IRS gives nonprofits an extension

July 30, 2010
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The Internal Revenue Service last week granted a “one-time” reprieve until Oct. 15 for small nonprofits that failed to complete a short online filing for 2007, 2008 and 2009.

Starting with the 2007 tax year, nonprofits with annual gross receipts of $25,000 or less are required to file the 990-N online form. The new requirement was part of the Pension Protection Act of 2006.

However, thousands of nonprofits across the nation, including hundreds in Kent and Ottawa counties, missed the May 17 deadline set by the IRS for those with a fiscal year ending Dec. 31.

An Urban Institute study of the nonprofit laggards speculated that many non-filers are defunct. But viable organizations that have not filed risk losing 501(c)(3) status, possibly owing taxes, facing corporate filing requirements and losing federal tax exemptions for donors.

The IRS issued new guidance last week. The reprieve includes the filing extension for nonprofits that are eligible to file the Form 990-N online and an opportunity for voluntary compliance for organizations eligible to file the Form 990-EZ.

The latter groups must file their delinquent forms and pay a fee to get back into compliance, according to an IRS press release.

“I think the IRS is just doing everything they can to help these small nonprofits meet the regulations,” said Peggy Bishop, partner-in-charge of the Nonprofit Industry Team at accounting firm Beene Garter. “They’re so little and they’ve never had to do anything in the past. They just don’t know any better.”

The IRS also posted a list of nonprofits that have not filed and have deadlines that fall between May 17 and Oct. 15. Filing deadlines are five months following the end of the fiscal year. The list is available in both Excel and PDF formats at www.irs.gov

For more information
“Here Today, Gone Tomorrow” is a report from the Urban Institute, National Center for Charitable Statistics that looks at characteristics of nonprofits in danger of losing tax-exempt status: www.urban.org/UploadedPDF/412135-tax-exempt-status.pdf

Searchable website created by the National Center for Charitable Statistics, Nonprofit Quarterly and the National Council of Nonprofits to check whether a nonprofit is on the endangered list: nccsdataweb.urban.org/PubApps/statePicker.php?prog=epostcard&display=state

For IRS information and to file an online-only Form 990-N: www.irs.gov and click on Charities & Nonprofits.

Alternative, IRS-endorsed site to file the 990-N: epostcard.form990.org/

General 990 information at the National Council of Nonprofits: www.councilofnonprofits.org/resources/resources-topic/boards-governance/irs-form-990-governance-guidance

Information and links from the Michigan Nonprofit Association: mnaonline.wordpress.com/2010/05/07/dont-lose-your-tax-exempt-status/

Sources: Internal Revenue Service; Urban Institute; National Council of Nonprofits; Michigan Nonprofit Association

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