Mistakes happen, even especially on tax filings. You can usually file an amended tax return to resolve any issues, but how do you correct erroneous information on Forms 1023 or 1024 applications for exemption after they’ve been approved by the IRS? It depends on the specific issues, but a couple of common examples are: 1) not fully disclosing all activities of the organization, and 2) not checking the correct box in the type of charity section of Form 1023.
- If your undisclosed activities fall within your exempt purpose and/or would not jeopardize your exempt status, you can disclose them on your next Form 990 filing or a separate letter so that the IRS is aware. You can also request that the IRS review the additional activities and issue a new determination letter, but the IRS will assess a fee.
- Checking the wrong box in the Public Charity Status section of the application (Form 1023, Part X or Form 1023-EZ, Part IV) is fairly common. It’s best to consult with someone who understands the various options prior to filing, but if you do make a mistake or circumstances change, you can make corrections. Most changes within the public charity category can be made on Form 990, Schedule A, but changes involving supporting organization or private foundation status generally must be requested using IRS Form 8940. If your organization finds itself in a situation where the IRS has approved your inadvertent request for private foundation status, but you actually qualify for public charity status, you don’t have to initiate the 5-year advance ruling request to make a change. File Form 8940 with your explanation and filing fee to get retroactive public charity status.
June 1, 2016