A couple of months ago in my post Reminder for Nonprofits: Form 990 Due on May 17, I warned that some nonprofit organizations could lose their tax-exempt status if they failed to timely file their informational returns for the last three consecutive years. Unfortunately, thousands of nonprofits failed to heed this warning and did not file in time. Fortunately, in a rare display of mercy, the IRS has extended the due date to October 15, 2010.
The relief is limited to organizations that can file a Form 990-N, which is merely an e-Postcard with minimal information required, or a Form 990-EZ. In general, an organization can file a Form 990-N if their annual gross receipts are less than $25,000. If its annual gross receipts are less than $100,000 but more than $25,000, a nonprofit can file a Form 990-EZ. Organizations with annual gross receipts greater than $100,000, which are required to file a Form 990, and private foundations, which are required to file a Form 990-PF, are unable to take advantage of the extension and must re-apply for tax-exempt status if it has been lost.
Organizations that can file a Form 990-N must file online by October 15, but no fees or penalties are required. Organizations filing a Form 990-EZ must file by the deadline through the voluntary compliance program and must pay a compliance fee.
Also, the IRS has compiled a list, organized by state, of nonprofits that are in danger of losing their tax exempt status. However, the IRS has admitted that the list may be incomplete, so it is important to make sure that the proper filing have been made even if your organization is not on the list.
Losing a nonprofit’s tax-exempt status will certainly put a dent in the organization’s ability to fulfill its mission. In addition to preserving your tax-exempt status Form 990 can also be used as a fundraising tool. Thus, it is vital to ensure that your nonprofit’s filings are up to date.