Automatic revocation and reinstatement, explained

Automatic revocation is the most common way small nonprofits lose their tax-exempt status, and it usually happens quietly. A treasurer moves away, nobody files the annual return or e-Postcard, and three years later the exemption is gone. The good news is that the IRS has a clear process to come back, and many organizations can be restored as if the gap never happened.

How automatic revocation works

The rule. IRC 6033(j) says that an organization that fails to file a required annual return or notice for three consecutive years loses its exemption. The returns that count are Form 990, Form 990-EZ, Form 990-PF and Form 990-N (the e-Postcard). See annual filing requirements for which one you owe.

When it takes effect. Revocation is effective on the original filing due date of the third missed return. For a calendar-year organization, returns are due on the 15th day of the fifth month after year end, which is May 15.

The warning. The statute directs the IRS to notify an organization after two consecutive missed years. After revocation, the IRS mails a revocation letter (Notice CP-120A) to the last address it has and adds the organization to its public Automatic Revocation of Exemption List.

Who is not affected. Churches, their integrated auxiliaries, and conventions or associations of churches are not required to file annual returns, so this rule does not reach them. See churches and 501(c)(3) status.

How to check whether you were revoked

Use Tax Exempt Organization Search on IRS.gov and search by your organization's name or EIN. The automatic revocation results show, for each organization:

• Name, EIN, organization type and last known address
• The effective date of revocation
• The date the organization was added to the list
• The date of reinstatement, if it has been reinstated

The IRS updates the list monthly. If you have not received mail from the IRS in years, check the list anyway; the letter may have gone to an old address.

What revocation means

According to the IRS automatic revocation page:

• Income tax. The organization is no longer exempt from federal income tax and may have to file Form 1120 (corporations) or Form 1041 (trusts) and pay tax.
• Donations. It is no longer eligible to receive tax-deductible contributions and is removed from the IRS list of eligible organizations (the Publication 78 data). Gifts made before the organization's name appeared on the revocation list remain deductible.
• State effects. State and local laws, including state income tax, sales tax and charitable registration, may be affected too; see state tax exemption.
• No appeal. The law prohibits the IRS from undoing a proper automatic revocation, and there is no appeal process. You must apply for reinstatement, even if your organization was never required to apply in the first place (for example, a small organization with gross receipts normally under $5,000).

The four reinstatement paths

Rev. Proc. 2014-11 sets out four procedures. The "15 months" in each is counted from the later of the date on your revocation letter or the date the IRS posted your name on the revocation list.

Which form to use

Form 1023-EZ is available only for Sections 4 and 7. Rev. Proc. 2026-5 and the Form 1023-EZ instructions confirm that organizations seeking retroactive reinstatement under Section 5 or 6 must file the full Form 1023. You also have to meet the normal 1023-EZ eligibility rules, including projected and past annual gross receipts of $50,000 or less and total assets of $250,000 or less. Previous automatic revocation does not by itself bar you from Form 1023-EZ. You can check your eligibility here:

Organizations reinstating under other paragraphs of section 501(c) use Form 1024, or Form 1024-A for a 501(c)(4). On each form, a specific part asks which Rev. Proc. 2014-11 section you are using: Schedule E of Form 1023, Part V of Form 1023-EZ, and Part VI of Forms 1024 and 1024-A.

User fees. Under Appendix A of Rev. Proc. 2026-5, the fee is $275 for Form 1023-EZ and $600 for Form 1023, 1024 or 1024-A, paid on Pay.gov.

Filing the missed returns

Section 4. To avoid the late-filing penalty, file paper Forms 990-EZ for any of the three years in which you were required to file Form 990-EZ, marked "Retroactive Reinstatement," and mail them to the IRS address in Ogden, Utah, given on the IRS reinstatement page. You do not file prior-year Forms 990-N for years when the e-Postcard was all you owed.

Sections 5 and 6. File properly completed paper returns for all three years and for any later years that were due before your application, mark them "Retroactive Reinstatement," mail them to Ogden, and include a statement with your application confirming you have done so.

When an organization is retroactively reinstated and meets the conditions, the IRS does not impose the IRC 6652(c) penalty for the three missed years. Our sister site explains those penalties in its guide to Form 990 late-filing penalties.

Writing a reasonable cause statement

Sections 5 and 6 require a reasonable cause statement: a showing that the organization exercised ordinary business care and prudence in trying to meet its filing obligations. Section 8 of Rev. Proc. 2014-11 asks for a detailed account of what led to the failure, how you discovered it, and what you have done to prevent it from happening again. Factors that weigh in your favor include:

• Reliance on erroneous written information from the IRS saying you did not need to file
• Events beyond your control that made filing impossible
• Prompt action to correct the problem once discovered, and new safeguards
• A history of compliance

The statement must include an original declaration signed under penalties of perjury by an authorized officer, director or trustee, in the wording given in Rev. Proc. 2014-11.

After reinstatement

The IRS issues a new determination letter, adds you back to Tax Exempt Organization Search, and updates its records so donors can rely on your status from the letter's effective date. The three-year clock restarts with the year the IRS approves your application, and an organization revoked a second time cannot use the streamlined path. Put the filing date on the board calendar, give two people the login to file, and keep copies of each acceptance, as described in our recordkeeping guide.

501Nonprofit.com is a private company, not the IRS. This page is general information, not legal or tax advice for your organization. Example organizations and figures are hypothetical.