Tax-exempts must re-register or risk losing status

Lake If you are registered in District of Columbia as a tax-exempt organization, you may need to renew your registration or risk losing your tax-exempt status there.

As the result of a new procedures, the D.C. Office of Tax Revenue is requiring all organizations that registered for tax-exempt status more than four years ago to renew their registration. This registration includes income, sales/use, property, charitable registration and franchise tax exemptions. If an organization fails to timely renew, the organization’s tax-exempt status with the District expires and the organization will be treated as a taxable corporation. To regain an exemption, your organization will need to start over with all applicable District registrations – a more complicated and time-consuming process.

The re-registration process is rolling out in batches and the procedure is time-sensitive. A specific notice will be mailed to each affected District organization and posted to the organization’s online account.

After the notice is sent, organizations have 30 days to renew online. If an organization does not respond within 30 days, the exemption is automatically revoked and the District will send a notice notifying the organization of the revocation.

Further complicating matters is the renewal application requires organization to attach IRS recognition of exempt status. However, if the IRS determination letter was issued more than five years ago, the organization has to attach a current affirmation letter of exempt status. Many organizations do not currently have those in-house, so they have to request from IRS. Once requested, it typically takes two weeks to receive an affirmation letter, but with the IRS shutdown in 2018-19, this may take longer.

We recommend organizations that register in the District contact the IRS for an affirmation letter soon. That way, organizations that have the letter in their files when they receive their notice from the District can avoid missing the 30-day window to renew.

We recommend that if you have not yet received a notice, check your company’s online registration status every two weeks until you receive one, just in case the notice is not received via mail.

Mary Torretta
Senior Manager
Arlington, Va.
T  +1 703 847 7659