If your nonprofit is small, your yearly IRS filing probably isn’t the long Form 990, or even the shorter 990-EZ. It is Form 990-N, a brief online notice most people call the e-Postcard. The form takes only a few minutes to complete. Ignoring it, year after year, can cost your organization its tax-exempt status.
Who can use it? The e-Postcard is built for small tax-exempt organizations that normally take in $50,000 or less in gross receipts a year. If your organization brings in more than that, you generally file the 990-EZ or the full 990 instead. A few groups cannot use it at all: private foundations file Form 990-PF, and “supporting organizations” under section 509(a)(3) must file a full return. Churches, their integrated auxiliaries, and associations of churches usually do not have to file at all.
Do not assume that “small” means you can skip it. If your organization is tax-exempt and normally takes in $50,000 or less, the e-Postcard is almost certainly the filing you owe. The IRS calls it a notice rather than a return, but it is still a real, required filing.
Filing is done online at IRS.gov. (The IRS moved the system there and no longer uses the old Urban Institute site.) You will need a short list of basic facts: the organization’s legal name and EIN, its mailing address, any “doing business as” name, a website if it has one, the name and address of a principal officer, the tax year you are reporting, a statement that the organization is still operating, and confirmation that gross receipts are normally $50,000 or less. It is short, but it still has to be accurate.
When is it due? The e-Postcard follows the same deadline as the rest of the 990 family: the 15th day of the fifth month after your tax year ends. For most organizations, which run on the calendar year, that means May 15. If the 15th falls on a weekend or legal holiday, you have until the next business day.
One catch on timing: the system only lets you file for the current year and the two years before it. Wait longer than that and you cannot quietly clean up old years through the e-Postcard—you are into a bigger fix.
Organizations often ask whether a late e-Postcard comes with a fine. It does not, there is no monetary penalty for filing Form 990-N late. But that is cold comfort, because the real danger is losing your exempt status. Miss the filing for three years in a row and the IRS revokes your tax-exempt status automatically. That rule applies to e-Postcard filers just like everyone else.
That is the part a nonprofit board needs to take seriously. Because the form is so short and does not ask for financial detail, it is easy to treat as busywork. The IRS does not see it that way, and the fallout from ignoring it is real.
What Happens If You Miss Three Years, and How to Catch Up
Here is what automatic revocation actually does. The moment it takes effect, your organization stops being tax-exempt and becomes a taxable entity going forward. Donors can no longer deduct their gifts. Grantmakers and donor-advised funds, which check before they write a check, will see your name on the IRS’s public Auto-Revocation List. There is no warning letter and no appeal, it happens by law under section 6033(j), whether or not anyone at the organization noticed the filings were missed.
The good news is that getting reinstated is a defined process, and for most small nonprofits it is a manageable one. The IRS laid it out in Revenue Procedure 2014-11, which gives revoked organizations four ways back.
If your organization was eligible to file the 990-N or 990-EZ for each of the three missed years, and it has never been auto-revoked before, you likely qualify for what the IRS calls streamlined retroactive reinstatement. You file the right exemption application; that is, either Form 1023, 1023-EZ, 1024, or 1024-A, with the user fee, and you do it within 15 months of the later of your revocation letter (CP-120A) or the date your name appeared on the IRS Revocation List. There is no separate “reasonable cause” statement to write, and you owe no penalties for the missed e-Postcards. If the IRS approves it, your exemption is restored all the way back to the revocation date, so gifts made during the gap stay deductible.
If your organization was required to file a full 990 or 990-EZ, or it misses the 15-month window, the path is longer. You still file the application and the past-due returns, and you have to show reasonable cause for missing at least one of the three years. If more than 15 months have passed, you can still be reinstated, but often only going forward from the date you apply, which leaves the gap period taxable and those donations unprotected. That is exactly why acting quickly matters.
What to Do After Receiving IRS Form CP-120A
“Your organization’s tax-exempt status has been revoked automatically because you have not filed for three years.” That is the sentence at the top of IRS Notice CP-120A, and it means the revocation has already happened. The letter informing you; it is not a warning, as revocation has already happened. Do not panic, but do not ignore it.
Take four steps. First, read the notice and write down the revocation date and any deadline it lists; that date starts the 15-month clock for streamlined retroactive reinstatement.
Second, confirm which of the three years were missed and gather the organization’s EIN, legal name, current address, and officer information.
Third, file the correct exemption application: either Form 1023, 1023-EZ, 1024, or 1024-A, with the user fee, and, if you are outside the streamlined path, attach the past-due returns and a reasonable-cause statement.
Fourth, until your status is restored, tell donors and grantmakers that reinstatement is in progress, because your organization will appear on the IRS Auto-Revocation List in the meantime. The single most important thing is to move quickly: filing within 15 months is what lets the IRS restore your exemption back to the revocation date, so gifts made during the gap stay deductible.
The simplest fix is not to get here at all. Each year, confirm the organization still falls under the $50,000 threshold, confirm your tax year-end, and put the May 15 deadline (or your equivalent) on the board or finance calendar well ahead of time. Keep the EIN, legal name, current address, and officer information somewhere the responsible person can reach quickly. These are small habits, and they head off a problem that is far more expensive to fix than to prevent.
If you have questions about what sort of entity you should create for your business or nonprofit organization, please contact Michael A. Airdo or Jake A. Leahy.
