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Insights & Alerts
May 06, 2010

Tax Flash - Nonprofits Out There - Beware of May 15, 2010!
By Marla Esan, Senior Manager - Tax & Business Services

The Internal Revenue Service will revoke the tax exempt status of any nonprofit entity for failure to file required information returns for three consecutive years.

The Pension Protection Act, which was signed into law August 17, 2006, required small IRC 501(c)(3) charities, with annual support or assets less than $25,000, to file annual returns with the Internal Revenue Service.

As a result of the passage of this Act, any organization which fails to file Form 990-N, Form 990-EZ or Form 990, for years 2007, 2008, and 2009, will be subject to termination of their exempt filing status. This three year window will be closing May 15th, 2010, for calendar year charities filing their required forms for 2009.

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 renewal date might be taxable and any contributions received between the revocation date and renewal date will not be tax deductible to the donor.

The IRS also states that a list of revoked organizations will be available to the public, state charities and tax officials on their website, IRS.gov.

The following chart details the required filings by entity type and financial activity:

Financial activity

Filing requirement

Gross receipts normally less than or equal $25,000
Note: Organizations eligible to file the e-Postcard may choose to file a full return.

990-N (e-Postcard)

Gross receipts < $ 500,000 and
Total assets < $1.25 million

990-EZ or 990

Gross receipts greater than or equal $500,000, or

990

Total assets greater than or equal $1.25 million

  

Private foundation (regardless of financial activity)

990-PF

Many exemptions exist related to the above requirements and may include:

  • A church, an interchurch organization, mission, auxiliary or affiliated organization or church operated school,
  • An exclusively religious activity of any religious order,
  • A state institution,
  • A black lung benefit trust,
  • A stock bonus, pension, or profit-sharing trust,
  • Certain foreign organizations,
  • Certain private foundations,
  • A political organization that is a state or local committee of a political party.

Should you have any questions related to this upcoming required filing, contact your MarcumRachlin Tax Professional.

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