Posted on April 1, 2010

Beginning in 2010, tax-exempt organizations that are required to file an annual information return (IRS Form 990, 990-EZ or 990-N) but haven’t for three consecutive years will automatically lose their tax-exempt status.

Small organizations with annual gross receipts of $25,000 or less should take special note. Prior to 2008, these organizations did not have to file an annual information return. The IRS introduced the 990-N (e-Postcard) in 2008 and required small organizations to complete it. Small organizations that failed to submit the 990-N in 2008 and 2009 will lost their tax-exempt status if they again fail to file in 2010.

If an organization loses its tax-exempt status for failure to file, it must reapply by filing Form 1023 or Form 1024 and pay the appropriate application fee. If the IRS approves the application, tax-exempt status will be effective as of the date of the application, unless the organization demonstrates reasonable cause for failure to file. Any income from the date of the revocation to the new effective date may be taxable.

For organizations with a fiscal year end of December 31, your annual information return is due to the IRS by May 15. Submit it on time or face fees and penalties, and possibly the loss of your tax-exempt status.

For more information, click here and refer to page five.