Smaller charities, meaning those that have annual gross receipts of less than $25,000, may be at risk this year of losing their tax-exempt status. Under a 2006 law, those charities were required to file a form 990-N (sometimes called an e-postcard) with IRS each year. Failing to file for three years in a row results in an automatic loss of status.
These new requirements mean that 2010 is the first year that many charities are at risk of losing their tax-exempt status. Under the new law, returns should have been filed for 2007, 2008 and 2009. The latter would have been filed in 2010. Tens of thousands of charities either were unaware of the new law (which is what I found at my office) or did not know whether it applied to them. As a result, the May 15 filing deadline came and went, leaving many charities at risk.
The IRS has been working on a solution to the problem and had previously urged charities to file even if the returns were going to be late. Now the IRS has officially extended the deadline for 2009 forms 990-N to October 15, 2010. The IRS is also offering a Voluntary Compliance Program for charitable organizations that normally file a form 990-EZ. This relief does not extend to those large charities required to file a form 990 or to private foundations required to file a form 990-PF.
If your charitable organization needs assistance remaining compliant, I strongly urge you to contact your tax pro. This year, it’s more important than ever!
Isn’t the IRS undermining Congress’s original intent in their law which was to force the charities to have filed by this time?
Wonder which interest groups, lobbyists, and politicians were lobbying the IRS behind the scenes.
I believe that large charities should file, but give small charities a break. They are “small”, where are they going to get the money. Not only that but the IRS forms are confusing to people that are not use to them. Charities should find help right away, to lose their status is a bit extreme. Our firm has some free advice for anyone that has tax problems, http://www.taxproblem.org.