Some 275,000 organizations that failed to file legally required annual reports for three consecutive years have automatically lost their tax-exempt status, the IRS announced Wednesday.
The agency said the vast majority of the affected groups are defunct, but set out special steps to help existing organizations apply for reinstatement of their tax-exempt status.
Most tax-exempt organizations are required to file an annual information return or notice with the IRS under the 2006 Pension Protection Act (PPA). The law imposed a filing requirement on small organizations for the first time in 2007. In addition, it automatically revokes the tax-exempt status of any organization that does not file required returns or notices for three years in a row.
The IRS said it had made an extensive effort to inform tax-exempt groups of the changes in the law, including mailing more than 1 million notices to organizations that had not filed. Last year, the agency published a list of at-risk groups and gave smaller organizations an additional five months to file required notices and come into compliance.