July 3, 2010
Authored by: Keith Kehrer
Before 2006, small charities with less than $25,000 of annual gross receipts were not required to file Form 990. After 2006, small charities are required to file Form 990-N (e-Postcard). Failure to file Form 990-N for three consecutive years generally results in loss of tax-exempt status. As of May 17, 2010, calendar year small charities that have not filed Form 990-N for the 2007 through 2009 tax years are in jeopardy of losing their tax-exempt status. We suspect several thousands of small charities are currently in jeopardy of losing tax-exempt status for failure to file Form 990-N.
The IRS recently announced, however, that it will do what it can to help small charities avoid losing their tax-exempt status. Although the IRS has not clarified this statement, it is possible this statement means the IRS will not automatically revoke the tax-exempt status of every late filer. If your small charity still has not filed, it is advisable to file Form 990-N as soon as possible. If a small charity files now, it should increase its chances of avoiding revocation. In addition, if tax-exempt status is revoked, filing Form 990-N will likely be necessary for re-instatement. The Form 990-N may be filed by clicking the following link to the IRS website and following the instructions: http://www.irs.gov/charities/article/0,,id=169250,00.html.