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IRS Announces One-Time Form 990 Filing Extension For Small Organizations to Avoid Revocation

Updated August 26, 2010

Small organizations that would otherwise have been in danger of losing their tax exemption for failing to file required information returns will have one more chance to submit the overdue filings, under a new program announced by the IRS on July 26. The new deadline under the one-time extension is October 15, 2010.

Under the federal Pension Protection Act of 2006, exempt organizations that fail to file required Form 990 annual information returns (or, in the case of very small organizations, the Form 990-N e-postcard) for three consecutive years are subject to automatic revocation of their tax exemptions effective on the filing due date of the third year. The Form 990 or e-postcard is required to be filed annually by the 15th day of the 5th month following the end of an organization's fiscal year.

The first round of revocations was set to begin on May 17, 2010. Recognizing that many small organizations may have been missed despite an aggressive outreach effort by the IRS, the Urban Institute, the National Council of Nonprofits, state associations of non-profits and countless others, the IRS has created one more window of opportunity for small organizations to submit their overdue filings. The program has two components:

Filing Relief Program for Form 990-N filers: According to the IRS Web site, the smallest organizations – those eligible to file Form 990-N (e-Postcard) and whose e-Postcards are due on or after May 17 and on or before October 15 – can maintain their tax-exempt status by filing the required annual electronic notice by October 15, 2010, without incurring any additional fees or penalties for failure to file.

Voluntary Compliance Program (VCP) for Form 990-EZ filers – An organization that is too large to file the e-postcard but which are small enough to be eligible to file a Form 990 EZ can take advantage of a one-time voluntary compliance program (VCP) and avoid automatic revocation if—

It failed to file for 2007, 2008, and 2009;
It was eligible to file a Form 990-EZ for 2009;
It was eligible to file either a Form 990-N or Form 990-EZ for 2007 and 2008.

Organizations who wish to take advantage of the VCP must:

File complete (all required schedules and attachments) paper Forms 990-EZ or, if preferred, Forms 990 for its 2007, 2008 and 2009 tax years by the extended due date of October 15, 2010;
Submit a signed checklist agreeing to the terms of the VCP; and
Pay a compliance fee, ranging from $100 to $500 depending on the organization’s gross receipts as reported on its 2009 information return.

Organizations that are eligible to take advantage of this program are urged to do so. Those that have failed to file for three consecutive years and have not submitted their 990 paperwork by October 15 will have their tax exemptions revoked on that date. If tax exemption is revoked, the only way to reinstate it will be to reapply.

For more information:
IRS News Release: http://www.irs.gov/newsroom/article/0,,id=225959,00.html?portlet=7
IRS Relief Program Portal: http://www.irs.gov/charities/article/0,,id=225702,00.html
Frequently Asked Questions: http://www.irs.gov/charities/article/0,,id=225954,00.html
IRS List of Organizations at Risk of Revocation (scroll down to find links to New Jersey list): http://www.irs.gov/charities/article/0,,id=225889,00.html?portlet=7
Contact the Center
Brief IRS Video on the Filing Deadline: http://www.youtube.com/watch?v=iLEcaDAoybc

This article is intended for general informational purposes and does not constitute legal advice or a legal opinion. For answers to specific questions concerning your situation, you should consult a knowledgeable attorney who can advise you regarding your particular circumstances

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