The End of Small Nonprofits That Have Not Filed Form 990

Published on: by Gene Takagi Category:CURRENT AFFAIRS & OPINION, IRS & FEDERAL TAX ISSUES

Today is the last day for up to 380,000 nonprofits to file some version of Form 990 or automatically lose their tax-exempt status.  Many of these organizations have been abandoned, and it will be of value to get them off the books.  But it is believed that a substantial number of small organizations (with annual gross receipts of $25,000 or less) that were previously not subject to the reporting requirement simply are not aware of the change in the law that will terminate their exempt status without any review or exception.  

The Pension Protection Act of 2006 requires the IRS to revoke the federal tax exemption of any organization that is required to file a version of Form 990 and has failed to do so for three consecutive years.  If a 501(c)(3) organization loses its exempt status, it is no longer a charity.  It may not be able to raise charitable funds, and donors to the organization will not be able to take a charitable income tax deduction.  Generally, loss of exemption will kill a charitable organization to the detriment of the beneficiaries of its charitable services.  This can be easily remedied if such small organizations file the incredibly easy Form 990-N (e-Postcard) online today.  Officers and directors have a legal responsibility to ensure this gets done.

Here are the 5 to 8 items you need to know to complete the Form 990-N:

  1. Employer identification number (EIN)
  2. Tax year
  3. Legal name and mailing address
  4. If applicable, any other names the organization uses
  5. Name and address of a principal officer
  6. If applicable, the organization's web site address
  7. Confirmation that the organization’s annual gross receipts are normally $25,000 or less 
  8. If applicable, a statement that the organization has terminated or is terminating (going out of business)

To file Form 990-N, start here (IRS website).

If you do not qualify to file Form 990-N and must instead file Form 990 or Form 990-EZ, you may request an extension by filing Form 8868 today.  If you want to file online for the automatic 3-month extension, start here (file Form 8868 electronically).

If you're not sure whether your organization needs to file the 990, check the searchable database on the website of the National Center for Charitable Statistics here.

Read "Time's Up! What You Need to Know about Your Form 990" here (The Nonprofit Quarterly).

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