What to Do if Your Tax Exemption Was Automatically Revoked by the IRS

The Internal Revenue Service (IRS) has created a section of its website for credit unions who have received a letter notifying them of the automatic revocation of their tax exempt status. These letters were generated in response to the Pension Protection Act of 2006, which provided for the automatic revocation of tax-exempt status of any organization that fails to file a required annual information return (Form 990) for three consecutive years.

A credit union’s tax exemption may come from one of two sources. Federal credit unions are exempt under section 501(c)(1) and are not required to file an information return. State chartered credit unions are exempt under section 501(c)(14) and are required to file an information return.

The IRS webpage addresses three different situations:

  1. A federal credit union whose tax exempt status was revoked even though federal credit unions are not required to file information returns;
  2. A state chartered credit union whose tax exempt status was revoked; and
  3. A state chartered credit union that has received a letter stating that its parent organization’s tax exempt status was revoked.

The IRS also published a searchable list of all entities whose tax exempt status was automatically revoked, allowing credit unions to verify their status.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance.