Beginning in calendar year 2008, most tax-exempt organizations with annual gross revenues of $25,000 or less may be required to submit a new yearly notice to the Internal Revenue Service, Form 990-N, “Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ.” Tax-exempt organizations with annual gross receipts of normally $25,000 or less, with some exceptions, had previously not been required to file Form 990 (or Form 990-EZ), “Return of Organization Exempt from Income Tax.” This provision was included as part of the Pension Protection Act of 2006, enacted by Congress last year.
Form 990-N requires small tax-exempt organizations to provide the following information to the IRS each year: (1) a legal name and mailing address, and any other names used, (2) a Web address if one exists, (3) the name and address of a principal officer, (4) the organization’s employer identification number (federal tax identification number), (5) the organization’s annual tax period, (6) a statement confirming that the organization’s annual gross receipts are normally $25,000 or less, and (7) indicate if the organization has terminated (is no longer in business).
Under this new law, any affected organization that fails to meet its annual reporting requirement for three consecutive years automatically loses its tax-exempt status. An organization that wants to regain its exempt status will then have to reapply for recognition as a tax-exempt organization. There is no monetary penalty for failure to file the notice.
Like other information returns filed by tax-exempt organizations, the Electronic Notices are subject to the public disclosure and inspection rules generally applicable to tax-exempt organizations (see Jeff Tenenbaum’s article on these rules at www.venable.com/links.cfm?link_id=1346).
Further details about the new Electronic Notice requirement are available on the IRS web site at http://www.irs.gov/newsroom/article/0,,id=172258,00.html. In addition, an updated IRS Frequently Asked Questions document on the subject can be found at http://www.irs.gov/charities/article/0,,id=173864,00.html.
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For more information, contact Jonathan L. Pompan at 202/344-4383 or jlpompan@venable.com.
This article is not intended to provide legal advice or opinion and should not be relied on as such. Such advice may only be given when related to specific fact situations that Venable has accepted an engagement as counsel to address.