How can we get our nonprofit's 501(c)(3) status reinstated?
It is possible to have 501(c)(3) status reinstated if it has been revoked by the IRS for failure to file annual 990 returns.
How Does the Reinstatement Process Work?
The reinstatement process depends on why the organization's tax-exempt status was revoked and which reinstatement procedure applies.
For organizations whose 501(c)(3) status was automatically revoked because they failed to file required Form 990-series returns or notices for three consecutive years, the organization must apply to the IRS for reinstatement and pay the applicable user fee. For a 501(c)(3) organization, this generally involves filing Form 1023 or Form 1023-EZ, as applicable. The organization may also request retroactive reinstatement as part of its application.
The IRS provides four procedures for reinstatement after automatic revocation. Depending on the organization's circumstances, it may qualify for streamlined retroactive reinstatement, retroactive reinstatement within 15 months, retroactive reinstatement after 15 months, or reinstatement effective from the postmark date of the application. The requirements for each procedure are different.
For example, organizations that meet the requirements for streamlined retroactive reinstatement may be able to have their exemption reinstated back to the date of revocation if they apply within the applicable 15-month period and meet the IRS requirements. Other organizations may need to provide a reasonable-cause statement and documentation showing that required returns have been filed.
If an organization believes its status was revoked in error, the situation is different. The IRS has procedures for organizations that can provide documentation showing that they met their filing requirements.
It's important to review the organization's revocation date, filing history, previous revocations, and current circumstances before determining which reinstatement procedure may apply. The IRS provides detailed information about the reinstatement options on its Automatic Revocation – How to Have Your Tax-Exempt Status Reinstated page.
Organizations should also take steps to meet their ongoing IRS filing requirements after reinstatement. Failure to file required returns or notices for three consecutive years can result in automatic revocation again.