatic revocation of tax-exempt status. The IRS provides a lot of information about auto-revocation, including FAQs.

Checking Your Tax-Exempt Status

You can search the auto-revocation list,which is updated monthly, using the EO (Exempt Organization) Select Check search. The EO Select Check tool can also be used to search the list of nonprofits officially approved to receive tax-deductible contributions, which is helpful if your organization cannot find your original determination letter from the IRS and your current board is unsure whether 501(c)(3) status was ever granted.

What If Our Tax-Exempt Status Has Been Revoked?

The National Council of Nonprofits provides a thorough overview of the implications of auto-revocation, as well as what to do next. In short, if your tax-exempt status has been revoked for failure to file for the past three years, you will need to do one of the following if you want to regain your status:

If you believe your organization’s status was erroneously revoked, the IRS provides details on how to proceed on their website.

Additional Resources to Help You Regain Your Tax-Exemption

Don’t Forget the State Side

Corporate Status

In most cases, a tax-exempt organization is also a nonprofit corporation registered with the Maine Secretary of State. Organizations whose tax-exempt status have been revoked because of failure to file may have also failed to file Annual Reports, which can jeopardize this corporate status.

To look up your corporate status visit Maine’s Interactive Corporate Services site and use the Corporate Name Search.

If your organization is not in good standing, there are two possible next steps.

  • If it has been less than six years since you last filed an Annual Report with the Secretary of State’s office, then you can apply for reinstatement.
  • If it has been longer than six years, you’ll need to re-incorporate.

If you’re not sure which applies to your organization, you can call the State at 624-7736 and ask. They can look up your last filing date, if any, and advise you.

Our Starting a Nonprofit Checklist and FAQs also  contain information about incorporating that can be helpful.

Lessons to Learn

Loss of tax-exemption has far-reaching implications for your organization, which can include back-taxes and penalties, loss of eligibility for grants, erosion of public trust, and more. The best way to protect your organization is to invest the time and energy to build a strong board aware of its fiscal responsibilities.

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