Thursday, March 11, 2010

Non-profit Organizations Beware!

On January 21, the IRS issued notice IR-2010-10 reminding tax exempt organizations that in 2010 their tax-exempt status will be automatically revoked, if the entity has not filed the required form in the last three years. So what is this all about; exactly what must be done and when is the deadline?

The Pension Protection Act of 2006 contains the automatic revocation provision. The Act says that non-profit organizations that do not file a required information form for three consecutive years automatically lose their Federal tax-exempt status. The Act went into effect at the beginning of 2007 therefore the initial three year period is now up. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax exempt status. Also, any income received after the revocation date may be taxable.

Small non-profits with annual receipts of $25,000 or less can file an electronic notice, Form 990-N (e-Postcard). They will only need a few pieces of basic information for the filing. Non-profits with more than $25,000 in annual receipts will need to file Form 990 or Form 990-EZ annually. Private foundations file Form 990-PF. Churches and integrated auxiliaries of churches are not required to file any notices or returns.

Form 990-series returns and e-Postcards, are due by the 15th day of the 5th month after an organization’s tax year ends. Don’t miss this date; the consequences of doing so will be maddening if not downright costly. Additional information is available from the IRS at,,id=218550,00.html


  1. It seems strange that the IRS revokes the tax exemption for organizations that are formerly "tax exempted". In fairness to the IRS, they seem to give a lot of information about this. And the solution is to simply renew the exemption for every three years. It sounds fair enough.