Did you know almost all tax-exempt organizations (other than churches or church related organizations) are required to file yearly returns with the IRS? Well, it’s true!
The filing requirement for a tax-exempt organization depends on the yearly financial activity. Check out this handy chart (courtesy of www.irs.gov) to see what your organization is required to file:
Financial activity: Filing requirement:
Gross receipts normally ≤ $25,000 990-N (e-Postcard)*
Gross receipts < $ 500,000 and total assets < $1.25 million 990-EZ or 990
Gross receipts ≥ $500,000, or total assets ≥ $1.25 million 990
Private foundation (regardless of financial activity) 990-PF
*Note: Organizations eligible to file the e-Postcard may choose to file a full return.
Tax-Exempt organizations have submission deadline rules similar to those of corporations and partnerships. Unlike individual tax returns, which are all required to be filed or extended (no exceptions!) by April 15th of each year, tax-exempt organizations’ returns are due on the 15th day of the fifth month after the organization’s year-end. For many organizations, the fiscal year-end is the same as the calendar year-end, which means the return for your tax-exempt organization must be postmarked by May 15th. On years when May 15th falls on a holiday or weekend, such as it does this year, the due date falls on the nearest following business day – in this case, May 17, 2010.
As with all entities, organizations, and individuals that are required to file, there are repercussions if a tax-exempt organization doesn’t file in a timely fashion. If your organization is required to file and fails to do so for three consecutive years, the organization will automatically lose its tax-exempt status. What does that mean? It means moving forward, the organization will be required to pay income tax, contributor’s donations are no longer tax deductible, and the organization will have to go through the process of re-applying for exempt status (involving paperwork, fees, and time).
The lesson? File on time, and all will be fine.
PJA has provided tax compliance services for tax-exempt organizations for many years, but did you know we recently launched a branch of nonprofit consultation services? Services include:
- Organizational analysis
- Interim leadership and management
- Executive search
- Executive coaching
- Governance
- Fundraising
- Administration
- Strategic planning
- Qualification for certification with ECFA (Evangelical Council for Financial • Accountability) – for Christian faith-based organizations
Check out our website for more detailed information about these new services! As always, let us know if you have any questions about anything, or if we can assist your tax-exempt organization in any way. We are here to help!
by Jami Taylor
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