There have been recent Internal Revenue Service (IRS) changes that may affect tax-exempt organizations throughout Michigan, as well as the rest of the country.

 

Most small tax-exempt organizations are now required to file an electronic notice or

“e-Postcard” with the IRS annually. In the past, charities and non-profits with gross receipts of $25,000 or less were not required to file information returns. This was changed with the enactment of the Pension Protection Act of 2006. If your organization fits this profile, it is important to follow the new guidelines or your tax-exempt status could be jeopardized.

 

The IRS Form 990-N, also known as the IRS “e-Postcard,” will require organizations to provide a legal name and mailing address, any other names that may be used, a Web 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 “e-Postcard” will be available on-line later this year and will not be due until Spring 2008. Organizations are required to file by the 15^th of the fifth month following the end of their year-end. For example, organizations with a December 31 year-end must file no later than May 15, 2008.

 

If the filing guidelines are not followed for three consecutive years, tax-exempt status can be revoked. The only exceptions to the filing rule are: 1) Organizations that are included in a group return; 2) Private foundations that are required to file Form 990-PF; and, 3) Churches, their integrated auxiliaries and conventions or associations of churches.

 

Please note that Section 509(a)(3) supporting organizations of any size have been required to file Form 990 or Form 990-EZ since 2006 and should not file the “e-Postcard.” The only exception is for supporting organizations of religious organizations that have gross receipts of $5,000 or less. These supporting groups must file the Form 990-N.

 

The IRS will be sending notification letters and educational materials to tax-exempt organizations throughout the next several months. Information is also available on the IRS website at http://www.irs.gov/charities/article/0,,id=169250,00.html. For additional information contact IRS Customer Serviceat (877) 829-5500. Nonprofit executives and their boards should share specific questions related to their organizations with their tax and accounting advisors.