Small Tax Exempt Organization Filing Requirements

We mentioned a link on our twitter page previously that discussed how small non-church tax exempt organizations are running into a problem this year in keeping their tax exempt status.  Back in 2006, the Pension Protection Act contained a small paragraph in the bill stating that tax-exempt organizations who previously had not had any filing responsibilities were now required to file a form with the IRS, and if not filed, the organization would be in jeopardy of losing their tax exempt status.

The form required depends on the amount of gross receipts brought in by your organization. For organizations with under $25,000 in gross receipts for 2009, a 990-N postcard is required to be filed annually with no fee associated with the fling. This 990-N form requires a small amount of information but if not filed for three consecutive years the organization loses it’s tax exempt status.

Small entities over the $25,000 gross receipt limit but under $500,000 gross receipts with assets below $1,250,000 are required to file the Form 990-EZ. This category of filer has to file an actual tax return for the year and pay a small compliance fee which can range anywhere from $100 to $500 based on gross receipts to get back into good standing if previously they were not.

This one time relief for the above described filers is not available to entities over the 990-EZ filing requirement limit.

This hasn’t been an issue in prior years because the loss of tax exempt status arises only after three consecutive years of non-filing even though the forms must be filed annually.  The law was passed in 2006 effective beginning 2007.  The filing date of this form is the 15th day of the 5th month after the end of the organization’s fiscal year. For calendar year organizations the third year filing date was May 17, 2010. Apparently many organizations were not aware of this filing requirement.

Fortunately the IRS had over 300,000 tax exempt organizations who were going to lose their status for being non-compliant under this law, so they extended the deadline for filing the postcard until October 15, 2010.  The list of entities who are in jeopardy of losing tax exempt status is available here.

We can help if you think you may be in this situation. If you need assistance or have any questions regarding this issue please email us info@eaecpa.com or call 817-645-3962.

EAE

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CIRCULAR 230 DISCLAIMER: ADVICE, ARTICLES AND COMMENTARY INCLUDED HEREIN DO NOT CONSTITUTE AN OPINION AND ARE NOT INTENDED OR WRITTEN TO BE USED, AND THEY CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER.