Indianapolis, Indiana: September 15, 2010 – The IRS has announced a one-time relief to allow small tax-exempt organizations to come back into compliance and retain their tax-exempt status even though they failed to file for three consecutive years. These organizations can preserve their tax-exempt status by filing returns by Oct. 15, 2010.
Tax-exempt organizations that fail to satisfy annual filing requirements for three consecutive years automatically lose their tax-exempt status. If an organization loses its exemption, it will have to reapply to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.
This one-time relief benefits Form 990-N (e-Postcard) and Form 990-EZ filers only. Organizations required to file Form 990 or Form 990-PF are not eligible and are automatically revoked if they fail to file for three consecutive years. If an organization loses its exemption, it will have to reapply with the IRS to regain tax-exempt status, which may cause donations received between the revocation date and renewed exemption to be classified as taxable income.
The IRS has published a list of organizations at risk of losing their tax-exempt status because, according to IRS records, they have not filed for 2007, 2008 and 2009. The list contains the name of the organization and its last-known address. Concerned not-for-profits can check this list to see whether their organization is at risk of automatic revocation and can avoid this consequence by following IRS guidance.
The list, which was generated on June 30, 2010, includes only organizations with an annual filing requirement. Certain exempt organizations are exempt from this requirement. For more information, read Annual Exempt Organization Return: Who Must File on the IRS web site.
According to an IRS press release published on July 26 2010, there are two types of relief available for small exempt organizations
- A filing extension for the smallest organizations required to file Form 990-N, Electronic Notice (e-Postcard)
- A voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
The IRS goes on to state that the new filing requirement does not apply to organizations specifically excluded from filing Form 990, including churches, church-related organizations, governmental entities and affiliates of governmental units.
>> For more information, read the complete IRS article here. (opens in new window)
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