NONPROFITS CAN LOSE TAX-EXEMPT STATUS

NONPROFITS CAN LOSE TAX-EXEMPT STATUS
By: Allen T. May, C.E.O. of Westwood Associates, LLC
Nonprofits can lose federal tax-exempt status by not filing IRS Form 990 or IRS Form 990-EZ for a three year period. Small tax-exempt nonprofit organizations whose annual gross receipts are normally $25,000 or less ($50,000 for tax years ending on or after December 31, 2012) may be required to electronically submit IRS Form 990-N, also known as the e-Postcard, unless they choose to file a complete IRS Form 990 or IRS Form 990-EZ.
If you do not file your e-Postcard on time, the IRS will send you a reminder notice. However, an organization that fails to file required e-Postcards (or information returns 0 IRS Forms 990 or 990-EZ) for three consecutive years will automatically lose its tax-exempt status.
The revocation of the nonprofit organization's tax-exempt status will not take place until the filing due date of the third year. The e-Postcard is due every year by the 15th of the 5th month after the close of your tax year. For example, if your tax year ended on December 31st, the e-Postcard is due on May 15th of the following year. If the due date falls on a Saturday, Sunday or federal holiday, the due date is the next business day. You cannot file the e-Postcard until after your tax year ends.
Protecting your organization's tax-exempt status should be one of your highest priorities.
If you feel your tax-exempt status may be in jeopardy, we urge you to contact your tax professional for assistance.