Staying on Top of IRS Filings for Nonprofits
There are many different reasons that nonprofits will need to submit paperwork to the IRS, including filing the annual Form 990, reinstating their tax exempt status, changing the name of an organization, or dissolving a nonprofit. In any of these situations, it’s important to stay on top of IRS filings for nonprofit organizations.
Unfortunately, sometimes a lack of follow up can lead to major issues for nonprofit organizations, including losing their tax exempt status, owing penalties to the IRS, or creating opportunities for fraud. Here are four situations where nonprofits might submit information to the IRS and need to ensure the information is accepted by the IRS.
Filing Form 990 annually
In recent years, the IRS changed the process for submitting annual 990s. While organizations could submit their 990 by mail in the past, the IRS now requires that it be submitted electronically.
After submitting the form online, it is the organization’s responsibility to confirm that it has been accepted. When first submitted, the status will show as “received,” then change to “pending,” and finally “accepted.” The IRS does not consider the form to be properly filed until it shows as “accepted,” so check back regularly to ensure it reaches that status. If it doesn’t, the organization must contact the IRS to determine why the form has not been accepted and resolve the issue.
Failing to submit the annual 990 for three years in a row can lead to loss of tax exempt status. This is another area where the IRS will not proactively notify an organization that they have lost their status. Once the organization realizes the issue, it can be a time-consuming and costly effort to reinstate their status.
Reinstating tax exempt status
If an organization has lost tax exempt status and would like it reinstated, they must mail a reinstatement request plus copies of all missing 990s to the IRS. However, it’s important to note that you cannot mail a Form 990 for official submission, even though they are required as part of you reinstatement request. You also can’t submit it electronically if your status has been revoked.
That means that once your tax exempt status has been reinstated, you must log in to the IRS portal and submit any past Form 990s electronically. Then, check back to ensure that each of those Form 990s has been marked as “accepted” to ensure the organization stays in good standing with the IRS. The organization will also need to pay any penalties required by the IRS before their status can be reinstated.
“There are several important documents and steps required to officially dissolve a nonprofit organization.”
Dissolving a nonprofit organization
There are several important documents and steps required to officially dissolve a nonprofit organization. Nonprofits who simply stop operating and don’t follow these steps risk having their employer identification number (EIN) stolen and used for fraud.
To formally dissolve a nonprofit, a letter signed by an officer must be submitted to the IRS with copies of the following documents:
● Articles of dissolution that have been filed with the Secretary of State
● Dissolution minutes signed by an officer
● List of the most recent officers and directors and their phone numbers
● List of any remaining assets at time of dissolution and where they were donated
Also note that, while not an IRS filing, charitable organizations in the state of Oklahoma must notify the Attorney General 45 days prior to dissolution, consolidation, disposition or removal of substantial charitable assets, or an amendment to the charitable purpose of the organization stated in governing documents. These requirements are outlined in 18 OS 552.24 effective November 1, 2023.
Changing your organization’s name
The IRS has updated how it processes name changes for organizations. Previously, filing one form would result in your name being changed and a new determination letter being sent. Now, it is a two-step process. First, organizations must file Form 4506A to change their name with the IRS. After the IRS processes the name change, organizations need to file Form 4506B to request a new letter of determination — the official document showing your tax status.
The IRS does not reply to submissions of Form 4506A or notify organizations when the process has been completed. Instead, look for your organization's name using the Tax Exempt Organization Search. Once your new name appears in that search, you can file the request for a new determination letter. We recommend checking the website 60 days after the name change paperwork is submitted and continuing to check until the process is complete.
Conclusion
In each of these four areas, or any other situation where a nonprofit is filing paperwork with the IRS, the organization must follow up on their IRS filings for nonprofits to ensure acceptance of the paperwork. In most cases, this is done through the IRS portal, but there may times the IRS notifies the organization by mail.
Whether you are filing paperwork yourself or a third party is filing on your behalf, ensure you keep good records of both the date that something was filed and the date you received confirmation of acceptance. This ensures your organization stays in compliance and minimizes any future risk from incomplete filings or paperwork.
