Law Office Report - Spring 2008
New Tax Reporting Requirement for Tax-Exempt Organizations
Attorney Rick A. FlugaurThe Pension Protection Act of 2006 added a new tax reporting requirement for small tax-exempt organizations. Organizations whose gross receipts are normally $25,000 or less are now required to submit Form 990-N, an electronic form of the standard Form 990 (commonly referred to as the e-Postcard).
Form 990 is an annual reporting return that certain tax-exempt organizations must file with the IRS. It provides information on the filing organization’s mission, programs, and finances. Prior to the changes under the Pension Protection Act of 2006, the reporting requirement applied only to tax-exempt organizations with gross receipts of more than $25,000, and all 501(c)(3) private foundations, regardless of income.
While most small tax-exempt organizations with gross receipts that are normally $25,000 or less must file the e-Postcard, there are some exceptions. The exceptions include organizations that file as part of a group return and churches (including their integrated auxiliaries, conventions or associations).
The following organizations cannot file the e-Postcard but must file different forms instead:
• Tax-exempt organizations with annual gross receipts that are normally greater than
$25,000 must file Form 990 or Form 990-EZ;• Private foundations must file Form 990-PF;
• Section 509(a)(3) supporting organizations are required to file Form 990 or Form 990-EZ.
Organizations will receive a reminder from the IRS if they fail to file their e-Postcard on time. No late penalty will be assessed, but if the organization fails to file required e-Postcards (or information returns — Forms 990 or 990-EZ) for three consecutive years, it will automatically lose its tax-exempt status.
The first e-Postcards are due in 2008 for tax years ending on or after December 31, 2007. The e-Postcard is due every year by the 15th day of the fifth month after the close of your tax year. For more information on the requirements for filing the required e-Postcards (or information returns — Forms 990 or 990-EZ), please contact our office or visit http://www.irs.gov/charities/.