(ARA) - This is the time of year when people start preparing their annual income tax returns. It's also time to remind people who run charities and other tax-exempts that those organizations must file annual returns with the Internal Revenue Service, as well. "Most tax-exempt organizations, other than churches, must file a yearly information return or notice with the IRS," says Lois G. Lerner, director of IRS Exempt Organizations. "That's either a Form 990, 990-EZ, 990-PF or the 990-N e-Postcard." Filing those 990s on time is crucial because if an organization does not file a required, annual return for three consecutive years, the law requires that it will automatically lose its tax-exempt status. That means it must file income tax returns and pay income tax. If an organization loses its tax-exempt status, it can reapply by filing Form 1023 (for 501(c)(3) organizations) or Form 1024 (for organizations exempt under other code sections), but it must pay another application fee. If the IRS approves the application, the organization's tax-exempt status will be effective as of the date of the application; any income from the date of the revocation to the new effective date may be taxable. If, on the other hand, the organization can demonstrate reasonable cause for failure to file, the exemption will be retroactive to the date of revocation. So it's better to avoid losing your tax-exempt status, in the first place, says Lerner. For smaller tax-exempt organizations with receipts of $25,000 or less, filing can be a quick process. Using the Internet to respond to a few basic questions on the Form 990-N (e-Postcard) only takes a few minutes. Visit www.irs.gov/charities and click on "Annual Electronic Filing Requirement for Small Exempt Organizations" to learn more about the e-Postcard and how to access and transmit the form. Tax-exempt organizations, with more than $25,000 in gross receipts use the Form 990-EZ or Form 990. Private foundations use Form 990-PF. Unlike personal income tax returns, the 990-series forms do not have a single due date. The 990s are due by the 15th day of the fifth month after the close of an organization's tax year. For example, if an organization's tax year closes on Dec. 31, its form is due by the following May 15. Although the three year rule applies only to the 990-series returns, Lerner says this is a good time to make sure that other IRS-related filings are up-to-date, including an organization's Form 941, Employer's Quarterly Federal Tax Return, and Form 990-T, Exempt Organization Business Income Tax Return. For details, go to the IRS Charities and Nonprofits Web page at www.irs.gov/eo. Courtesy of ARAcontent |
