How to Avoid Losing Your Nonprofit by Keeping up with Annual Returns

In 2011, the I.R.S. announced that it had revoked the tax-exempt status of over 275,000 nonprofits due to failure to file an annual filing in compliance with the Pension Protection Act of 2006. This Act changed the reporting requirements for small nonprofits and gave the I.R.S. the right to automatically take away a nonprofit’s tax-exempt status if it did not file for three consecutive years – even if they were a small organization with minimal revenue. Unfortunately, Revolution Leadership was one of those organizations.

I applied for tax-exempt status for Revolution Leadership before I was an attorney. I was still in my early twenties and asked someone I thought was knowledgeable if we needed to file any annual returns since we were a small nonprofit at the time and did not have much income. They told me “no” and I believe them. Because I relied on someone that was not a nonprofit attorney and was unaware that the law had changed – my nonprofit lost our tax-exempt status that year.

I had to spend time and money going through the arduous process of reapplying and learning the new requirements. Learn from my mistakes. Stay on top of nonprofit laws yourself – or work with a knowledgeable nonprofit attorney that stays on top of the ever-changing requirements for you so that you do not find yourself in the same situation. 

An important part of running or managing a nonprofit is making sure that you are current with your annual filings. Although you can hire someone to handle it for you, it is always good to at least understand the basics of what you will be responsible for filing so that you can make sure that your nonprofit is still in good standing with the I.R.S. 

You don’t have to do it alone. At Chisholm Law Firm, we have a 100% success rate for our clients. You can rest assured that your nonprofit is in the best hands and that we’ll get everything done right the first time. Call us today to schedule your free consultation.

And remember – it shouldn’t be this hard to be a superhero. 


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