IRS AUTOMATIC REVOCATION OF TAX-EXEMPT STATUS

The release of the final IRS Automatic Revocation of Tax-Exempt Status list on June 9 has created some confusion and concerns. The list discloses approximately 275,000 organizations that have failed to file a Form 990 for the last three years, and have lost their tax-exempt status by operation of law. The list includes entities that use the name “Boy Scouts.”

No local councils have lost their tax-exempt status, because they all properly filed Form 990. Last year the IRS published an “At-Risk” list that was widely publicized in the press and by nonprofit watchdogs. The Finance Impact Department shared the list through their e-Letter and on their Web page.

Most of the BSA entities on the list had either properly filed a final Form 990 or the entity had been dead for years. BSA units have been discouraged from filing for separate tax-exempt status. Council leadership has been offered electives and webinars on tax compliance–related topics for the past two years.

There is also confusion about how the IRS group exemption ruling relates to the IRS automatic revocation list. The group exemption permits councils and trusts to become tax-exempt by using IRS-approved standard documents for articles of incorporation, bylaws, and trusts, instead of making a separate application for tax-exempt status to the IRS.

Being listed on the group exemption without filing a separate Form 990 doesn’t make a trust tax-exempt. Under the IRS rules, the trust must file a separate 990 to be included on our group exemption list.

Local councils should determine what action, if any, they should take with local units on the list. Councils can check the list at www.irs.gov to see if there are any related entities on the list, and for more information. Councils that have questions about the automatic revocation list or their trust can contact Russ McNamer ( russ.mcnamer@scouting.org ) of the BSA Legal Team at 972-580-2226.

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