About 15 years ago a couple of moms started a homeschool summer sports group. About 8 years ago, two leaders opened a bank account. The bank set them up with a “Club” account and secured a federal ID number (EIN) for the club. We never applied to the IRS for anything. We never filed any annual reports (the Form 990-N).
Now from reading your website and our emails, it sounds like our tax exempt status was revoked and we need to get it back.
How can something we never had (501c7 Social Club status) be revoked?
Your help in clarifying this is appreciated, so we know how to move forward.
I know this is confusing.
Your sports group is a recreational club that fits the IRS definition of 501(c)(7) social club.
501(c)(7) Social Clubs can “self declare” their tax exempt status without officially applying. Technically, you “self-declared” your tax exempt status when you said you “never applied to the IRS for anything.”
Since 2007, the IRS has required all tax exempt organizations, even those that self-declared their tax exempt status, to file the annual Form 990N. Read more here: http://homeschoolcpa.com/irs-form-990n-faq/
Your organization failed to file the 990-N for three years the and IRS has revoked your “self declared” tax exempt status.
Now you need to file the paperwork (Form 1024) to get back your tax exempt status that you didn’t need to apply for in the first place!
A lot of small organizations have learned that their tax exempt status had been revoked and they didn’t even know about it!
I don’t think the IRS thought this through. I wish they had not revoked the status of 501(c)(7)s, but they did. I also wish they would allow a simple phone call to get reinstated instead of filing the paperwork and paying the IRS $400 fee.
Here’s the IRS webpage explaining how to get your tax exempt status reinstated. They offer 4 methods.
If you find reading the IRS webpage a bit confusing, feel free to contact me and we can set up a personal consultation by phone to discuss your options.
Carol Topp, CPA