Hundreds of thousands of small non-profits, from Little League teams to community soup kitchens, could lose their tax-exempt status on Monday because of an IRS filing requirement.The 2006 Pension Protection Act included a provision requiring all non-profits to file an annual return with the IRS.
Previously, non-profits with annual revenue of less than $25,000 were excluded. Non-profits that fail to file a return for three consecutive years lose their tax-exempt status. On May 17, the three-year clock runs out for non-profits that haven't filed a return since 2007.
The Urban Institute estimates that up to 365,000 non-profits could lose their tax-exempt status if they fail to file by Monday. Groups that miss the deadline will have to apply for a new exemption and pay a user fee of up to $850. They could also be liable for taxes on any revenue earned before their exemption is renewed.
The requirement does not apply to churches or church-related operations.
- IRS, IR-2010-59, Many Tax-Exempt Organizations Must File Form 990 by May 17 Deadline to Preserve Tax-Exempt Status with IRS
- IRS, Annual Electronic Filing Requirement for Small Exempt Organizations — Form 990-N (e-Postcard)
- IRS, FAQ
- IRS, Exempt Organizations: Status Revoked for not Filing Annual Returns or Notices
- Chronicle of Philanthropy, Up to 25% of Nonprofit Groups Could Soon Lose Charity Status
- GuideStar, Grantees and Nonprofit Clients May Be in Danger of Losing Tax-Exempt Status
- Washington Post, IRS Tightens Control of Smallest Nonprofits
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