What This Notice Means

Some exempt organizations are covered by a group exemption letter issued to a central or parent organization. The subordinates listed under that letter share its exempt recognition. A CP120B tells you that your organization is no longer recognized as a tax-exempt subordinate in that group exemption letter.

That matters. Your organization was relying on the group letter for its recognized status. That cover is gone. If you want the IRS to recognize your exemption, you now have to apply for it in your own name.

What to Do

Your next step depends on what kind of organization you are.

  • If you believe you are a 501(c)(3) organization: file Form 1023, Application for Recognition of Exemption Under Section 501(c)(3), or Form 1023-EZ if you're eligible for the streamlined version. You must pay the required user fee.
  • If you want recognition as a 501(c)(4): file Form 1024-A.
  • If you want recognition under another subsection of 501(c): file Form 1024, Application for Recognition of Exemption Under Section 501(a).

When you file Form 1024 or 1024-A, include Form 8718, User Fee Exempt Organization Determination Letter Request, and pay the applicable user fee.

Keep Filing

If your organization is something other than a 501(c)(3) or 501(c)(9), you should continue to meet your annual filing requirements. Losing your place under the group letter does not end those obligations. Missing annual returns creates a separate set of problems you don't want.

Other Steps

  • Contact the IRS at the number on your notice if your address has changed.
  • Talk with the parent organization that holds the group exemption. Find out why your organization was dropped and whether that was a mistake.
  • Keep a copy of the notice with your organization's permanent records.
  • Publication 557, Tax-Exempt Status for Your Organization, covers the application process in detail.

If you need someone to deal with the IRS for the organization, you can authorize a representative with Form 2848.

If your organization received a CP120B notice and you need help sorting out its exempt status, call us at (813) 229-7100.