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Friday, February 27, 2009

Update: Small Charities Must File

A few months back we reported that the Pension Protection Act of 2006 set forth a new requirement that small charities must file a 990-N in order to maintain their tax-exempt status. According to the IRS, as many as half a million nonprofits have not filed. If these charities fail to remedy the situation, then they stand to lose their tax-exempt status in 2010.

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1 comment:

Colin Oakes said...

I have been personally involved in matters relating to this very issue. I’m a dues-paying member of a small nonprofit, and at the last organizational meeting I had the sad task of informing the board of directors that the organization was no longer listed in the IRS’s Publication 78 -- most likely because they hadn’t filed Form 990N -- and they faced the possibility of having their tax-exemption revoked/suspended. Not surprisingly, the board members had no idea what Form 990N was, nor did they know they needed to file it.

But isn’t this really the IRS’s fault? Isn’t it their responsibility to communicate with small nonprofits on this matter? The organization to which I belong never received any kind of information from the IRS about Form 990N-- that’s why the board was so in the dark. I’d hate to see half a million nonprofits lose their tax-exemption because they failed to meet a filing requirement the IRS never told them about.