Non-Profits: FIle Form 990 or Risk Losing Exempt Status
April 8, 2010
Despite its moniker, the Pension Protection Act of 2006 imposed a number of changes that extend beyond pension plans, including a three-year revocation rule for exempt organizations of all sizes that do not file their required annual information form. In 2010, an organization that has failed to file its Form 990 (see chart below) for three consecutive years will have its exempt status revoked.
The consequences of losing exemption, even temporarily, are serious. Not only will the organization have to re-apply for tax-exempt status with the Internal Revenue Service (IRS), but it may be taxed on any income received between the revocation date and the renewed exemption date. Furthermore, the IRS will make public a list of all organizations with revoked status on its website.
To preserve tax-exempt status, most exempt organizations (other than churches) must file the appropriate Form 990-series return in a timely manner. Filing requirements are based on an organization's financial activity. Requirements for the 2009 tax year are:
|
Financial activity |
Filing requirement |
|
Gross receipts normally ≤ $25,000 |
990-N (e-Postcard) |
|
Gross receipts < $ 500,000 and |
990-EZ or 990 |
|
Gross receipts ≥ $500,000, or |
990 |
|
Private foundation (regardless of financial activity) |
990-PF |
According to the IRS, Form 990 is its primary tool for gathering information about tax-exempt organizations, for educating organizations about tax law requirements, and for promoting compliance with tax law.
Please contact Lindquist LLP Partner Michelle McCann with Form 990 questions at (925) 277-9100 or mmccann@lindquistcpa.com.
Download this article
Our firm provides the information in this e-newsletter for general guidance only. It does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.