How can small charities still comply with the 990-N filing?

Maribeth Wright | August 4th, 2010

The IRS has announced it will help thousands of small charities keep their tax-exempt status who missed the May 17 deadline for filing the new online return, called the Form 990-N or “e-postcard.”

Small groups that did not file required informational tax returns for 2007, 2008 or 2009 by the May 17 deadline can still preserve their tax-exempt status by using a one-time relief program that allows the organizations to bring their filings up-to-date, but they must do so by October 15, 2010.

The exemption revocation results from the Pension Protection Act of 2006, which became effective at the beginning of 2007. Many small organizations, especially those that have become inactive or dormant, were unaware of the requirement, even though the IRS has conducted an extensive outreach to tax-exempt organizations since the law came into effect.

If an organization loses its exemption, it must reapply with the IRS to regain its tax-exempt status. The organization can regain its tax-exempt status by filing the proper form (1023 for a 501(c)(3) or 1024 for other types of exempt organizations) and paying a $850 new application user fee. If the IRS approves the organization’s application, the group’s exempt status would become effective the date of the application. However, the approval process can take six months to a year to complete. Any income received between the revocation date and the renewed exemption may be taxable.

Tax-exempt organizations with annual receipts above $25,000 are required to file the Form 990 or Form 990-EZ annually, while private foundations file Form 990-PF. Smaller not-for-profit organizations with annual receipts of $25,000 or less can file an electronic notice, Form 990-N, which is an e-postcard. Churches and integrated auxiliaries of churches are the only nonprofit groups that are not required to file the Form 990.

The IRS has also posted the names and last-known addresses of nonprofit groups with jeopardized exemptions on its web site. The list for Ohio alone includes approximately 15,000 organizations.

Please contact your Rea not-for-profit professional if you have questions about the 990 filing requirement. Team members are experienced in completing the form and can assist you in this process. You can also visit www.irs.gov for additional information.

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