Many are worried that because we are tax exempt, when the laws change, like a Sunday law, we’ll have to comply or not only lose our tax exempt status, but pay back taxes all the way back to when we applied for our status. Losing out exempt status is no problem, it’s better to pay taxes than to bow to laws that contradict the Bible, but paying back taxes could break the church. This excuse for keeping our tax exempt status doesn’t seem right, I think that this is a lie and that’s why our leaders always say that “we might lose” instead of saying “we will lose”. I’m always looking for wording in all areas. This is how commercials in TV lie, they just use phrases that sound like what they want you to think, and if you don’t pay attention, you’ll be deceived.
So, I’m trying to research this, and it’s hard. I can find all kinds of instruction on how to apply for tax exempt, but I can’t find much on quitting your tax exempt status. Anyway, I’m just going to start posting what I find her.
First, here is what the IRS says happened to those who’s tax exempt status is revoked:
Automatic Exemption Revocation for Non-Filing: Effect of Losing Exemption
Full article here
What is the effect of automatic revocation on an organization?
An organization that has lost its tax-exempt status through automatic revocation may be required to file one of the following federal income tax returns and pay any applicable income taxes:
-Form 1120, U.S. Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of an organization’s tax year, or
-Form 1041, U.S. Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of an organization’s tax year.
In addition, a section 501(c)(3) organization that loses its tax-exempt status cannot receive tax-deductible contributions and will not be identified in the IRS Business Master File extract as eligible to receive tax-deductible contributions, or be included in Exempt Organizations Select Check (Pub 78 database).
To have its tax-exempt status reinstated, the organization must file an application for exemption. An organization may also request retroactive reinstatement as part of its application.
As you can see here, when you’ve had your 501(3) status revoked the only penalties are that you have to pay your taxes that year and you lose your status, no mention of any back taxes.
What is the effect of my nonprofit losing its tax-exempt status?
Full article here
1. It means that your nonprofit is no longer exempt from federal income tax and may have to pay corporate income tax on annual revenue. Your nonprofit may be required to file one of the following federal income tax returns and pay any applicable income taxes:
- Form 1120, U.S. Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or
- Form 1041, U.S. Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year.
2. It may mean that any state tax exemption your nonprofit received that is dependent on federal tax-exempt status is also now revoked.
3. It means that your nonprofit will not be listed inIRS Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986,which is a list of organizations eligible to receive tax-deductible charitable contributions.
4. It means that private foundations are unlikely to give a grant directly to your nonprofit that has lost its tax-exempt status, because federal tax law imposes an excise tax on grants made to organizations that are not tax-exempt.
Again, no mention of any back taxes….