Wednesday, August 25, 2010

Small Tax Exempt Organizations

The pension protection act of 2006 enacted a myriad of tax legislation changes. One item that was lost in the fold was its affect on Small Tax Exempt Organizations. Small tax exempt organizations are those with annual gross receipts of normally $25,000 or less.

This legislation effectively required all tax exempt organizations to file returns in order to keep their tax exempt status (prior to this legislation small charities were not required to file). In order to keep tax exempt status a small tax exempt organization must have filed at least one return in the last three years.

The legislation also created a new filing form for these small tax exempts known as the form 990-N ( or e-postcard). This filing form is very simple and is so easy to file, most tax exempt organizations should not have any reason to fail to file this form. However, many small tax exempt organizations that previously were not required to file have been caught in a precarious situation, if they have not filed any returns since the requirement came into effect in 2007.

There is good news for all those organizations who fall in this category. The IRS is offering a one-time "get out of jail free card" to all small tax exempt organizations that have not previously filed a required return. The IRS has said that all applicable organizations have until October 15 2010 to file required returns, and the IRS will not change their exempt status. In addition, they will not impose any non-filing penalties. It seems to be a win-win for the IRS and small tax exempt organizations.

If you believe your organization may be in danger there is a list published on the IRS website.

Click this link and it will take you to their web page.

As always consult a tax professional if you are unsure as to your specific tax situation.

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