While many states grant automatic recognition of tax-exempt status to nonprofit organizations following recognition by the Internal Revenue Service, certain states and the District of Columbia mandate a separate application process. Organizations must complete and submit Form FR-164 to request DC’s recognition of their tax-exempt status. Traditionally, this was a one-time filing obligation that would remain effective indefinitely.
However, there has been a notable change to this process in recent years. For exemption certificates issued on or after June 1, 2018, the validity of exemptions granted by DC will now extend only for five years. At the end of this term, organizations are required to file a renewal application to maintain their tax-exempt status. Tax-exempt entities should anticipate receiving a notice 180 days before their exemption expires, followed by a second notice 30 days before the expiration date.
To maintain compliance, both initial applications and subsequent renewal submissions must be processed through the organization’s MyTax.DC.gov portal account. The online renewal procedure mirrors the initial exemption applications; however, the renewal process has been streamlined to no longer necessitate a copy of the IRS Determination or Affirmation letter.
Due to the updated process, it is imperative for nonprofit organizations to be vigilant for expiration notices from the District of Columbia, as many exemption certificates expire in the coming months. It is equally important to prepare and submit renewal requests promptly to avoid any lapse in tax-exempt status.
© Copyright CBIZ, Inc. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.
“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.