Non-Profits - Don't Lose your Tax-Exempt Status

If you serve as a board member or are otherwise involved in a non-profit organization, you want to be aware of IRS changes for 2010.

While 501©(3) non-profit organizations are exempt from federal income tax, most of them must file an annual information return, or risk losing their non-profit status. The Pension Protection Act of 2006 mandates that beginning in 2010, any organization that fails to file for three consecutive years automatically loses its federal tax-exempt status. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and the renewed exemption may be taxable.

The type of Federal Form 990 a charity must file is determined by the organization’s gross receipts. Organizations with less than $25,000 in annual receipts can file an electronic notice Form 990-N. Tax-exempt organizations with annual receipts above $25,000 must file a Form 990 or 990-EZ.