Wednesday, October 28, 2020
The end of last week saw a further development in the sharp increase in automatic revocations of tax-exempt status sent out by the IRS this year. To review the initial phase of this series of events, nearly thirty thousand tax-exempt organizations had their status automatically revoked despite the fact that the IRS had changed the relevant filing deadline from May to July. In response, Democrats from the House of Representatives demanded an explanation from Treasury Secretary Mnuchin. To read more about events leading up to that point in the situation, see this blog’s post from last week here.
Shortly after the letter in question was sent, the IRS issued a statement confirming the suspicion voiced in our earlier blog post: namely, that the IRS messed up. Blaming “systemic limitations,” the Service admitted that it had been unable to correct the program it uses to send automatic revocation notices to tax-exempt organizations. As a result, organizations abiding by the IRS's extended deadlines were sent revocation notices anyway. However, the Service did prevent organizations properly filing before the updated July deadline from having their status listed as ‘revoked’ on the agency’s official site. Tax-exempt organizations who believe they received a revocation notice in error should contact the IRS at the fax number they have dedicated to resolving this mishap.
For the IRS’s statement, see https://www.irs.gov/charities-non-profits/current-edition-of-exempt-organizations-update
By David Brennen, University of Kentucky College of Law