Last year, GuideStar warned, "Half a Million Nonprofits Could Lose Their Tax Exemptions." This year, the number is down to 350,000 or 400,000, but the rest of the message is the same: hundreds of thousands of nonprofits are scheduled to lose tax-exempt status because they failed to file annual returns with the IRS.
The Pension Protection Act of 2006 requires the IRS to revoke the federal tax exemption of any organization that has failed to file three consecutive annual returns (Form 990-N, 990-EZ, 990, or 990-PF). Nonprofits that wish to have their exemptions reinstated will be required to re-apply to the IRS for tax-exempt status. This process can take several months.
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