Tax Alert: IRS Warns Exempt Organizations of New Penalty For Missing Form 990 Deadline
2/03/2010
The Internal Revenue Service (IRS) has issued a reminder that all tax-exempt organizations must file Form 990, Return of Organization Exempt from Income Tax, on time to preserve their tax-exempt status. Beginning 2010, the IRS will revoke the tax-exempt status of any not-for-profit organization that has not filed Form 990 in the last three years.
The revocation was imposed by the Pension Protection Act of 2006 and has applied since the beginning of 2007. Tax-exempt status will be automatically revoked for any organization that fails to file Form 990 for three consecutive years.
Every tax-exempt organization must file a Form 990 or a Form 990-EZ annually. Small organizations with annual receipts of $25,000 or less must electronically file Form 990-N (e-Postcard). Private foundations must file Form 990PF. Churches and other religious institutions are not required to file Form 990.
Form 990 is due by the fifteenth day of the fifth month following the end of the organization’s tax year—May 15th for the calendar-year organization.
The IRS warned that if the organization loses its exemption, it will have to reapply to the IRS to regain its tax-exempt status. Furthermore, any contributions or other income received after revocation and before renewal may be taxable.
In addition, with the economic crisis existing at the state level, more states are reviewing ways to increase revenue.
Many states are reviewing whether not-for-profit organizations are registered in that state to solicit charitable contributions as well as paying and filing proper tax forms for each state. A careful review should take place to ensure all proper state filings are being prepared to state authorities.
For further guidance on this and other tax issues, please contact Kelly Frank, CPA, partner and Not-for-Profit Industry Practice co-director; Thomas Lanning, CPA, partner; or your J.H. Cohn engagement partner at 877-704-3500.
Kelly Frank, CPA, is a J.H. Cohn partner and co-director of the Firm's Not-for-Profit Industry Practice. She can be reached via email or at 973-403-7999.
Thomas Lanning, CPA, is a J.H. Cohn partner and a member of the Firm's Not-for-Profit Industry Practice. He can be reached via email or at 646-834-4108.
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