The IRS has issued temporary and proposed regulations (TD 9366) governing how certain tax-exempt organizations that are not currently required to file annual information returns will be required to submit an annual electronic notice. The Service has also developed a new form, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, that organizations can use to satisfy the electronic notice requirements.
The temporary regulations were effective November 15, 2007, and are applicable to tax years beginning after December 31, 2006.
Certain exempt organizations that are not required to file an annual information return under Sec. 6033(a)(1) must still file annual electronic notices under Sec. 6033(i)(1). The preamble to the temporary regulations notes that churches are exempt from the notice requirement (just as they are exempt from the return-filing requirement).
These annual notices must contain (1) the legal name of the organization, (2) any name under which the organization operates or does business, (3) the organization’s mailing address and website address (if any), (4) the organization’s taxpayer identification number, (5) the name and address of a principal officer, and (6) evidence of the continuing basis for the organization’s exemption from the filing requirements under Sec. 6033(a)(1) (Secs. 6033(i)(1)(A) through (F)).
Caution: The penalty for failing to file the annual electronic notice is the same as the penalty for failure to file a required annual information return: After three consecutive years of failing to file, the organization’s tax-exempt status will be revoked (Sec. 6033(j)).
The IRS says it plans to develop “a simple, Internet based process” for submitting Form 990-N. Because it will be internet based, organizations will not have to purchase software, and the Service suggests that organizations without access to a computer (if any such organizations exist) can go to their local public library to file the notice.
Sec. 6033(i)(1) requires electronic notification, and there is no provision in the regulations for paper notification. However, an organization can file a complete Form 990, Return of Organization Exempt from Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, and the Service will deem the notification requirement to be satisfied for that organization. Note that the information return must be complete: The regulations say that submitting a Form 990 or 990-EZ containing just the information required in the electronic notice will not satisfy the electronic notice requirement.
Organizations must submit their electronic notification on or before the 15th day of the fifth calendar month following the close of the period for which the notification is required to be submitted. In other words, an organization with an account-ing period ending December 31, 2007, is required to submit the annual notification by May 15, 2008.