Tax-exempt organizations still need to file their information returns, with a deadline set for May 15, 2024, for many tax-exempt organizations. The requirements for filing generally begin in the tax year the organization is legally formed, usually when it applies for an EIN. The Pension Protection Act of 2006 made it mandatory for most tax-exempt organizations to file annual information returns with the IRS.
Small tax-exempt organizations with annual receipts of $50,000 or less can file a Form 990-N, e-Postcard. This form requires basic information about the organization, such as its name, address, EIN, and confirmation of annual gross receipts. Other tax-exempt organizations have different requirements, depending on their gross receipts and assets. The Taxpayer First Act of 2020 mandated electronic filing for most tax-exempt organizations.
If organizations need more time to file, they can request a six-month extension using Form 8868. Parts of the 990 series forms may be available for public inspection, so organizations should avoid including sensitive information like Social Security Numbers. While most tax-exempt organizations do not owe tax, failure to file can result in penalties, including a loss of tax-exempt status if the organization fails to file for three consecutive years. Reinstatement can be a time-consuming and expensive process, so organizations should ensure they file each year as required.
The penalties for late filing can vary based on the organization’s annual gross receipts, with a daily penalty of $20 up to a maximum penalty of $12,000 or 5% of gross receipts for the year. Organizations with annual receipts exceeding $1,208,500 could face a penalty of $120 for each day the failure continues, up to a maximum penalty of $60,000 for any one return. Failure to file for three consecutive years could result in an automatic loss of tax-exempt status, making the organization ineligible to receive tax-deductible contributions.
For organizations that have documentation showing they have not failed to file for three consecutive years, it is recommended to contact the IRS to address any potential issues. Reaching out to the Exempt Organizations Account Unit with the necessary documentation could help resolve any concerns about potential loss of tax-exempt status due to failure to file. By understanding the filing requirements and deadlines, tax-exempt organizations can ensure compliance with IRS regulations and maintain their tax-exempt status.
