Is your tax exempt status secure? The IRS is set to begin revoking tax exemptions on May 17th due to failure to file. Under the federal Pension Protection Act of 2006, exempt organizations that fail to file required Form 990 annual return the Form 990-N e-postcard for three consecutive years will have their tax exemptions automatically revoked by the IRS effective on the filing due date of the third year.
The Form 990 or e-postcard must be filed annually by the 15th day of the 5th month following the end of an organization’s fiscal year. The first round of revocations will begin May 17, 2010 (May 15 happens to fall on a Saturday this year.) If tax exemption is revoked, an organization can be subject to corporate income tax requirements, and non-profits can no longer receive tax-deductible contributions. (a fund accounting disaster) The only way to reinstate a revoked tax exemption will be to reapply to the IRS. (And for those of you who went through this process the first time, you know once was enough.) Small organizations with revenues below $25,000 are particularly susceptible, since prior to 2008 they were not required to submit annual filings to the IRS, and possibly may not have knowledge of the obligation.
Below is a simple tool that will help you determine if you need to file.
Go to http://nccsdataweb.urban.org/PubApps/statePicker.php?prog=epostcard&display=state .
- Select your state and then enter your nonprofit’s name. Check to see if there is a “File Now” Alert next to your nonprofit’s name.
- You may need to file a 990 or 990-N (e-postcard) by May 17 in order to avoid having your nonprofit’s tax-exempt status automatically revoked by the IRS. (NOTE: The “file now” link will take you directly to the E-postcard electronic filing site. Your filing requirements may differ.
Keep in mind that religious organizations are still exempt from Form 990 and related IRS annual filings. (See http://www.irs.gov/charities/article/0,,id=152729,00.html for common filing exceptions.) Also, Form 990-N e-postcard applies to organizations whose gross receipts are below $25,000. If your organization’s gross receipts are normally in excess of $25,000, you must file a Form 990 and not the e-postcard. (See http://www.irs.gov/charities/article/0,,id=169250,00.html) And one more thing to keep in mind – If your organization is categorized as part of a group exemption, you might find it listed even though the parent organization may be including the financial information on its group return. Be sure to check with the parent organization or your accountant to ensure annual filings are being made. If your group exemption filings are up to date, you do NOT have to file separately.
Once your organization’s exemption status is revoked you will have to reapply for tax exemption as well as pay all the fees associated.
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