The District of Columbia Requires DC-Registered Not-for-Profits to Renew Tax Exemptions
Starting in 2019, the District of Columbia (DC) Office of Tax and Revenue (OTR) is mandating not-for-profits organizations that claim tax-exempt status in DC must reapply for tax-exempt status through an online renewal process.
New Tax-Exempt Renewal Requirement
A not-for-profits organization secures DC tax-exempt status by registering for taxes with DC OTR and applying for tax-exempt status by filing a DC form FR-164. Previously, this process was a one-time requirement, and organizations recognized as tax-exempt by the DC OTR were not required to continuously renew their tax-exempt status.
Beginning Jan. 1, 2019, DC OTR will start to expire the current DC tax-exempt status of not-for-profits organizations and require all organizations to renew their tax-exemptions every five years. Failure to comply with this renewal process will result in being classified as a fully taxable entity for DC income tax purposes. DC OTR has already started sending out notices to organizations, Notice of Upcoming Exemptions Expiration, informing them of the new requirement. DC OTR will send organizations an additional notice at least 30 days before the actual expiration date of their tax exemptions.
The renewal process requires a not-for-profits organization to log into their respective MyTax.DC.gov accounts and complete the online form FR-164 application. Paper applications will no longer be accepted.
not-for-profits may need to provide the following documents if they are not already uploaded in the MyTax.DC.gov portal:
- If incorporated in DC, a certificate of incorporation is required. If not incorporated in DC, a certificate of registration is required.
- An IRS determination letter. Please note that if the determination letter is more than four years old, the not-for-profits will need to also include an affirmation letter from the IRS. Such a letter must be dated within the past year.
- If applying for sales and use and personal property tax exemptions, a current certificate of occupancy or lease showing proof of physical location in DC.
After a not-for-profits tax-exempt application is approved, DC OTR will provide a new exemption certificate which will have an expiration date. Not-for-Profits organizations will be required to recertify every five years from the date of issuance on the exemption certificate (DC Form FR-164 will need to be completed again online).
Requesting an Affirmation Letter
A not-for-profits organization may request an affirmation letter by contacting the IRS Exempt Organization Customer Account Services via telephone, mail, or fax. The request must include the organization’s full name and employer identification number, and it must be signed by an authorized officer or trustee of the organization.
Lori Yokobosky, CPA, Partner, Not-for-Profit & Education Practice
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
InsightIRS: Amounts used as ‘payroll costs’ in 2020 PPP loan forgiveness applications are ineligible for retroactive 2020 Employee Retention CreditsDana FriedEmployers retroactively eligible for 2020 Employee Retention Credits (ERCs) will be held to the Payroll Costs reported on their PPP loan forgiveness applications.
Insight10 top tax issues in cannabis operating agreementsMichael HarlowBe aware of the impacts and implications of having a partnership vs. corporation structure, debt agreements, tax withholding, tax distributions, and more.
Press ReleaseZeger rejoins CohnReznick as Trusts & Estates leaderCohnReznick LLP, one of the leading advisory, assurance, and tax firms in the United States, today announced that Sahri D. Zeger, JD, MBA, has rejoined the firm as Principal and leader of the Trusts & Estates group.
InsightCannabis outlook for 2021 and beyond: Predicting the commercial landscape and business challengesGreg Chin, Michael HarlowRead what industry specialists from New Frontier Data, CohnReznick, and NFP expect for the investment climate, M&A, business tax and talent challenges, and more.
InsightIRS Large Business & International (LB&I) Division adds compliance campaigns related to Puerto Rico Act 22, sections 1060 and 338(h)(10) reportingJames Wall, Christina Lee, James RobbinsThe Large Business & International Division has identified risks related to Puerto Rico Act 22 and Section 1060 and 338(h)(10) transaction reporting. Learn more.