IRS Advice on Tax-Exemption Snafu
Credit unions that received a notice from the IRS informing them that their tax-exempt status had been revoked due to improper filing now have specific instructions on how to have it restored.
Lois Lerner, IRS director of exempt organizations, addressed three instances of tax-exempt revocation.
In the case of state-chartered credit unions that had group Form 990 returns filed by a parent organization on their behalf, the IRS admitted it had erroneously notified credit unions their tax-exempt status had been revoked. As such, they are not required to apply for recognition exemption.
Federal credit unions that failed to notify the IRS of their charter conversion were placed on the revocation list because the Treasury Department didn’t realize they were no longer subject to state-chartered filing requirements. To update a credit union’s IRS status, the organization must prepare a request to have its account updated, Lerner said.
When federal credit unions filed Forms 990-T to claim health insurance premium tax credits, in some cases the filings prompted an automated search for past Forms 990, which were not required. Lerner said the agency is working to address this issue internally, and, in the meantime, said impacted credit unions could contact the agency directly to reverse the revocation.