Taxation Case Study: Reinstatement of a Nonprofit's 503(c)(3) Status
Company
A national nonprofit organization in Philadelphia, Pennsylvania. Revenue: < $250K.
Position
Taxation Professionals and Advisors
Challenge
The nonprofit received notification from the IRS that it was stripped of its 501(c)(3) status due to a failure to file its federal Form 990 for the previous six years. Without the designation, they would be responsible for back taxes with penalties and interest for that entire period, which would likely bankrupt them.
Work Performed
We immediately jumped in, assigning two of our accountants to coordinate with the nonprofit’s lawyers and staff accountant to recreate the records for the missing time frame. We spent countless hours on the phone with the IRS to properly address the issues. Based on those calls and the information we received from the nonprofit’s staff accountant, we were able to reconstruct the Forms 990 for each of the missing years and submit them to the IRS.
Outcome
The nonprofit’s 501(c)(3) status was reinstated, and all fees and penalties were expunged. As a result, they have engaged us as their taxation accountants to guarantee that each year their Form 990 is filed cleanly, correctly, and promptly.