IRS LAUNCHES E-POSTCARDS FOR TAX-EXEMPTSWashington, D.C. — The Internal Revenue Service has introduced an electronic filing system that allows small tax-exempt organizations to file Form 990-N “e-Postcards” to report their annual income.
In the past, tax-exempt organizations that earned annual gross receipts of $25,000 or less did not need to file a Form 990 or 990-EZ. But the Pension Protection Act of 2006 now requires them to file Form 990-N for tax years beginning in 2007.
The e-Postcards must be filed electronically, according to the IRS. To file them, an organization must include its employer identification number, tax year, legal name and mailing address, any other names it uses, an Internet address if one exists, the name and address of a principal officer, and a statement confirming that the organization’s annual gross receipts are normally $25,000 or less.
The due date for filing Form 990-N is the 15th day of the fifth month after the close of the tax year. For example, an organization whose most recent tax year ended on Dec. 31, 2007, must file the e-Postcard by May 15, 2008. Under the new law, organizations that do not file a Form 990-N for three consecutive years will lose their tax-exempt status.
The IRS has launched a disclosure site where the public can search for and view a specific organization’s e-Postcard. For more information, visit the charities and nonprofits section of the IRS Web site, www.irs.gov.
IRS PROVIDES SAFE HARBOR ON RENTAL PROPERTY
Washington, D.C. — The Internal Revenue Service has issued Revenue Procedure 2008-16, which provides a safe harbor under which the IRS will not challenge whether a property that is rented to others but also occasionally used by the owners for personal purposes qualifies as property that may be exchanged in a like-kind exchange under Section 1031 of the Tax Code.
Section 1031(a) provides that no gain or loss is recognized on the exchange of property held for productive use in a trade or business or for investment (relinquished property) if the property is exchanged solely for property of like kind that is to be held either for productive use in a trade or business or for investment (replacement property).
If a taxpayer files a federal income tax return and reports a transaction as an exchange under Section 1031, based on the expectation that a dwelling unit will meet the qualifying use standards, and subsequently determines that the dwelling unit does not meet the qualifying use standards, the taxpayer, if necessary, should file an amended return and not report the transaction as an exchange under Section 1031.
The safe harbor applies only to the determination of whether a dwelling unit qualifies as property held for productive use in a trade or business or for investment under Section 1031.
A taxpayer utilizing the safe harbor also must satisfy all other requirements for a like-kind exchange under Section 1031 and its regulations. The revenue procedure is effective for exchanges of dwelling units occurring on or after March 10, 2008.
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