Taxation & Estate Planning

REVISED EXEMPT ORGANIZATION FILING AND DISCLOSURE REQUIREMENTS

By Charles Rubin

The IRS has provided recent guidance as to the revisions to various filing and disclosure requirements that impact exempt organizations. Many of these requirements were changed as part of the Pension Protection Act of 2006, but not all exempt organizations are aware of the changes. Some of the highlights of the changes, and the IRS guidance as to how those changes are implemented are:

a. SMALL ORGANIZATION EXEMPTION FROM FILING FORM 990. Generally, organizations with less than $25,000 in gross receipts do not need to file an annual Form 990. However, under the 2006 Act, nonfilers must give electronic notice to the IRS of their nonfiling. This is done through the use of the Form 990-N e-postcard. This is due by the 15th day of the 5th month after the close of the tax year, although there are some limited exceptions that exempts some organizations from even having to file the e-postcard form. If an organization does not file for 3 years, the penalty is severe ? revocation of tax-exempt status.

b. SUPPORTING ORGANIZATION MANDATORY FILINGS. Supporting organizations are now required to file an annual information return, regardless of the level of gross receipts. The filing includes information on organizations supported, the type of organization that the supporting organization is, and certifying lack of control by disqualified persons.

c. MANDATORY ELECTRONIC FILING. Organizations with assets over $10 million must now file their Form 990 electronically.

d. FORM 990-T. Organizations with $1,000 or more of unrelated business income must file a Form 990-T. This filing requirement may apply even if a Form 990 is not required (e.g., churches still need to file the Form 990-T if applicable, even though they do not have to file a Form 990). The public and inspection and disclosure requirements applicable to Forms 990 are now extended to Form 990-T, although schedules, attachments and supporting documents that don?t relate to the imposition of the unrelated business income tax don?t have to be made available to the public.

IRS PUBLICATION 557

Full post as published by Rubin on Tax on June 26, 2008 (boomark / email).