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Exempt Organizations - Potential Examination Consequences

An examination can result in the following actions:

  • No change to the organization's exempt status or tax liability,
  • No change to the organization's status or liability, with an advisory and later IRS follow-up to see if advice has been followed,
  • Imposition of tax (unrelated business income, employment, or excise) and/or penalties,
  • Revocation of the IRS's determination that the organization is tax-exempt,
  • Modification of the IRS's determination of tax-exempt status (for example, reclassifying an organization recognized as exempt as a social welfare orgnaizaton under Code § 501(c)(4) as a business league described in
    § 501(c)(6)), and/or
  • Reclassification of foundation status (for § 501(c)(3) organizations and § 4947(a)(1) trusts only).


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)

Page Last Reviewed or Updated: 14-Mar-2014