We don’t think this blog will become simply another place for reposting – but the implications of this are too important not to share. Hopefully old news for Cleveland-area nonprofits, but just in case…
From GuideStar last week:
“Half a million nonprofits could find themselves stripped of tax-exempt status in May 2010. According to IRS estimates, that’s how many smaller organizations have failed to file a Form 990-N. The Pension Protection Act of 2006 requires exempt organizations (nonprofits the IRS has designated as exempt from federal income taxes) that do not meet the income threshold for filing an annual return (IRS Form 990 or one of its variants) to provide certain information to the IRS each year. The IRS created Form 990-N for this purpose, and smaller nonprofits began filing it in 2008.
The Pension Protection Act also directs the IRS to revoke the tax-exempt status of any organization that fails to file an annual return, including the 990-N, for three consecutive years. Revocations will happen automatically beginning in May 2010.
Nonprofits whose exemptions are revoked will suddenly be required to pay federal income taxes—and subject to financial penalties if they fail to do so. Hundreds of thousands of charities, many operated on shoestrings, could find them themselves no longer eligible to accept tax-deductible contributions. Nonprofits that wish to have their exemptions reinstated will be required to re-apply to the IRS for tax-exempt status, a process that can take several months.”
The IRS summarizes: “Beginning in 2008, small tax-exempt organizations have a new filing requirement. It’s short, easy and electronic – it’s the new e-Postcard. If you are a tax-exempt organization that normally has annual gross receipts of $25,000 or less and does not have to file Form 990 or 990-EZ, you must file the e-Postcard. The e-Postcard is due by the 15th day of the fifth month after the close of your tax year. So if your organization operates on a calendar year, the e-Postcard is due by May 15 of the following year. What happens if you don’t file? You risk losing your tax-exempt status! If you think this new filing requirement may apply to your organization, go to www.irs.gov/eo for complete details and while you’re there sign up for Exempt Organization’s free email newsletter, EO Update, to receive up-to-date information posted on the charity pages of irs.gov.”
Check out the IRS page for more information.