990-N; One More Chance

The Pension Protection Act of 2006 created the Form 990-N and initiated the requirement for nonprofit organizations with gross receipts that are normally less than $25,000 to file annually with the Internal Revenue Service. Another provision of the Act requires the IRS to revoke the exempt status of any organization that fails to file for three consecutive years. The form is filed electronically and is due the 15th day of the 5th month after the organization’s year-end. For organizations with a year end of December 31, 2009, May 17, 2010 was the final deadline to file their initial Form 990-N and avoid losing their exempt status.

It is estimated that between 350,000 to 400,000 nonprofits are in danger of losing their exempt status, but it is not too late. The IRS Commissioner, Doug Shulman, issued a statement on May 18, 2010 stating, “The IRS will do what it can to help them avoid losing their tax-exempt status.” He noted further that guidance would be forthcoming and urged small nonprofits that had missed the deadline “to go ahead and file” Form 990-N.

Organizations that have filed in previously years should continue to file the 990-N postcard each year. For those organizations that have failed to file for three consecutive years, the IRS will start issuing revocation notices in 2011. Nonprofits that wish to have their exemptions reinstated will be required to reapply to the IRS for tax-exempt status using the Form 1023 or 1024.

The Form 990-N is required by most tax-exempt organizations that normally have gross receipts of $25,000 or less, there are exceptions for churches and state institutions. For nonprofits that normally have gross receipts of more than $25,000, they should file the Form 990 or 990-EZ. The Form 990-N must be filed online and can be found at http://epostcard.form990.org. To complete the filing, the organization will need its’ employer identification number, tax year, organization’s legal name and mailing address, name and address of the principal office, website address (if applicable) and confirmation that the organization’s annual gross receipts are normally $25,00 or less.

At this time the IRS has not issued any further guidance for organizations that did not meet the May 17th filing deadline. Organizations that missed the deadline should file the form as soon as possible and continue to watch for further guidance from the IRS.