IRS Provides Relief for Small Tax-Exempt Nonfilers

The IRS announced that is providing relief for small tax-exempt organizations that are supposed to automatically lose their tax-exempt status because they failed to file Forms 990-EZ or 990-N for the years 2007, 2008, and 2009. Under a special one-time program, the IRS is giving those organizations until October 15, 2010, to preserve their tax-exempt status.

May 17, 2010, was the deadline for calendar-year tax-exempt organizations to file their Forms 990 for 2009. It also marked the third filing deadline under the mandatory filing requirement instituted by the Pension Protection Act of 2006 (P.L. 109-280). Under the terms of that mandatory filing requirement, tax-exempt organizations that fail to file an information return in Form 990 series for three consecutive years automatically lose their tax-exempt status (Sec. 6033(j)).

Under the relief program announced by the IRS, small tax-exempt organizations that are eligible to file Form 990-N, Electronic Notice (e-Postcard), are being given an automatic extension until October 15 to file the form, which can be done on the IRS website.

Organizations eligible to file Form 990-EZ, Short Form Return of an Organization Exempt from Tax, that did not file for the years 2007–2009 must enter a voluntary compliance program in order to preserve their tax-exempt status. Under the voluntary compliance program, such organizations will have to file their delinquent returns by October 15 and pay a fee of between $100 and $500, depending on their 2009 gross receipts.

The announced relief is not available to larger organizations that are required to file the regular Form 990 or to private organizations required to file Form 990-PF.

The IRS has also posted to its website a list of organizations for which it does not have a record of required filings for 2007, 2008, and 2009.