IRS Makes Progress on Exemption Application Backlog

August 22, 2014 Posted by Jessica Shofler in IRS, News, Nonprofits

BacklogAt the beginning of 2014, 15% of the exemption applications still on backlog with the IRS were more than one year old. The IRS Tax-Exempt and Government Entities Division (TE/GE) announced this week that the division has since closed 97% of those cases.

According to TE/GE’s deputy commissioner, Donna Hansberry, the division is “on pace to close almost all the aged inventory by the end of calendar year 2014.” They are working from oldest application to newest to get this done.

So what has been the hold up? Hansberry blames it on the auto-revocation. Specifically, the automatic revocation required when an exempt organization fails to file an information return for three consecutive years. She explained that more than 577,000 exempt organizations were automatically revoked for failure to file and the IRS has since reinstated almost 34,000. Of the exemption application received last year, about 30% were for reinstatement.

On top of that, Hansberry noted that since 2010 exemption applications have increased significantly while in the same time period TE/GE staffing has decreased.

At The Law Firm for Non-Profits, we’ve experienced the backlog reduction first hand. In the last two months, we’ve received a large number of determinations filed more than a year ago. Indeed, as of this posting, we only have three applications submitted more than a year ago still outstanding.

Tell us if you’ve been waiting more than a year for your determination. Have you heard anything from the IRS? What have been the consequences to the organization of having to wait a year or more for exemption?

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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