March 15, the IRS announced that taxpayers can find
information about tax-exempt organizations in a new online
search tool called Exempt Organizations Select Check (IR-2012-34).
The information that is searchable online includes whether the organization:
- Is eligible to receive tax-deductible contributions.
- Had its tax exemption automatically revoked for failing to file a required Form 990, Return of Organization Exempt From Income Tax, for three consecutive years.
- Filed a Form 990-N, Annual Electronic Filing Requirement for Small Exempt Organizations, also called an e-Postcard.
This new search tool replaces the online Auto-Revocation List, the online version of Publication 78, Cumulative List of Organizations Exempt From Tax, and the e-Postcard database.
Taxpayers who want to contribute to tax-exempt organizations can rely on the exempt status posted either on Select Check or the related online publication, Statistics of Income Tax Stats—Exempt Organizations Business Master File Extract, unless they have specific knowledge that an organization is not exempt. These two resources are updated monthly, but the IRS does not guarantee each update will occur on the same day (EO Update for Charities and Nonprofits, Issue No. 2012-6 (March 14, 2012)).
As welcome as the news of being able to rely on this electronic search engine to check an organization’s status is, it is not without controversy. Once an organization is placed on the auto-revocation list (which occurs for the relatively benign failure to file Form 990 for three consecutive years), the organization is permanently on the list. The IRS says that because the auto-revocation list is an “official IRS record of organizations that have lost their exempt status,” it will not remove organizations from list, “even if they subsequently reapply for exemption and are reinstated” (EO Update for Charities and Nonprofits, Issue No. 2012-6 (March 14, 2012)).
The IRS reports that it has received inquiries from organizations that have had their exempt status reinstated, but whose names still appear on the auto-revocation list. The IRS says that, while it will not remove organizations from the list just because their exempt status has been reinstated, it will remove organizations from the list if they can provide “documentation to show that [the organization] is listed erroneously, either because the organization filed or had an IRS determination of no filing requirement” (EO Update for Charities and Nonprofits, Issue No. 2012-6 (March 14, 2012)).
However, the IRS in Exempt Organizations Select Check Frequently Asked Question 7 responds to an organization’s question about its recent reinstatement after auto-revocation by noting that Select Check will be updated monthly so that the IRS will be able to provide more up-to-date information on the organization’s status, which suggests that, once organizations are reinstated, Select Check will reflect that.
Searching for an organization whose status has been revoked leads to a cautionary message that an organization’s appearance on the list does “not necessarily [reflect] its current tax-exempt or non-exempt status.” Taxpayers are given a toll-free number to call to check whether an organization is recognized as tax-exempt.