Internal Revenue Code Section 6043(b) and Treasury Regulations Section 1.6043-3 establish rules for when a tax-exempt organization must notify the IRS that it has undergone a liquidation, dissolution, termination, or substantial contraction. Generally, most organizations must notify the IRS when they terminate. Among other things, notice to the IRS of a termination will close the organization’s account in IRS records. If the organization is listed on the Exempt Organizations Business Master File list of tax-exempt organizations, notice of a termination will remove the organization from that listing. Notice of a termination should also stop the IRS from issuing letters about missed returns. This page describes how a tax-exempt organization should provide notice to the IRS of a termination. This information applies to organizations that are ceasing all activities. An organization undergoing a substantial contraction or partial liquidation should not take the steps described below. How you should inform the IRS that you are terminating Organizations currently recognized as exempt and required to file an annual return or notice If you are required to file a return or notice and you are currently recognized as exempt from federal income tax, use your final return or notice to tell the IRS about the termination. Note: If you are not required to file an annual return or notice, but you are required to notify the IRS of a termination, see Organizations not required to file an annual return or notice. An organization required to file an annual return or notice will indicate its termination on its annual return or notice as summarized below: Return/report required How to report Form 990-N (e-Postcard) Answer yes to question asking whether organization has terminated or has gone out of business. Form 990 or 990-EZ Check Terminated box in header of return (Item B) and provide the information described below. Form 990-PF Check Final return box in header of return (Item G) and provide the information described below. Note: For the purposes of this discussion, “termination” means a complete cessation of activities. For a discussion of the termination of private foundation status under section 507, see Termination of Private Foundation Status. If you were required to file an annual return or notice, and lost your tax-exempt status for failure to file a required return or notice for 3 consecutive years, you can provide notice to the IRS that you will terminate by following the procedure described for Organizations that did not file for tax-exempt status. When the final return is due A tax-exempt organization with a filing requirement must ordinarily file its required annual return or notice by the 15th day of the 5th month after the end of its normal tax year (unless an extension is requested). If you terminate before the end of your normal tax year, your tax year will close early. In that case, if you are required to file an annual return (Form 990, Form 990-EZ or Form 990-PF), that return will be due (and you must file your final return) by the 15th day of the 5th month after the termination date. For example, an organization that has a calendar year tax period (ending December 31) would ordinarily file its final annual return by May 15th of the following calendar year. If the same organization terminates on August 31, its final tax period will end on August 31, instead of December 31. That organization must file its final return on or before January 15. The Form 990-N e-Postcard is a notice, not a return. A Form 990-N filer that terminates before the end of its normal tax year should file its final Form 990-N e-Postcard as soon as reasonably practicable after the start of what would have been its next normal tax year. Information you will need to disclose on your final return Form 990 filers should In header area B of page 1: Check the Final Return/Terminated box; At Part IV, Line 31: Answer yes to, “Did the organization liquidate, terminate, or dissolve and cease operations?”; At Part IV, Line 32: If applicable, answer yes to, “Did the organization sell, exchange, dispose of, or transfer more than 25% of its net assets?”; and Complete Schedule N (Form 990 or 990-EZ), Liquidation, Termination, Dissolution or Significant Disposition of Assets. Include a description of the assets and any transaction fees, the date of distribution, the fair market value of the assets and information about the recipients of the assets. Form 990-EZ filers should In header area B of page 1: Check the Final Return/Terminated box; At Part V, Line 36: Answer yes to, “Did the organization undergo a liquidation, dissolution, termination, or significant disposition of net assets during the year?”; and Complete Schedule N (Form 990 or 990-EZ), Liquidation, Termination, Dissolution or Significant Disposition of Assets. Include a description of the assets and any transaction fees, the date of distribution, the fair market value of the assets and information about the recipients of the assets. Relationship between your organization and transferee organization Schedule N also asks specific questions about whether an officer, director, trustee, or key employee of your organization is, or is expected to be, involved in the successor or transferee organization by governing, controlling, or having a financial interest in that organization. If you answer yes to any of the questions, you will need to provide the name of the person involved and an explanation of the circumstances. Attachments to your final Form 990 or 990-EZ return You will need to provide a certified copy of your articles of dissolution or merger, resolutions and plans of liquidation or merger along with your Form 990 or 990-EZ. You may also need to provide other documentation requested in Schedule N. Form 990-PF filers should In header area E of page 1: If all assets were distributed to a qualified public charity (see Instructions for Form 990-PF), check the box for termination of private foundation status under section 507(b)(1)(A); In header area G of page 1: Check the Final return box; Attachments: Prepare an attachment to Form 990-PF that includes A description of each transaction you undertake in the winding up of your activities A certified copy of the liquidation plan, resolution, etc. (if any) and all amendments or supplements that weren't previously filed A list showing the names and addresses of each recipient of assets An explanation of the nature and fair market value of the assets distributed to each recipient For a complete corporate liquidation or trust termination, attach a statement as to whether a final distribution of assets was made and the date it was made (if applicable) Organizations not required to file an annual return or notice Terminating will not cause you to have a filing requirement if you are not otherwise required to file an annual return or notice. How you notify the IRS of your termination will depend upon whether you applied for and received a determination of exemption. Organizations that applied for and received a determination of exemption If you applied for and received a determination of tax-exempt status and you are not required to file an annual return or notice, you should send your termination information and documentation described below to the TEGE Correspondence Unit at the following address. TEGE Correspondence Unit P.O. Box 2508, Room 6403 Cincinnati, OH 45201 Express and Overnight: TEGE Correspondence Unit Room 6403 550 Main Street Cincinnati, OH 45202 You may also send the information by fax to 855-204-6184. Required information and documents Documentation that implements and directs your dissolution as an entity under state law. Such documentation may include Articles of Dissolution filed with the state (for incorporated entities); Minutes of the meeting where the vote was taken to dissolve. (This document must be signed and dated by an officer for unincorporated associations or for corporations that did not file Articles of Dissolution with their state); Resolution to dissolve a trust, signed and dated by a trustee A list of the last directors, trustees or officers, with daytime telephone numbers For organizations described in section 501(c)(3) only: A statement signed by an officer describing the final distribution of assets Organizations that did not file for tax-exempt status If you have an EIN, you didn’t file for tax-exemption and you are not required to file an annual return or notice, you need merely to inform the EO Entity division by letter that you are terminating your activities and wish to close your account. Doing so will inactivate your EIN. You should send that letter to the following address: IRS Attn.: EO Entity, MS 6273 Ogden UT 84201 You may also send the letter by fax to 855-214-7520. Your letter should include your complete legal name (as shown on your Application for Employer Identification Number), your EIN, and your address. If you have the letter the IRS sent you informing you of your EIN, please include it with your letter. Your letter should state the reason you wish to close your account. If you did not file for tax-exempt status because you are affiliated with a parent organization that holds a Group Exemption Number, you should provide the parent organization with a copy of your letter to EO Entity. If you are an organization that automatically lost tax-exempt status for failure to file a required annual return or notice for 3 consecutive years and you have ceased activities and intend to dissolve, please provide notice to EO Entity so that your account can be closed. State filings The state where you are organized may have its own procedures that apply when a nonprofit organization ceases its activities. You should check with the state attorney general or other appropriate state office of your intent to dissolve, liquidate, or terminate. Additional information Publication 4779, Facts About Terminating or Merging Your Exempt Organization PDF Form 990, Return of Organization Exempt From Income Tax PDF Form 990-EZ, Short Form Return of Organization Exempt From Income Tax PDF Schedule N, Liquidation, Termination, Dissolution, or Significant Disposition of Assets PDF Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ Form 990 Series, Which forms do exempt organizations file? State Non Profit Information Termination of Private Foundation Administrative reinstatement of corporate charter - new exemption application not required Return to Life Cycle of a Public Charity Return to Life Cycle of a Social Welfare Organization Return to Life Cycle of a Labor Organization Return to Life Cycle of an Agricultural or Horticultural Organization Return to Life Cycle of a Business League (Trade Association)
