Exemption automatically revoked for filing 990-N while over the $50,000 threshold

Plain-English summary

Small tax-exempt organizations with average gross receipts of $50,000 or less can meet their annual IRS filing duty with a short electronic notice, the Form 990-N "e-Postcard." Larger organizations must file a full Form 990 or 990-EZ instead. Here an organization recognized under 501(c)(3) kept filing the 990-N even though its gross receipts averaged more than $50,000 (and it held more than $500,000 in assets), so it never filed the return it actually owed. Under section 6033(j)(1)(B), failing to file the required return or notice for three consecutive years revokes exempt status automatically, by operation of law. The IRS issued this final revocation (with the earlier proposed letter and a Form 886-A explanation attached). The document notes that automatic revocation cannot be appealed or challenged by declaratory judgment; the organization's only limited recourse is to ask Appeals to review whether its receipts really exceeded $50,000 in a given year, and otherwise it must reapply. Once revoked, contributions are no longer deductible under section 170 and the group is listed as auto-revoked.

Ruling snapshot

• Question: Should the organization's exempt status be revoked for failing to file a proper annual return for three consecutive years?
• Outcome: revocation (automatic, by operation of law)
• Key authorities: IRC § 6033(a)(1), (i), (j)(1)(B); IRC §§ 501(a), 170, 7428; Treas. Reg. §§ 1.6033-2, 1.6033-6

Full text (IRS public release)

Department of the Treasury Date:
Internal Revenue Service October 2, 2024
IRS Tax Exempt and Government Entities Taxpayer ID number (last 4 digits):
|__|

Form:

Tax periods ended:

Person to contact:
Name:
ID number:
Telephone:
Release Number: 202452015
Release Date: 12/27/24 Last day to file petition with United States

UIL Code: 501.03-00 Tax Court:
December 31, 2024

CERTIFIED MAIL - Return Receipt Requested

Why we are sending you this letter
This is a final determination that you don't qualify for exemption from federal income tax under Internal
Revenue Code (IRC) Section 501(a) as an organization described in IRC Section 501(c)(3), effective

. Your determination letter dated , is revoked.

Our adverse determination as to your exempt status was made for the following reasons: You regularly filed
Forms 990-N. However, your organization had an average of more than $50,000 in gross receipts and more than
$500,000 of assets. Thus, you consistently did not file the appropriate annual return. If an organization
described in IRC Section 6033, subsection (a)(1) or (i) fails to file an annual return or notice required under
either subsection for 3 consecutive years, such organization's status as an organization exempt from tax under
section 501(a) shall be considered revoked on and after the date set by the Secretary for the filing of the third
annual return or notice [IRC 6033(j)(1)(B)].

Organizations that are not exempt under IRC Section 501 generally are required to file federal income tax returns
and pay tax, where applicable. For further instructions, forms and information please visit IRS.gov.

Contributions to your organization are no longer deductible under IRC Section 170.

What you must do if you disagree with this determination
If you want to contest our final determination, you have 90 days from the date this determination letter was

mailed to you to file a petition or complaint in one of the three federal courts listed below.

How to file your action for declaratory judgment
If you decide to contest this determination, you can file an action for declaratory judgment under the provisions
of Section 7428 of the Code in either:

* The United States Tax Court,
* The United States Court of Federal Claims, or
* The United States District Court for the District of Columbia

Letter 6337 (Rev. 3-2024)
Catalog Number 74808E


You must file a petition or complaint in one of these three courts within 90 days from the date we mailed this
determination letter to you. You can download a fillable petition or complaint form and get information about
filing at each respective court's website listed below or by contacting the Office of the Clerk of the Court at one
of the addresses below. Be sure to include a copy of this letter and any attachments and the applicable filing fee
with the petition or complaint.

You can eFile your completed U.S. Tax Court petition by following the instructions and user guides available
on the Tax Court website at ustaxcourt.gov/dawson.html. You will need to register for a DAWSON account to
do so. You may also file your petition at the address below:

United States Tax Court
400 Second Street, NW
Washington, DC 20217
ustaxcourt.gov

The websites of the U.S. Court of Federal Claims and the U.S. District Court for the District of Columbia contain
instructions about how to file your completed complaint electronically. You may also file your complaint at one of
the addresses below:

US Court of Federal Claims

717 Madison Place, NW

Washington, DC 20439

uscfc.uscourts.gov

US District Court for the District of Columbia
333 Constitution Avenue, NW

Washington, DC 20001

dcd.uscourts.gov

Processing of income tax returns and assessments of any taxes due will not be delayed if you file a petition for
declaratory judgment under IRC Section 7428.

The IRS office whose phone number appears at the top of the notice can best address and access your tax
information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate
Service (TAS) if you can't resolve your tax problem with the IRS or if you believe an IRS procedure just isn't
working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects
taxpayer rights. Visit TaxpayerAdvocate.IRS.gov/contact-us or call 877-777-4778 (TTY/TDD 800-829-4059)
to find the location and phone number of your local advocate. Learn more about TAS and your rights under the
Taxpayer Bill of Rights at TaxpayerAdvocate.IRS.gov. Do not send your Tax Court petition to TAS. Use the
Tax Court address provided earlier in the letter. Contacting TAS does not extend the time to file a petition.

Where you can find more information
Enclosed are Publication 1, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, for

more comprehensive information.

Find tax forms or publications by visiting IRS.gov/forms or calling 800-TAX-FORM (800-829-3676). If you
have questions, you can call the person shown at the top of this letter.

If you prefer to write, use the address shown at the top of this letter. Include your telephone number, the best
time to call, and a copy of this letter.

You may fax your documents to the fax number shown above, using either a fax machine or online fax service.
Protect yourself when sending digital data by understanding the fax service's privacy and security policies.

Letter 6337 (Rev. 3-2024)
Catalog Number 74808E


Keep the original letter for your records.

Sincerely,

[illegible]
Director, Exempt Organizations Examinations

Enclosures:
Publication 1
Publication 594
Publication 892

Letter 6337 (Rev. 3-2024)
Catalog Number 74808E


Date:
12/15/2023

Department of the Treasury
Internal Revenue Service
Tax Exempt and Government Entities Taxpayer ID number:

IRS Exempt Organizations Examinations
Form:
||

Tax periods ended:

Person to contact:
Name:
ID number:
Telephone:

Address:

Manager's contact information:

CERTIFIED MAIL — Return Receipt Requested ID number:
Telephone:

01/25/2024

Why you're receiving this letter

If you agree
If you haven't already, please sign the enclosed Form 6018, Consent to Proposed Action, and return it to the

contact person shown at the top of this letter. We'll issue a final adverse letter determining that you aren't an
organization described in IRC Section 501(c)(3) for the periods above.

If you disagree

1. Request a meeting or telephone conference with the manager shown at the top of this letter.

2. Send any information you want us to consider.

3. File a protest with the IRS Appeals Office. If you request a meeting with the manager or send additional
information as stated in 1 and 2, above, you'll still be able to file a protest with IRS Appeals Office after

the meeting or after we consider the information.

The IRS Appeals Office is independent of the Exempt Organizations division and resolves most disputes
informally. If you file a protest, the auditing agent may ask you to sign a consent to extend the period of
limitations for assessing tax. This is to allow the IRS Appeals Office enough time to consider your case.
For your protest to be valid, it must contain certain specific information, including a statement of the
facts, applicable law, and arguments in support of your position. For specific information needed for a
valid protest, refer to Publication 892, How to Appeal an IRS Determination on Tax-Exempt Status.

Fast Track Mediation (FTM) referred to in Publication 3498, The Examination Process, generally doesn't
apply now that we've issued this letter.

Request technical advice from the Office of Associate Chief Counsel (Tax Exempt Government Entities)
if you feel the issue hasn't been addressed in published precedent or has been treated inconsistently by the
IRS.

Letter 3618 (Rev. 8-2019)
Catalog Number 34809F

If you're considering requesting technical advice, contact the person shown at the top of this letter. If you
disagree with the technical advice decision, you will be able to appeal to the IRS Appeals Office, as
explained above. A decision made in a technical advice memorandum, however, generally is final and
binding on Appeals.

If we don't hear from you
If you don't respond to this proposal within 30 calendar days from the date of this letter, we'll issue a final

adverse determination letter.

Contacting the Taxpayer Advocate Office is a taxpayer right
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that can help protect your

taxpayer rights. TAS can offer you help if your tax problem is causing a hardship, or you've tried but haven't
been able to resolve your problem with the IRS. If you qualify for TAS assistance, which is always free, TAS
will do everything possible to help you. Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.

Additional information
You can get any of the forms and publications mentioned in this letter by visiting our website at

www.irs.gov/forms-pubs or by calling 800-TAX-FORM (800-829-3676).
If you have questions, you can contact the person shown at the top of this letter.

Sincerely,

Lynn A. Brinkley
Director, Exempt Organizations Examinations
Enclosures:

Form 886-A
Form 6018, Form 6018, Publication 3498, and Publication 892

Letter 3618 (Rev. 8-2019)
Catalog Number 34809F

Form 886A Department of the Treasury Internal Revenue Service Exhibit No. 1
Explanation of Items

Name of Taxpayer Year/Period Ended
ISSUES:
1) Whether annual gross receipts of were normally
more than $50,000 for tax periods ending , and
and, therefore, was ineligible to satisfy the annual

return filing requirement under Internal Revenue Code ("IRC") Section 6033(a)(1)
by filing Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt
Organizations Not Required to File Form 990 or 990-EZ.

2) Whether exempt status should be revoked by
operation of law under IRC Section 6033(j)(1)(B) for the failure to satisfy the
annual return filing requirement under Section 6033(a)(1) for tax periods ending

; and
FACTS:
is recognized as an IRC Section 501(c)(3) tax-exempt
organization described in IRC Section 509(a)(2). is
filed Form 990-N for tax periods ending ;
and
During the communication with they provided the following
information:
In the year ended ; received $ in
annual gross receipts and averaged $ in annual gross receipts over the
period ending that same year.
In the year ended , received $ in
annual gross receipts and averaged $ in annual gross receipts over the
period ending that same year.
In the year ended ; received $ in
annual gross receipts and averaged $ in annual gross receipts over the
period ending that same year.
LAW & ANALYSIS:

Form 886A Department of the Treasury - Internal Revenue Service Exhibit No. 1
Explanation of Items

Name of Taxpayer Year/Period Ended

Under IRC Section 6033(a)(1), every organization exempt from taxation under Section
501(a), subject to certain exceptions, must file an annual information return (Form 990,
Form 990-EZ, or Form 990-PF). Section 6033(a)(3)(A)(ii) provides a mandatory
exception for organizations with annual gross receipts normally not more than $50,000.
Section 6033(a)(3)(B) additionally provides that the Secretary may relieve any
organization (other than an organization described in Section 509(a)(3)) from the annual
return filing requirement where the Secretary determines such a filing is not necessary
to the efficient administration of the internal revenue laws. Under this discretionary
exception, most exempt organizations with annual gross receipts normally not more
than $50,000 are not required to file an annual information return. See Treasury
Regulation ("Regulation") Section 1.6033-2(g)(1)(iii) and (viii).

The gross receipts of an organization are normally not more than $50,000 if, in the case
of an organization that has been in existence for three years or more, the average of the
gross receipts received by the organization in the immediately preceding three taxable
years, including the year for which the return would be required to be filed, is $50,000 or
less. See Regulation Section 1.6033-2(g)(3)(ii) and Revenue Procedure 2011-15, 2011-
3 IRB 322.

IRC Sections 6033(i) and (j) were added to the Internal Revenue Code by section 1223
of the Pension Protection Act (PPA) and became effective for taxable years beginning
after 2006. Section 6033(i)(1) contains an annual electronic notice requirement for most
exempt organizations that are not required to file an annual information return under
Section 6033(a)(1) because their annual gross receipts result in such organizations
being referred to in Section 6033(a)(3)(A)(ii) or (a)(3)(B). In effect, Section 6033(i)
generally requires an exempt organization to submit an annual electronic notice (Form
990-N) if its annual gross receipts are normally not more than $50,000. The Department
of the Treasury and the Service issued final regulations under Section 6033(i) that
describe the time and manner of submitting the annual electronic notice. See
Regulation Section 1.6033-6.

Regulation Section 1.6033-6(b)(1) provides that an organization that is required to file
an annual information return under IRC Section 6033(a)(1) shall not submit an annual
electronic notice. Regulation Section 1.6033-6(c)(3) further provides that by submitting
the annual electronic notice, "an organization acknowledges that it is not required to file
a return under section 6033(a) because its annual gross receipts are not normally in
excess of [$50,000]." In order to make this determination, the organization must
maintain records that enable it to calculate its gross receipts. All organizations are
required to keep records under IRC Section 6001. These records will provide evidence
of the continuing basis for the organization's exemption from the annual return
requirement under Section 6033(a)(1). Finally, the regulations provide that an
organization's eligibility to submit the annual electronic notice under Section 6033(i)


Form 886A Department of the Treasury - Internal Revenue Service Exhibit No. 1
Explanation of Items

Name of Taxpayer Year/Period Ended

rather than having to file a return does not relieve the organization from having to file
other required information or tax returns, or from the penalties for the failure to file such
returns.

IRC Section 6033(j)(1)(B) provides, in part, that if an organization required to file an
annual information return under Section 6033(a)(1) fails to file the return or notice
required for three consecutive years, the organization's tax-exempt status is revoked by
operation of law (automatic revocation). The revocation is effective as of the date set by
the Secretary for the filing of the third required information return or electronic notice.

If an organization is required to file an annual information return on Form 990 or Form
990-EZ pursuant to IRC Section 6033(a)(1) or an annual electronic notice on Form 990-
N pursuant to Section 6033(i), Section 6033(j)(1)(B) provides for the automatic
revocation of the exempt status of the organization if it fails to file the required return or
notice for three consecutive years. Section 6033(i) and the regulations thereunder
require an organization to submit a Form 990-N (with some exceptions not applicable
here) if it is not required by Section 6033(a)(1) to file Form 990 or Form 990-EZ.
Regulation Section 1.6033-6(b)(1) expressly provides that an organization required to
file an annual information return under IRC Section 6033(a)(1) shall not submit an
annual electronic notice under Section 6033(i). In other words, an organization whose
annual gross receipts normally exceed $50,000 can neither satisfy its annual reporting
obligation nor avoid the automatic revocation provision of Section 6033(j)(1)(B) by
submitting a Form 990-N. Thus, any organization that fails to file the return required by
Section 6033(a)(1) for three consecutive years, including an organization identified as
having improperly submitted a Form 990-N for a consecutive period, will be
revoked by operation of law pursuant to Section 6033(j)(1)(B).

GOVERNMENT'S POSITION:

failed to satisfy its annual return filing requirement under
IRC Section 6033(a)(1) for the tax periods ending , and
For each of these tax periods, did not file a Form 990 or
Form 990-EZ and was ineligible to file a Form 990-N due to normally receiving more
than $50,000 in annual gross receipts.

POSITION:
agrees

LIMITED OPPORTUNITY FOR APPEAL CONSIDERATION:

Automatic revocation under IRC Section 6033(j) occurs by operation of law and is not
an adverse determination within the meaning of Section 7123(c). Therefore, an


Form 886A Department of the Treasury - Internal Revenue Service Exhibit No. 1
Explanation of Items

Name of Taxpayer Year/Period Ended

organization whose tax exemption is automatically revoked generally may not appeal
the revocation of its exempt status but must reapply for exempt status. See also Section
12.02 of Revenue Procedure 2022-5.

This limitation on administrative appeals parallels the limitation on declaratory judgment
actions with respect to automatic revocation in IRC Section 7428. In general, Section
7428(a)(1) permits, in pertinent part, an organization to bring an action for declaratory
judgment in cases involving a determination of an organization's continuing qualification
as an organization described in Section 501(c). Section 7428(b)(4), however, provides
that no action may be brought with respect to the revocation of exempt status under
Section 6033(j)(1)(B). There is similarly no determination for the Independent Office of
Appeals to review with respect to an automatic revocation.

Although an organization whose exempt status is revoked by operation of law under
IRC Section 6033(j)(1)(B) has no declaratory judgment rights and is not eligible to
challenge the revocation, including the opportunity for consideration by Appeals, the
Service has the discretion to offer organizations the opportunity for Appeals
consideration with respect to certain issues. The Service has determined that Appeals,
in its discretion, may provide a limited review as to whether

annual gross receipts normally exceeded $50,000 in a specific year, rendering it
ineligible to submit the Form 990-N for that year.

If requests and Appeals agree to review the case, Appeals
may sustain or reverse the Service's examination conclusion that
annual gross receipts normally exceeded $50,000 for a specific year. If
Appeals reverses this conclusion as to annual gross
receipts, automatic revocation will not occur because the organization would not have
failed to file its required annual return or notice for three consecutive years. However, if
Appeals sustains the Service's conclusion that gross
receipts normally exceeded $50,000 (rendering it ineligible to submit a Form 990-N),
exempt status is revoked. Appeals does not have the
authority to reverse the automatic revocation based on IRC Section 6033(j)(1)(B)
because such revocation occurs by operation of law.

CONCLUSION:
failed to satisfy its annual filing requirement for tax years

ending ; and as required under IRC Section 6033(a)(1).
was ineligible to satisfy this requirement by filing Form 990-


Form 886A Department of the Treasury - Internal Revenue Service Exhibit No. 1
Explanation of Items

Name of Taxpayer Year/Period Ended

N due to its annual gross receipts normally exceeding $50,000 during each of those tax
periods.

exempt status should be revoked by operation of law
pursuant to IRC Section 6033(j)(1)(B) due to its failure to file a proper return for three
consecutive years as required under Section 6033(a)(1). If finalized, the effective date
of this automatic revocation will be , the due date of the third tax year without
the filing of a proper return by

If automatically revoked, will be removed from the Tax
Exempt Organizations Search webpage at www.irs.gov/teos that lists organizations
eligible to receive tax-deductible charitable contributions. In addition,
will be added to the Tax Exempt Organizations Search webpage that lists
automatically revoked organizations. For additional information concerning automatic
revocations of exempt status under IRC Section 6033(j)(1), please visit irs.gov website
link Automatic Exemption Revocation for Non-Filing: Effect of Losing Exemption |
Internal Revenue Service (irs.gov).