Letter 947B: How To Regain Your Tax-Exempt Status
Summary:
Letter 947B is an IRS notice informing organizations that their tax-exempt status has been revoked due to failing to file Form 990 for three consecutive years. This letter outlines the implications of revocation, offers guidance for reinstatement, and provides details on the necessary steps to address this situation effectively.
Receiving a notice from the IRS can be stressful, especially when it results in the revocation of your organization’s tax-exempt status. Letter 947B is a formal notification sent to organizations that have not filed Form 990 for three consecutive years. The loss of tax-exempt status can significantly impact operations, donor trust, and financial health.
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What is IRS letter 947b?
Letter 947B is issued by the IRS to inform tax-exempt organizations that their status has been automatically revoked. This action is typically taken when the organization fails to file Form 990, Form 990-EZ, or Form 990-N for three consecutive years.
Purpose of form 990
Form 990 serves as a critical compliance tool for tax-exempt organizations. It:
- Provides transparency about the organization’s activities and financials.
- Demonstrates accountability to the IRS and the public.
- Confirms the organization’s adherence to tax-exempt requirements.
Pro Tip
Maintain a compliance calendar to track all IRS filing deadlines and set reminders to avoid missing critical dates like Form 990 submissions.
How to identify letter 947b
The letter typically includes:
- The effective date of the tax-exempt status revocation.
- Details about the reason for revocation, usually non-filing of Form 990.
- Instructions for addressing the revocation and pursuing reinstatement.
Consequences of losing tax-exempt status
The loss of tax-exempt status can lead to serious repercussions:
- Loss of tax-deductible donations: Contributions made to your organization may no longer qualify for tax deductions, potentially deterring donors.
- Increased tax liability: Your organization may be required to pay federal income taxes on revenue.
- Damage to reputation: Your organization will be listed publicly on the IRS Automatic Revocation List, which may impact credibility.
- Operational disruptions: Grant opportunities and partnerships may be compromised.
Steps to take if you receive letter 947b
Review the letter thoroughly
Read the entire letter to understand the specifics of the revocation. Pay attention to the stated reason for revocation, the date it became effective, and any included instructions.
Confirm your filing history
Check your organization’s filing records for the last three years to confirm whether Form 990 filings were missed. Identifying these gaps will help in the reinstatement process.
Notify stakeholders
Inform key stakeholders, including board members and donors, about the situation. Transparency can help maintain trust and support as you resolve the issue.
Take immediate corrective action
Begin the reinstatement process by selecting the appropriate method based on your organization’s circumstances.
Pro Tip
If your organization’s tax-exempt status is revoked, consult a CPA or tax attorney immediately to streamline the reinstatement process and avoid further complications.
Options for reinstating tax-exempt status
The IRS provides several pathways to reinstate tax-exempt status. Choose the option that best fits your organization’s situation:
Streamlined retroactive reinstatement
Organizations eligible for this option must meet the following criteria:
- The revocation occurred due to failure to file Form 990 for three consecutive years.
- The organization was otherwise compliant with IRS regulations.
- The reinstatement application is submitted within 15 months of the revocation date.
Steps:
- File the missing Form 990 for all applicable years.
- Submit Form 1023 or Form 1024, depending on the type of organization, along with the appropriate fee.
- Provide a detailed explanation of why the filings were missed and describe measures to prevent future non-compliance.
Retroactive reinstatement (beyond 15 months)
If more than 15 months have passed since revocation, your organization may still request retroactive reinstatement by:
- Filing the missing Form 990 for all affected years.
- Submitting Form 1023 or Form 1024 with the required fee.
- Including a comprehensive explanation of reasonable cause for the non-filing and steps taken to ensure compliance going forward.
Reinstatement with a new effective date
If your organization cannot provide sufficient cause for retroactive reinstatement, you may apply for reinstatement with a new effective date. This involves submitting Form 1023 or Form 1024 and paying the application fee.
Preventing future revocations
To avoid losing tax-exempt status in the future:
- Implement a compliance calendar to track Form 990 filing deadlines.
- Assign responsibility for filing to a specific individual or team.
- Conduct regular reviews of IRS compliance requirements.
- Seek professional advice from a CPA or tax attorney.
Consequences of not addressing letter 947b
Failing to act promptly after receiving IRS Letter 947B can lead to serious consequences for your organization. Here’s what you need to know about the potential outcomes:
Loss of tax-exempt status
When your organization loses its tax-exempt status, it is no longer exempt from federal income tax. This means your revenue will be subject to taxation, which can significantly impact your financial stability.
Donor impact
Donors may lose confidence in your organization if their contributions are no longer tax-deductible. This can lead to reduced donations, limiting your ability to fund operations and programs.
Damage to reputation
Your organization’s name will appear on the IRS Automatic Revocation List, a public record that may harm your credibility with donors, grant providers, and partners.
Ineligibility for grants
Many grants and funding opportunities require organizations to have active tax-exempt status. Without it, your eligibility for such opportunities may be jeopardized.
Operational disruptions
Revocation of tax-exempt status often comes with administrative burdens, including back taxes, penalties, and additional reporting requirements. These challenges can divert resources from your core mission.
Seeking professional help
If your organization receives Letter 947B, navigating the reinstatement process can be complex. Seeking professional help ensures you take the right steps to resolve the issue efficiently.
Engage a CPA or tax attorney
A certified public accountant (CPA) or tax attorney can provide expert guidance tailored to your organization’s circumstances. They can help you prepare accurate reinstatement documentation, calculate any owed taxes, and address IRS inquiries.
Work with a nonprofit compliance expert
Nonprofit compliance specialists can assist with ensuring that your organization adheres to IRS requirements going forward. They can also help develop internal policies and systems to avoid future compliance issues.
Pro Tip
Communicate openly with your donors about the steps your organization is taking to reinstate its tax-exempt status to maintain their confidence and support.
Contact the IRS taxpayer advocate service
If your case becomes complicated or you experience delays, the IRS taxpayer advocate service can help. This free resource offers guidance and assistance to resolve disputes or streamline the reinstatement process.
Use professional tools and resources
There are numerous tools and services designed to support nonprofit organizations, including compliance monitoring software and tax filing platforms. These resources can reduce the administrative burden and ensure accuracy in reporting.
Benefits of seeking professional assistance
Working with professionals not only speeds up the reinstatement process but also reduces the risk of errors that could delay your application. It also demonstrates to donors and stakeholders that you are taking the necessary steps to resolve the issue responsibly.
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Frequently asked questions
What should I do if I miss Form 990 filing deadlines in the future?
If you anticipate missing a Form 990 deadline, communicate with the IRS as soon as possible to request an extension. Use Form 8868, Application for Extension of Time to File an Exempt Organization Return, to apply for an automatic six-month extension. Staying proactive can prevent issues like automatic revocation.
Can donors claim deductions for contributions made during the period of revocation?
Donors generally cannot claim tax deductions for contributions made to an organization after its tax-exempt status has been revoked. Informing donors of your organization’s status and timeline for reinstatement is essential to maintain transparency and trust.
How do I know if my organization is eligible for streamlined reinstatement?
Your organization is eligible for streamlined reinstatement if it was otherwise compliant with IRS regulations, the revocation occurred solely due to failure to file Form 990 for three consecutive years, and you apply within 15 months of the revocation date. Review the eligibility criteria outlined in the letter or consult a tax professional for guidance.
What happens if my reinstatement request is denied?
If your reinstatement request is denied, the IRS will provide details explaining why. You may submit a new application with additional documentation or appeal the decision within the allowed timeframe. Engaging a tax attorney or CPA can help you navigate this process effectively.
Can tax-exempt organizations be penalized for other compliance issues beyond Form 990?
Yes, organizations can face penalties for non-compliance with other IRS requirements, such as failing to file employment tax returns, improperly managing unrelated business income, or failing to provide accurate disclosures on fundraising materials. Maintaining comprehensive compliance practices is critical to avoiding penalties and retaining tax-exempt status.
Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.
| CP01 | The IRS verified your claim of identity theft and will monitor your account. |
| CP01H | The IRS received a tax return with a social security number that belongs to a dead person. |
| CP02H | Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma. |
| CP03C | You received the First-Time Homebuyer Credit for a house you purchased. |
| CP04 | You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice. |
| CP08 | You may be entitled to additional money due to the Additional Child Tax Credit. |
| CP10 | Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP10A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP11 | You owe money because the IRS amended your return due to a miscalculation. |
| CP11A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed. |
| CP11M | Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP12 | You are due a bigger refund because the IRS corrected one or more mistakes on your tax return. |
| CP12A | The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return. |
| CP12E or CP12F | The IRS corrected a miscalculation on your return. |
| CP12M | The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return. |
| CP12R | The IRS made changes to the computation of the Rebate Recovery Credit on your return. |
| CP13 | The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero. |
| CP13A | The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero. |
| CP13M | The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero. |
| CP13R | The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero. |
| CP14 | You owe money on unpaid taxes. |
| CP16 | The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts. |
| CP21A | You owe money due to the changes you requested that the IRS make on your tax returns. |
| CP21B | You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks. |
| CP21C | The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero. |
| CP21E | As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes. |
| CP21I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP22A | The IRS made the changes you requested, and you owe money as a result. |
| CP22E | As a result of your recent audit, the IRS changed your tax return, and you now owe money. |
| CP22I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP23 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes. |
| CP24 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP24E | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP25 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero. |
| CP31 | You need to update your address because your refund check was returned to the IRS. |
| CP45 | The IRS was unable to apply your overpayment to your estimated tax as you requested. |
| CP49 | The IRS used all or part of your refund to pay a tax debt. |
| CP53 | Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit. |
| CP57 | The bank declined your payment, so the IRS was unable to draft funds from your bank account. |
| CP71 | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71A | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71C | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71D | A reminder of the amount you owe in tax, penalty, and interest. |
| CP88 | The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax. |
| CP90 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing. |
| CP91 | The IRS will levy up to 15% of your social security benefits for unpaid taxes. |
| CP120 | The IRS needs documentation of your tax-exempt status. |
| CP120A | Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years. |
| CP130 | You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed. |
| CP152 | The IRS received your return. |
| CP153 | The IRS will send your refund by mail because your direct deposit did not go through. |
| CP161 | You have an unpaid balance due to the IRS. |
| CP166 | Your monthly payment to the IRS did not go through due to insufficient funds in your bank account. |
| CP178 | You may no longer owe excise tax because your tax return filing requirements changed. |
| CP231 | You need to update your address because your refund was returned to the IRS. |
| CP259 | You did not file the business tax return identified in the notice. |
| CP259A | You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard). |
| CP259B | The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259C | The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259D | You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return. |
| CP259E | You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP259F | The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return. |
| CP259G | The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations. |
| CP259H | As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP276A | You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time. |
| CP276B | The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time. |
| CP297 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP297A | The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP298 | The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes. |
| CP501 | You have a balance due on one of your tax accounts. |
| CP503 | You have an unpaid balance on one of your accounts, and the IRS has not heard from you. |
| CP504 | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe. |
| CP504B | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe. |
| CP521 | A reminder that you have an installment agreement payment due. |
| CP523 | You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets. |
| CP601 | Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas. |
| CP603 | No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas. |
| CP604 | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda. |
| CP604B | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda. |
| CP621 | Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente. |
| CP623 | Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo. |
| CP711 | Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones. |
| CP721 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP722 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP771 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP772 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP773 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP774 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP959 | Usted no radicó su planilla de contribución de negocios identificada en este aviso. |
| CP2000 | The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due. |
| CP3219A | The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax. |
| CP3219N | The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days. |
| Letter 0012C | The IRS needs additional information to process your tax return. |
| Letter 0484C | The IRS wants a completed |
| Letter 0525 | Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed. |
| Letter 531 | IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return. |
| Letter 0668D(LP 68) | The IRS released their levy. |
| Letter 0549C | Your tax bill was paid. |
| Letter 0681C | The IRS accepted your payment proposal. However, this is not a formal Installment Agreement. |
| Letter 0757C | You did not adhere to the terms of your Installment Agreement. |
| Letter LT 11 | The IRS plans to seize your property or rights to property. |
| Letter 1058 | The IRS has not received your payment. It plans to seize your property or rights to property. |
| Letter 1615 (LT 18) | You must respond to the IRS within 10 days of this notice regarding past due tax returns. |
| Letter 1737 (LT 27) | Complete and sign Form 433F, Collection Information Statement. |
| Letter 1961C | Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify. |
| Letter 1962C | Your application for a |
| Letter 2050 (LT 16) | The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed. |
| Letter 2257C | The IRS is providing the payoff amount that you requested. |
| Letter 226-J | An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP). |
| Letter 2271C | A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information. |
| Letter 2272C | An IRS letter explaining why your request to pay the balance due in installments was declined. |
| Letter 2273C | A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included. |
| Letter 2318C | A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged. |
| Letter 2357C | The IRS is admitting that it did not send you the balance due notices that it should have. |
| Letter 2603C | The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property. |
| Letter 2604C | The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction. |
| Letter 2761C | The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer. |
| Letter 2789C | An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid. |
| Letter 2840C | Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify). |
| Letter 3030C | Provides an explanation of the tax, penalty, and interest still due on your account. |
| Letter 3127C | A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities. |
| Letter 3174 | A reminder of taxes due after the IRS has sent a Notice of Intent to Levy. |
| Letter 3217C | The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify). |
| Letter 3228 (LT 39) | A request to pay the balance due within 10 days using the envelope provided. |
| Letter 3500 | The IRS has received your documents, and it needs additional time to review them. |
| Letter 3572 | Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment. |
| Letter 4883C | The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately. |
| Letter 4903 (LT 26) | You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response. |
| Letter LP 47 | The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address. |
| Letter LP 59 | The IRS has not received a response to the notice of levy it previously sent. |
| Audit Letter 2205 | The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit). |
| Letter 915 | You recently underwent an audit, and the IRS informs you that you now owe taxes. |
Key takeaways
- Letter 947B is issued when an organization’s tax-exempt status is revoked for failing to file Form 990 for three consecutive years.
- Reinstatement options include streamlined retroactive reinstatement, retroactive reinstatement beyond 15 months, and reinstatement with a new effective date.
- Maintaining compliance through regular filings and audits can prevent future revocations.
- Prompt action and thorough documentation are key to successfully regaining tax-exempt status.
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