n-11-43.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Transitional Relief under Internal Revenue Code § 6033(j) for Small
Organizations

Notice 2011-43
This notice provides transitional relief for certain small organizations that have
lost their tax-exempt status because they failed to file a required annual
electronic notice (Form 990-N e-Postcard) for taxable years beginning in 2007,
2008 and 2009. A small organization – that is, one that normally has annual
gross receipts of not more than $50,000 in its most recently completed taxable
year – that qualifies for the transitional relief under this notice and applies for
reinstatement of tax-exempt status by December 31, 2012, will be treated by the
Internal Revenue Service (“IRS”) as having established reasonable cause for its
filing failures and its tax-exempt status will be reinstated retroactive to the date it
was automatically revoked.
Organizations not described in this notice should consult Notice 2011-44, in
this Bulletin, for guidance on how to apply for reinstatement of tax-exempt status
and request retroactive reinstatement.
BACKGROUND
The Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780, §
1223 (2006), added sections 6033(i) and (j) to the Internal Revenue Code
(“Code”), both of which became effective for taxable years beginning after 2006.

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Section 6033(i) requires tax-exempt organizations excepted from filing annual
information returns because they normally have annual gross receipts of not
more than $25,000 (increased to normally not more than $50,000 for taxable
years beginning on or after January 1, 2010) to annually file a Form 990-N e-
Postcard. Section 6033(j) automatically revokes the tax-exempt status of any
organization that fails to file a required annual return or Form 990-N e-Postcard
for three consecutive years.
In order to obtain reinstatement of its tax-exempt status, an organization that
has had its tax-exempt status automatically revoked under section 6033(j) must
apply for reinstatement with the IRS, even if it was not originally required to
submit such an application. I.R.C. § 6033(j)(2). If an organization applying for
reinstatement of tax-exempt status can show reasonable cause for its
consecutive filing failures, the organization’s tax-exempt status may, in the
discretion of the Secretary, be reinstated retroactive to the date of the automatic
revocation. I.R.C. § 6033(j)(3).
ELIGIBILITY FOR TRANSITIONAL RELIEF
The IRS recognizes that many small organizations that have lost their tax-
exempt status because they failed to file a Form 990-N e-Postcard for their 2007,
2008, and 2009 taxable years were never required to file an annual return or
notice prior to their 2007 taxable year. The IRS also recognizes that many small
organizations are operated by volunteers and may face unique challenges in
meeting federal tax obligations. Accordingly, the IRS will treat a small
organization (one that normally has annual gross receipts of not more than

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$50,000 in its most recently completed taxable year) as having established
reasonable cause for failing to file a Form 990-N e-Postcard or an annual return
for its taxable years beginning in 2007, 2008, and 2009 if it meets each of the
following criteria:
• The organization was not required to file annual information returns (such
as Form 990, Return of Organization Exempt from Income Tax or Form
990-EZ, Short Form Return of Organization Exempt from Income Tax) for
taxable years beginning before 2007.
• The organization was eligible in each of its taxable years beginning in
2007, 2008, and 2009 to file a Form 990-N e-Postcard (rather than an
annual information return). Generally organizations (other than private
foundations and most section 509(a)(3) supporting organizations) with
annual gross receipts that were normally not more than $25,000 in such
taxable years would have been eligible to file a Form 990-N e-Postcard.
• On or before December 31, 2012, the organization submits to the IRS a
properly completed and executed application for reinstatement of tax-
exempt status.
An organization’s annual gross receipts are “normally not more than” $25,000
or $50,000 in a taxable year if its average annual gross receipts for that taxable
year and the two taxable years immediately preceding it are not more than
$25,000 or $50,000, respectively. See
Rev. Proc. 2011-15, 2011-3 I.R.B. 322,
section 4.

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The IRS will reinstate the tax-exempt status of a small organization that meets
the above criteria retroactive to the date it was revoked.
APPLICATION FOR REINSTATEMENT OF TAX-EXEMPT STATUS
An organization seeking reinstatement of tax-exempt status under section
6033(j)(2) must use the same forms that are filed by all other applicants for tax-
exemption. Thus, an organization seeking reinstatement of tax-exempt status
under section 501(c)(3) must submit Form 1023, Application for Recognition of
Exemption Under Section 501(c)(3) of the Internal Revenue Code. Most other
organizations seeking reinstatement of tax-exempt status must submit Form
1024, Application for Recognition of Exemption Under Section 501(a). Any
organization that seeks reinstatement of tax-exempt status must submit the
appropriate application regardless of whether the organization was originally
required to apply with the IRS for recognition of tax-exemption.
A small organization seeking the transitional relief described in this notice
must write “Notice 2011-43” on the top of the form it uses to apply for
reinstatement of tax-exempt status and on the envelope.
A small organization seeking the transitional relief described in this notice
must also attach to its application for reinstatement of tax-exempt status the
following statement:
[Name of Organization] was not required to file annual information
returns for taxable years beginning before 2007; was eligible in
each of its taxable years beginning in 2007, 2008 and 2009 to file a
Form 990-N e-Postcard; and had annual gross receipts of normally
not more than $25,000 in each of its taxable years beginning in
2007, 2008 and 2009.

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Small organizations that are eligible for the transitional relief described in this
notice are also eligible for a reduced user fee of $100 for the application of
reinstatement of tax-exempt status. See
Rev. Proc. 2011-36, this Bulletin,
modifying
Rev. Proc. 2011-8, 2011-1 I.R.B. 237, section 6.07. For information on
where to mail the application for reinstatement of tax-exempt status, see the
Instructions for Form 1023 or Form 1024 (whichever is applicable).
SUBSEQUENT AUTOMATIC REVOCATIONS
An organization whose tax-exempt status has been automatically revoked and
reinstated may have its tax-exempt status automatically revoked a second time
under section 6033(j)(1) only if it fails to file returns or notices for another three
consecutive taxable years, beginning with the taxable year the IRS approves its
application for reinstatement of tax-exempt status. For example, if an
organization reporting on a calendar year basis has its tax-exempt status
automatically revoked for failing to file required returns or notices for 2007, 2008,
and 2009 and receives a determination letter recognizing the reinstatement of its
tax-exempt status dated September 1, 2011, the organization’s tax-exempt
status will not be automatically revoked a second time for failing to timely file a
return or notice for 2008, 2009, and 2010. However, the organization’s tax-
exempt status will be automatically revoked a second time if the organization fails
to timely file a return or notice for 2011, 2012, and 2013.
DRAFTING INFORMATION
The principal authors of this notice are Monice Rosenbaum and Preston
Quesenberry of the Office of Division Counsel/Associate Chief Counsel (Tax

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Exempt and Government Entities) and Matthew Giuliano of the Tax Exempt and
Government Entities Division of the IRS. However, other personnel from the IRS
and Treasury Department participated in developing this notice. For further
information regarding this notice, contact Ms. Rosenbaum at (202) 622-6070, Mr.
Quesenberry at (202) 622-1124, or Mr. Giuliano at (202) 283-8917 (not toll-free
numbers).