Clarifications on 2011 Form 990

The 2011 Form 990 is not significantly changed from the prior year, but the instructions do have some possibly significant clarifications contained in them, if the particular area is applicable to your situation.  Here is a bullet list of the significant clarifications:

• Any organization must file Form 990, 990EZ or 990-N, even if an exemption application has not been filed or approved yet.  (The exemption for churches and certain religious organizations still exists.)
• If you had foreign investments valued at $100,000 or more, you must complete Schedule F, Part I and IV.
• Clarification on when to complete the parts of Schedule F providing grants or assistance made to organizations or individuals outside the United States.
• Clarification with examples for when a board member is considered independent.
• If the governing body allowed an executive committee to act on its behalf, it must provide an explanation in Schedule O.
• The governance section now asks if any governance decisions of the organization reserved to (or subject to approval by) members, stockholder, or persons other than the governing body.
• Instructions added that an organization cannot say “yes” to the governance area question (line 11a) about providing the 990 to the voting governing body before filing with the IRS if it merely notifies them that the 990 is available upon request for review.  It is satisfactory, though, to provide a link to a password-protected web site on which the entire Form 990 can be viewed.

The 2011 form can be found at: http://www.irs.gov/pub/irs-pdf/f990.pdf.

The 2011 990 instructions can be found at: http://www.irs.gov/pub/irs-pdf/i990.pdf.

Searchable Database for Revoked Exemption Status

Last year approximately 400,000 organizations automatically had their exempt status revoked due to failure to file Form 990-N (the E-Postcard). The IRS released a list but has developed a searchable database to help easily find specific organizations.

The searchable database is located on the IRS website here.

The E-Postcard and You

Most small organizations, other than churches and certain church-related organizations, whose gross receipts are normally $50,000 or less have an annual reporting requirement to file the E Postcard, also known as the 990-N.  The $50,000 threshold is not as straight forward as you would think, so use this link to read more about how it’s actually calculated:  http://www.irs.gov/charities/article/0,,id=177338,00.html.

 Use this link to read more about the 990-N filing requirement:  http://www.irs.gov/charities/article/0,,id=169250,00.html.

Many more tax-exempts can file e-Postcard instead of Form 990 for 2010 under new rule

In a Revenue Procedure, IRS has raised the annual gross receipts threshold at which tax-exempt organizations (other than private foundations and Code Sec. 509(a)(3) supporting organizations) must file Form 990, Return of Organization Exempt from Income Tax, from $25,000 to $50,000, for tax years beginning on or after Jan. 1, 2010. Thus, under this new rule, most tax-exempt organizations whose gross annual receipts are normally $50,000 or less can file the simpler Form 990-N (Electronic Notification e-Postcard). Rev Proc 2011-15, 2011- IRB , IR 2011-3

October 15th Deadline for Filing 990-N!!

The IRS extended the deadline for filing 990-N  for charitable organizations that have failed to file for three years and are at risk of automatically losing their charitable status but that new deadline is fast approaching.

The e-postcard for organizations with gross revenues under $25,000. It is important to consider any subsidiary or affiliate organizations that may have been established for specific purposes and determine if filings are up to date.

The IRS website has a list of organizations at risk of losing their tax-exempt status because, according to IRS records, they have not filed for 2007, 2008 and 2009. The list contains the name of the organization and its last-known address. Check this list , organized by state to see whether your organization is at risk of automatic revocation and can avoid this consequence by following IRS guidance.

Requirements for who must file the e-postcard changed for fiscal years beginning after December 31, 2006 which is why this three year filing revocation question has become a hot issue. Filing the e-postcard is an easy step and should be completed before the deadline to protect the tax exempt status.

MESSAGE TO SMALL NONPROFITS FROM IRS: FILE YOUR 990-N DESPITE DEADLINE PASSING

The IRS is encouraging small nonprofit organizations to continue trying to file the 990-N or “e-postcard” online even though the deadline of May 17, 2010 has passed.  IRS Commissioner Doug Shulman has issued a formal statement recognizing the vital role of small nonprofit organizations across the country, and vowing to help small nonprofits avoid losing their tax-exempt status even if they missed the May 17^th deadline.  Nonprofits are being urged to file the 990-N despite the passing of the deadline.

The link for filing a 990-N is:  http://www.irs.gov/charities/article/0,,id=217087,00.html 

The main information needed is for the filing is: Name, address, EIN#, and the principal officer’s name and address.

Deadline Pending for NonProfit Tax Exemption!

Many non-profit organizations are not aware that in 2006 legislation changed to require ALL non-profit entities to file tax forms starting in 2007. The Pension Protection Act of 2006 instructs the IRS to revoke tax exemptions of groups failing to file for three consecutive years which will be coming up fast this May 17, 2010. Revocation of non-profit status can be avoided by filing an extension before May 17th (the 15th is on a Saturday).

Previously, only organizations with revenues of $25,000 or more were required to file and many small charities are still functioning under that assumption. While this may represent a hardship for many small entities, it is part of an effort to provide more information to the donor community and tracking of non-profit entities in a more systematic manner. The IRS sent out approximately 665,000 letters to groups falling below the $25,000 threshold to notify them of the change in regulation and seem to be making an effort to help these groups reach compliance. No one involved is eager for a revocation en masse on May 18th!

Organizations with less than $25,000 in revenue can bring themselves into compliance by filing a simple e-postcard with the IRS.

Please keep this deadline in mind for any dormant groups, sub-organizations or affiliates and help get the word out. Go to the IRS website: http://www.irs.gov/charities/article/0,,id=217087,00.html for instructions on filing.

Additional information: http://www.nytimes.com/2010/04/23/us/23exempt.html