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
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
here.While 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!