Tuesday, June 14, 2011

Is your non-profit still tax-exempt? Are you sure?

Prior to the passage of the Pension Protection Act of 2006, many tax-exempt organizations, particularly smaller ones, were not required to file information returns with the IRS.  The 2006 Act changed that, and now most tax-exempt organizations ARE required to file with the IRS.  Many smaller organizations, unaware of the change, are in danger of losing their tax-exempt status, or have already lost it.  Recently, the IRS released a list of 275,000 organizations that under the law have automatically lost their tax-exempt status because they have not filed as legally required for the past three years.  The list is here.

Filing thresholds are detailed here   Smaller non-profits, those with annual gross receipts of $50,000 or less, are allowed to file an abbreviated return, Form 990-N (commonly referred to as “e-Postcard”).  Information on the e-Postcard is hereWhile the e-Postcard is a fairly simple matter, particularly when compared to the Form 990-EZ or the full Form 990, it nevertheless has a filing deadline.  The penalty for not filing can be severe - loss of tax-exempt status.

But, all is not lost.  The IRS has published instructions to help these organizations regain their tax-exempt status.  Note that the organization will have to pay a user fee for the reinstatement.  The good news is, for smaller organizations having gross receipts of $50,000 or less, the user fee has been reduced from $400-$850 to only $100.

Many of us are involved in small non-profit organizations in one capacity or another.  Loss of tax-exempt status could threaten the organization’s very existence.  Use the resources the IRS has provided, and make sure your non-profit regains or keeps its tax-exempt status!

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