The Internal Revenue Service states that by May 2010 an estimated half a million nonprofit organizations in America could be in danger of losing their exempt status because they did not file a Form 990 in 2008.
The Pension Protection Act of 2006 requires exempt organizations that do not meet the income thresholds for Form 990-EZ to file a new return with the IRS. The IRS created Form 990-N for this purpose, and smaller nonprofits began using this to report tax years ending on or after December 31, 2007.
The Pension Protection Act also mandates that the IRS revoke the tax-exempt status of any organization that fails to file a Form 990, 990-EZ, 990-PF, or 990-N for three consecutive years. Revocations will happen automatically beginning in May 2010. A nonprofit that loses its exemption because of failure to file will have to reapply to the IRS for exemption.
The IRS is making an effort to inform small nonprofits about the Form 990-N by mailing every organization that their records indicate is required to file the new return. In addition the IRS provides online training for tax-exempt organizations. The site includes workshops and mini courses on topics of interest to tax exempt organizations.
There is one easy way to avoid the headache and drama of losing your non-profit exemption; file the appropriate Form 990 in a timely manner. An Executive Director once told me: ” There are three people that I make sure are always taken care of, the I the R and the S.
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