1. Tax Exempt Status: How to Avoid 501(c)(3) Status Revocation

Tax Exempt Status: How to Avoid 501(c)(3) Status Revocation

Event ID: 73543
Session ID: 16290
Duration: Scheduled for 90 minutes including question and answer period.
Presenter(s): Nikki Semanchik, Founding Attorney of Semanchik Law Group, Inc.
Credits: Certificate of Attendance


Tax Exempt Status: How to Avoid 501(c)(3) Status Revocation

Most often a nonprofit organization – in order to carry out its mission – not only desires approval by the Internal Revenue Service as a tax exempt organization for federal income tax purposes but once received also wishes to avoid revocation of that status for failure to comply with the ongoing requirements. The consequences of revocation can be significant and include: the requirement to begin paying federal corporate income taxes, penalties for past taxes, state taxes, loss of donor contributions due to a donor's loss of the federal personal tax deduction, and more.

As important as 501(c)(3) is, many nonprofits appear to be unfamiliar with the ongoing requirements for keeping that status. One requirement involves the annual filing by May 15 of either Form 990-N, Form 990, or Form 990-EZ. Some of the other activities that may place that 501(c)(3) status in jeopardy involve: departing from the nonprofit's mission, engaging in unrelated activities that do not support the mission of the nonprofit, having excessive unrelated business income, engaging in political activity, and so on. This is only a partial list of potentially troublesome areas, and in fact, when it comes to not filing a Form 990, the problem has been so pervasive that in the past the IRS has conducted special outreach programs to prevent the revocation of the tax exempt status of thousands of nonprofits around the country. The Internal Revenue Service takes its responsibilities seriously, and nonprofits should not underestimate the enforcement efforts of the IRS.

Please join Nikki Semanchik, Founding Attorney of Semanchik Law Group, Inc., as she discusses various causes for 501(c)(3) revocation by the IRS and offers guidance for avoiding these pitfalls.


Just a sampling of what this webinar will cover:

  • Review Form 990 reporting requirements and deadlines.
  • Understand the importance of good record keeping for Form 990 filing and other compliance purposes.
  • Discuss the nature of the information that you must report depending on whether you file a Form 990-N, Form 990, or Form 990-EZ.
  • Discuss reasons for 501(c)(3) tax exempt status revocation including: failure to file Form 990, unrelated business income, departure from the nonprofit mission, providing both insiders and outsiders with personal benefits, and others.
  • 501(c)(3) status revocation is one penalty for noncompliance. Understand what other penalties may be assessed and the circumstances in which these "intermediate sanctions" may apply.
  • Find out how to reapply for 501(c)(3) status if your tax exempt status is revoked.

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