IRS Urges Small Charities To File Paperwork

May 19, 2010       Mark Hrywna      

A day after Monday’s deadline that potentially stripped hundreds of thousands of nonprofits of their tax-exempt status, Internal Revenue Service (IRS) Commissioner Doug Shulman said the agency will do what it can for small charities to keep their exemptions.

In a statement released Tuesday, Shulman said the IRS will be “providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline.” The IRS will offer “relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact,” he said.

An IRS spokesman said the agency was unable to elaborate further on the statement.

“It appears that many small tax-exempt organizations have not filed the required information return in time,” Shulman said. “The IRS has conducted an unprecedented outreach effort in the tax-exempt sector on the … new filing requirements, but many of these smaller organizations are just now learning of the May 17 deadline. I want to reassure these small organizations that the IRS will do what it can to help them avoid losing their tax-exempt status,” he said.

The Pension Protection Act of 2006 required nonprofits to start filing at least a Form 990-N (“e-Postcard”), even if annual receipts were less than $25,000. Tax-exempt status would be revoked if annual paperwork was not filed for three consecutive years (this being the third year).

Organizations with more than $25,000 in annual receipts must file Form 990 or Form 990-EZ annually. Private foundations file Form 990-PF. The tax forms are generally due four and a half months after the end of an organization’s fiscal year.

The Urban Institute’s National Center for Charitable Statistics (NCCS) estimates that of the 1,592,810 nonprofit organizations in the United States, more than 21 percent — or 340,834 — had not yet filed the required tax returns. The majority of those, about 213,497, faced a Monday deadline or risk automatic revocation. Data are based on the total number of organizations considered active and included on the IRS Business Master File as of April 1, 2010.

Link to IRS statement: http://www.irs.gov/newsroom/article/0,,id=223609,00.html