Nonprofit Advice Corner

Small nonprofits at risk of losing tax exempt status should still file with IRS

Postcard From the Edge

Small Nonprofits Should Still File with the IRS

By: Andy Holman, CPA, partner, RitzHolman CPAs in Milwaukee

Most tax-exempt organizations, except religious institutions, must file an annual Form 990 with the Internal Revenue Service (IRS) within four and one-half months from the end of their fiscal year.
In 2006, Congress changed the law that requires small nonprofits, with a gross revenue of less than $25,000, to file an electronic postcard, Form 990-N with the IRS.  Prior to that time, small nonprofits had no filing requirement. 
The law stated that such organizations had three years to comply and the deadline for those organizations whose fiscal year ended on Dec. 31, 2009 was this past Monday, May 17.
The IRS now has the power to revoke the tax-exempt status of any organization that has not filed some form of 990 within the last three years.  If exemption is revoked, an organization will have to re-apply for exempt status, which is a time consuming and costly proposition.
The IRS has also realized that many viable, small organizations may not have complied with Mondays deadline.  IRS Commissioner Doug Shulman issued a statement on Tuesday that the IRS will do what it can to help organizations from losing their tax-exempt status—but there is no information yet on what that will entail.
In the meantime, all tax-exempt organizations should make sure that their Form 990 is timely filed and small nonprofits should still file the electronic postcard, Form 990-N, that can be located at
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