Nonprofit organizations might be hit with a hefty penalty or even lose tax-exempt status for failing to file Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ. This article reviews the penalty framework and criteria for penalty relief and offers tips for applying for relief.
The bookkeeping at small nonprofits is often left to volunteer board members who have little accounting expertise, writes David James Heiss, who describes three nonprofits in California that mistakenly allowed their tax-exempt status to lapse. It took nearly a year and a half for one of the nonprofits to have its tax-exempt status reinstated.
On Thursday, the Internal Revenue Service issued new reinstatement procedures to be used by organizations that have had their tax-exempt status revoked because they failed to file annual returns for 3 years. Eligible organizations can get their exempt status reinstated retroactively to the date of revocation and can avoid late-filing penalties for the years they failed to file.
The Internal Revenue Service made significant changes to Form 990 and Form 990-EZ for the 2009 tax year. The forms were issued this month with detailed explanations. The forms are used by nonprofit organizations to maintain their tax-exempt status.
Money-market funds that qualify won't lose their tax-exempt status if they participate in a temporary guaranty program announced by the government. "Participation in the temporary guaranty program will not be treated as a federal guaranty that jeopardizes the tax-exempt treatment of payments by tax-exempt money market funds," the Treasury Department said.