The LTR 6176 notifies your tax-exempt organization of a compliance issue that could affect your exempt status. The IRS may have identified problems with your Form 990 filing, concerns about your operations, or potential violations of the conditions of your exemption.
Common Compliance Issues
Late or missing Form 990 filings (three consecutive years of non-filing results in automatic revocation), private benefit or private inurement concerns (organizational insiders receiving unreasonable compensation or benefits), political campaign activity (prohibited for 501(c)(3) organizations), excessive lobbying activity, failure to operate exclusively for exempt purposes, and unrelated business income that isn't properly reported.
Why This Is Urgent
Loss of tax-exempt status is catastrophic for a nonprofit. Donations become non-deductible for donors, which typically decimates fundraising. The organization becomes subject to income tax on its revenue. And regaining exempt status requires a new application (Form 1023 or 1024) with fees and processing time.
How to Respond
Address the specific issue identified in the LTR 6176. If the issue is a missing filing, file immediately. If it's an operational concern, provide documentation showing compliance with exemption requirements. If it's a governance issue, implement corrective measures and document the changes.
Respond by the deadline stated in the letter. A thorough, documented response showing compliance (or corrective action) typically resolves the issue without loss of exemption.
If your exempt organization received an LTR 6176, call us at (813) 229-7100. Your exemption may depend on a timely, well-prepared response.