05 December 2007

New IRS Compliance Requirement for Small Nonprofits

Starting January 1, 2008, all public charities, regardless of size, are required to file with the IRS. For organizations that do not currently file a “regular” Form 990 because their annual revenues are normally less than $25,000, there is a new, simple online form (Form 990-N) that must be filed. The new form asks a few basic questions about the organization, such as name, mailing address, website address, EIN, name and address of an officer, fiscal year, size of budget, and whether or not the organization is still active. Unfortunately, the form is not available yet because the IRS is still finalizing the online system.
The form must be filed 4 1/2 months after the close of an organization’s fiscal year. Failure to file the form for three consecutive years will result in termination of an organization’s tax exemption. To reinstate tax-exempt status, an organization must reapply (and pay a hefty “user fee”) and provide a good reason why it did not file earlier.
For more information, visit the IRS web site. Keep up-to-date with all IRS charity and exempt organization issues on their website here.

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