Understanding your organization's obligation to complete Form 990
On May 18th at 12:01 am, many non-profit organizations will lose their tax-exempt status. This is because May 17th represents a critical deadline for many tax-exempt organizations that are required to file Form 990.
According to the IRS:
The Pension Protection Act of 2006 mandates that all non-profit organizations, other than churches and church related organizations, must file an information form with the IRS. This requirement has been in effect since the beginning of 2007, which made 2009 the third consecutive year under the new law. Any organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Form 990-series information returns are due on the 15th day of the fifth month after an organization’s fiscal year ends. Many organizations use the calendar year as their fiscal year, which makes May 15 the deadline for those tax-exempt organizations. May 15 falls on a Saturday this year so the deadline this year is actually Monday, May 17. Organizations can request an extension of their filing date by filing Form 8868 by the original due date. Absent a request for extension, there is no grace period from filing by the original due date.
Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N (e-Postcard). This asks for a few basic pieces of information. Tax-exempts with annual receipts above $25,000 must file a Form 990 or 990-EZ, depending on their annual receipts. Private foundations file form 990-PF.
Any tax-exempt organization that has not filed the required form in the last three years automatically will lose its tax exempt status effective as of the due date of the annual filing. Under the law, the IRS does not have discretion in this matter.
A list of revoked organizations will be available to the public on IRS.gov.
If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.
Please be sure to file for an extension (by filing Form 8868) if you are unable to complete your Form 990 by Monday. If your organization is only required to file the e-Postcard (Form 990-N), it only takes about 10 minutes and can be completed by someone with no accounting knowledge (besides confirming that the organization has annual receipts below $25,000).
© 2010, Khaleef Crumbley. All rights reserved.
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