If a tax-exempt organization fails to file the Form 990 information return for three consecutive years, it will automatically lose its tax-exempt status.
This loss of tax-exempt status can have serious consequences for the organization, including:
- Tax Liability: The exempt organization may become subject to federal income tax on its net income, which could result in significant financial obligations.
- Reinstatement Process: If an organization loses its tax-exempt status, it must go through a reinstatement process to regain its exemption status, which can be time-consuming and costly.
- Ineligibility for Grants and Funding: Many grants and funding opportunities are available only to tax-exempt organizations. Losing tax-exempt status may disqualify the organization from accessing these resources.
- Loss of Donors’ Confidence: Donors and supporters may be less inclined to contribute to an organization that has lost its tax-exempt status, leading to decreased funding and support.
- State and Local Consequences: Losing federal tax-exempt status may also affect the organization’s status at the state and local levels, potentially subjecting it to additional taxes and regulatory requirements.
Failing to file Form 990 can have severe repercussions for a tax-exempt organization, jeopardizing its financial stability, reputation, and ability to fulfill its mission. Therefore, organizations need to meet their annual filing obligations to maintain their tax-exempt status and remain in compliance with IRS regulations.
What happens if I don’t file a Form 990?
If a tax-exempt organization fails to file the Form 990 information return for three consecutive years, it will automatically lose its tax-exempt status.
This loss of tax-exempt status can have serious consequences for the organization, including:
Tax Liability: The exempt organization may become subject to federal income tax on its net income, which could result in significant financial obligations.
Reinstatement Process: If an organization loses its tax-exempt status, it must go through a reinstatement process to regain its exemption status, which can be time-consuming and costly.
Ineligibility for Grants and Funding: Many grants and funding opportunities are available only to tax-exempt organizations. Losing tax-exempt status may disqualify the organization from accessing these resources.
Loss of Donors’ Confidence: Donors and supporters may be less inclined to contribute to an organization that has lost its tax-exempt status, leading to decreased funding and support.
State and Local Consequences: Losing federal tax-exempt status may also affect the organization’s status at the state and local levels, potentially subjecting it to additional taxes and regulatory requirements.
Failing to file Form 990 can have severe repercussions for a tax-exempt organization, jeopardizing its financial stability, reputation, and ability to fulfill its mission. Therefore, organizations need to meet their annual filing obligations to maintain their tax-exempt status and remain in compliance with IRS regulations.
Last modified: December 19, 2025
