How the IRS revokes tax-exempt status and what you need to do to get it back
The IRS revokes a nonprofit's tax-exempt status when the organization stops meeting the requirements for that status — usually because it stopped filing required annual reports, spent money on activities that don't match its stated purpose, or failed to respond to IRS inquiries. Once revoked, your organization cannot claim tax-exempt status again until you take specific steps to restore it. The path depends on why the status was revoked and how long ago it happened.
If your revocation was automatic — meaning the IRS pulled your status because you didn't file Form 990-N, 990-EZ, or Form 990 for three consecutive years — you can restore status without reapplying. If the revocation was for other reasons, you will need to file a new Form 1023 or Form 1023-EZ and go through the recognition process again. The timeline and cost differ between these routes.
Key Takeaways
- Automatic revocations due to non-filing can be restored by filing the overdue Form 990 and paying any penalties, without submitting a new process.
- Revocations for other reasons require you to file Form 1023 or Form 1023-EZ as if you were a new organization, which costs $275 to $600 depending on your gross receipts.
- You can check your current status on the IRS Tax Exempt Organization Search tool, which shows whether your status is active, revoked, or pending.
- During the restoration process, your organization cannot claim tax-exempt status or issue tax-deductible donation receipts, so notify donors and creditors of the situation.
- The IRS sends notice of revocation by mail to the address on file, so check your records for any letters dated three or more years back if you are unsure when revocation occurred.
Check whether your status was revoked and why
Start by searching the IRS Tax Exempt Organization Search at apps.irs.gov/app/eos. Enter your organization's name or Employer Identification Number (EIN). The search will show whether your status is listed as active, revoked, or pending. If it shows revoked, the listing will include the revocation date but not always the reason.
Next, contact the IRS directly to learn why the revocation happened. Call the Tax Exempt and Government Entities (TE/GE) division at 877-829-5500. Have your EIN ready. The IRS representative can tell you whether the revocation was automatic (due to three years of non-filing) or for cause (such as prohibited activities or failure to respond to an audit). This distinction determines your next step.
If you cannot reach the IRS by phone, you can also request this information in writing. Send a letter to the IRS office that issued the revocation notice — the address will be on the notice itself if you have it. Include your EIN and organization name and ask for the reason for revocation and the date it took effect.
Restore status if revocation was automatic due to non-filing
If the IRS revoked your status because you failed to file Form 990-N, Form 990-EZ, or Form 990 for three consecutive years, you can restore status without filing a new process. File all overdue returns when ready. For each year you missed, file the correct form based on your gross receipts that year: Form 990-N (e-postcard) if gross receipts were under $50,000, Form 990-EZ if they were $50,000 to $200,000, or Form 990 if they exceeded $200,000.
You will owe penalties for late filing. The IRS typically assesses a penalty of $25 per day for each overdue return, up to a maximum of $15,000 per return, though the IRS may reduce or waive penalties if you show reasonable cause. Submit the overdue returns to the IRS at the address listed in the Form 990 instructions for your filing year.
Once the IRS receives and processes your overdue returns, your tax-exempt status will be restored retroactively to the date it was revoked. You should receive written confirmation from the IRS. This process usually takes 4 to 8 weeks after the IRS receives your returns.
Reapply for tax-exempt status if revocation was for other reasons
If the IRS revoked your status for reasons other than non-filing — such as engaging in prohibited activities, failing to respond to an audit, or violating the rules for your type of organization — you must file a new Form 1023 or Form 1023-EZ process. This is the same form you would file if you were a new organization seeking recognition.
Form 1023-EZ is shorter and costs $275. You can use it only if your organization has been in existence for at least four years, had gross receipts under $50,000 in each of the past four years, and meets other specific criteria. Form 1023 is longer, costs $600, and has no income limit. Most organizations that are reapplying after revocation use Form 1023 because the circumstances are often more complex.
When you file, include a statement explaining what led to the revocation and what changes your organization has made to comply with tax-exempt requirements going forward. For example, if revocation occurred because the organization spent money on non-charitable purposes, explain how you have restructured your spending. If it occurred because you did not respond to IRS inquiries, explain your current record-keeping and communication procedures.
What happens to your organization while status is being restored
During the restoration process, your organization does not have tax-exempt status. This means donations are not tax-deductible for donors, and you may owe federal income tax on your net income. Notify your donors, board members, and creditors of the revocation and the steps you are taking to restore status. Many donors will continue to support your work, but they should understand that their gifts are not tax-deductible during this period.
If your organization has employees, you still must withhold and pay payroll taxes as you normally would. Your state tax-exempt status may also be affected; contact your state tax authority to learn whether you need to reapply for state-level exemption as well.
Do not claim tax-exempt status on any documents, tax forms, or fundraising materials while restoration is pending. Using a revoked EIN to claim exemption can result in additional penalties and may delay your restoration further.
Timeline and costs for restoration
The timeline depends on which path you take. If revocation was automatic and you file overdue returns, restoration typically takes 4 to 8 weeks after the IRS receives your forms. You will owe late-filing penalties, usually $25 per day per return, though the IRS may reduce this amount.
If you must reapply using Form 1023 or Form 1023-EZ, the process takes longer. The IRS typically issues a information letter within 2 to 4 weeks for Form 1023-EZ, though this can extend to 4 to 6 weeks if the IRS requests additional information. Form 1023 can take 2 to 6 months or longer, depending on the complexity of your situation and the IRS workload. You will pay the process fee ($275 or $600) upfront when you file.
During this time, your organization operates without tax-exempt status. Plan your budget accordingly, as you may owe income tax on net revenue and cannot offer donors tax deductions.
Prevent future revocation by staying current with filing requirements
Once your status is restored, maintain it by filing your annual return on time every year. The important date is typically May 15 for organizations with a calendar-year fiscal year, though you can request an automatic extension to November 15 by filing Form 8868.
If your organization has gross receipts under $50,000, you can file Form 990-N (the e-postcard) online at epostcard.form990n.org. It takes about 15 minutes and is free. If your organization has higher receipts, file Form 990-EZ or Form 990 depending on your income level. Set a calendar reminder for the filing important date each year, and assign responsibility to a board member or staff person to may support the form is filed on time.
Keep records of your organization's activities, spending, and governance. The IRS may request these records during an audit, and having them organized will help you respond quickly and avoid future compliance problems.
Frequently Asked Questions
Can I issue tax-deductible donation receipts while my status is being restored?
No. Once status is revoked, donations are not tax-deductible until the IRS issues a new information letter confirming restoration. Issuing receipts claiming tax deductibility during this period is illegal and can result in penalties. Inform donors that their gifts are not tax-deductible while restoration is pending.
How do I know if the IRS received my overdue Form 990?
The IRS does not send a receipt when it receives a paper Form 990. If you filed by mail, send it certified mail with return receipt requested so you have proof of delivery. If you filed electronically through an authorized e-file provider, you will receive a confirmation. You can also call the TE/GE division at 877-829-5500 to ask whether your return was received and processed.
What if I disagree with the reason the IRS gave for revocation?
You can request reconsideration by writing to the IRS office that issued the revocation notice. Include documentation supporting your position — for example, if the IRS said you failed to file, provide proof that you did file. The IRS will review your request, though this process can take several months. You may also consult a tax attorney or nonprofit accountant for guidance on whether you have grounds to challenge the revocation.
Do I need to reapply for state tax-exempt status as well?
This depends on your state. Some states automatically revoke state exemption when the IRS revokes federal status; others do not. Contact your state tax authority or secretary of state to learn whether you need to reapply for state-level exemption. Many states have their own forms and fees for this process.
Can I operate my organization while waiting for restoration?
Yes, but without tax-exempt status. You can continue your charitable work, but you cannot claim tax exemption on tax forms, cannot offer donors tax deductions, and may owe federal income tax on net revenue. You must still comply with all other laws, including employment law, nonprofit corporation law, and state charitable solicitation rules.