Some IRS recent activity related to nonprofit organizations of interest...
ONLINE SYSTEM FOR EXEMPTION APPLICATIONS DELAYED
The IRS was targeting 2010 for the release of an online application process for organizations seeking tax-exempt status. This electronic application process is a welcome offering, as the filing fee, now $850 for most nonprofits, was to be reduced to $200. The IRS announced in June that the 2010 target deadline, has been pushed-back due to technical difficulties.
FILING RELIEF FOR SMALL NONPROFITS OFFERED THROUGH OCTOBER 15th.
The Pension Protection Act of 2006 made two important changes affecting tax-exempt organizations, effective the beginning of 2007. First, it created a new tax return filing requirement - all tax-exempt organizations, other than churches and church-related organizations, must file an annual return with the IRS. The Form 990-N was created for small tax-exempt organizations that had not previously had a filing requirement. Second, the law also directed that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status. The IRS conducted an extensive outreach effort about this new legal requirement but many organizations have yet to file their required tax returns.
If an organization loses its exemption, it will have to reapply with the IRS to restore its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.
Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their tax-exempt status by filing returns by Oct. 15, 2010, under a one-time relief program, the Internal Revenue Service announced in July 2010.
The IRS has posted on a special page of IRS.gov the names and last-known addresses of the organizations with delinquent tax filings, along with guidance about how to comply with new filing requirements. The organizations on the list have tax return due dates between May 17 and Oct. 15, 2010, but the IRS has no record that they filed the required tax returns for the last three years.
Two forms of relief are available for small exempt organizations -- a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice (e-Postcard), and a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
Small organizations required to file Form 990-N (e.g., gross receipts up to $25,000 annually) should go to the IRS website, provide the eight information items requested on the form, and electronically file it by Oct. 15.
Under the VCP, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by October 15 and pay a compliance fee. Details about the VCP are on the IRS website, along with frequently asked questions.
The relief announced today is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
The IRS will keep the list of at-risk organizations on IRS.gov until Oct. 15, 2010. Organizations that have not filed the required information returns by that date will have their tax-exempt status revoked, and the IRS will publish a list of these revoked organizations in early 2011. Donors who contribute to at-risk organizations are protected until the final revocation list is published.
Monday, August 2, 2010
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