As you may know, the IRS revamped the Form 990 a few years ago. During this process a law was passed that requires an automatic revocation of tax exempt status for failure to file form 990, 990-EZ, 990-N or 990-PF for three consecutive years. Did you get that? You will lose your tax exempt status if you do not file your annual return three years in a row? If you do lose your status, you have to start the application process again. The IRS cannot reverse the revocation.
So let's review the rules on who must file. Most tax exempt organizations must file an annual return (except for these organizations). Here are four types of returns - 990, 990-EZ, 990-N, and 990-PF. The following thresholds are for the tax year 2009. The 990 must be filed if the tax exempt organization has gross receipts equal to or greater than $500,000 OR total assets equal to or greater than $1.25 million. The 990-EZ can be filed if the tax exempt organization has gross receipts equal to or less than $500,000 OR total assets equal to or less than $1.25 million. The 990-N must be filed if the tax exempt organization has gross receipts equal to or less than $25,000. Private foundations must file a 990-PF regardless of financial activity.
The 2010 tax year thresholds drop to $200,000 for gross receipts and $500,000 for total assets. The 990-N threshold increases to gross receipts equal to or less than $50,000. This can be confusing so I recommend you use the IRS charts.
Here is where this might affect you or someone you know. The 990-N is a relatively new form and small organizations simply may not be aware of the new filing requirements. Another example includes organizations with volunteer officers that rotate frequently. It is important that all tax exempt organizations, regardless of size have a process in place to ensure annual compliance. As you can see, annual compliance has become critical.
You can find more information on the annual filing requirements here. PSK is here to help. Please call to schedule an appointment if you need help with your organization’s annual filings.
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