The IRS and the Treasury Department have issued final regulations clarifying how and when certain small tax-exempt organizations must file an annual electronic notice.
The final regulations finalize the temporary regulations without substantive change and affect small tax-exempt organizations whose annual gross receipts are not normally in excess of $25,000. They may be required to electronically submit Form 990-N, also known as the e-Postcard, unless they choose to file a complete Form 990 or Form 990-EZ.
The Pension Protection Act of 2006 added this filing requirement to ensure that the IRS and potential donors have current information about tax-exempt organizations.
The first e-Postcards were due in 2008 for tax years ending on or after Dec. 31, 2007. The e-Postcard is due every year by the 15th day of the 5th month after the close of the organization's tax year. For example, if the organizations tax year ended on Dec. 31, 2007, the e-Postcard is due May 15, 2008. Organizations cannot file the e-Postcard until after their tax year ends.
Most small tax-exempt organizations with gross receipts that are normally $25,000 or less must file the e-Postcard. Exceptions to this requirement include: organizations that are included in a group return; and churches, their integrated auxiliaries, and conventions or associations of churches.
The following organizations cannot file the e-Postcard but must file different forms instead: tax-exempt organizations with annual gross receipts that are normally greater than $25,000 must file Form 990 or Form 990-EZ; private foundations must file Form 990-PF; Section 509(a)(3) supporting organizations that are required to file Form 990 or Form 990-EZ.
IRC section 527 (political) organizations required to file an annual exempt organization return must file Form 990 or Form 990-EZ.
If the organization does not file an e-Postcard on time, the IRS will send a reminder notice but will not assess a penalty for filing the e-Postcard late. However, an organization that fails to file required e-Postcards (or information returns Forms 990 or 990-EZ) for three consecutive years will automatically lose its tax-exempt status. The revocation of the organizations tax-exempt status will not take place until the filing due date of the third year.
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