Nonprofits that automatically lost their tax-exempt status last year face unnecessary obstacles if they attempt to get reinstated, the Internal Revenue Service’s internal monitor said this week, as part of her annual report to lawmakers.

More than 385,000 nonprofits were knocked off the tax-exempt rolls after they failed to file their tax returns with the IRS for three consecutive years. But while the IRS allows groups to regain their tax-exempt status, Nina E. Olson, the tax agency’s national taxpayer advocate, says the process is marred by bureaucracy.

She says under the current process, groups can’t challenge whether the IRS was wrong to take away their status. Instead, they are simply told to send in the same form they originally submitted to seek tax-exempt status.

That form can take as long as seven months to process, and groups must then wait several more months before…

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