Most tax-exempt organizations that end their operations, either through shutting down, transferring their assets or merging with another tax-exempt organization, must inform the IRS about the details of the action. For organizations other than private foundations, this is done by filing a final Form 990, 990-EZ or e-Postcard (990-N). Which of these the organization files depends largely on its gross receipts and assets.
How You Should Inform the IRS
For the 2008 tax year returns (filed in 2009 or 2010) the filing guidelines are:
-
Gross receipts normally less than or equal to $25,000, file the e-Postcard (990-N)
-
Gross receipts greater than $25,000 and less than $1 million, and total assets less than $2.5 million, the organization can choose to file Form 990-EZ or 990
-
Gross receipts $1 million or more and total assets greater than or equal to $2.5 million, file Form 990
These amounts will increase next year, as explained in Filing Phase-In.
When the Return is Due
If you are terminating your organization or effectively going out of business by merging with another organization, you will need to file a final form 4 months and 15 days after the date of the organization’s termination.
Information You Will Need to Disclose
Form 990 filers should check the Termination box in the header area on page 1 of the return and answer yes to the question whether the organization liquidated, terminated, or dissolved (line 31 of Part IV) and, if applicable, to the question whether the organization engaged in a significant disposition of net assets (line 32 of Part IV).
Form 990-EZ filers should check the Termination box in the header area on page 1 of the return and answer yes to the question whether the organization liquidated, terminated, dissolved or substantially contracted (line 36 of Part V).
After you’ve indicated on the 990 or 990-EZ that you are terminating your organization or transferring assets, you’ll need to file a Schedule N, Liquidation, Termination, Dissolution, or Significant Disposition of Assets. The information required on Schedule N includes a description of the assets and any transaction fees, the date of distribution, the fair market value of the assets and information about the recipients of the assets.
Relationship Between Your Organization and Transferee Organization
Schedule N also asks specific questions about whether an officer, director, trustee, or key employee of your organization is, or is expected to be, involved in the successor or transferee organization by governing, controlling, or having a financial interest in that organization. If you answer yes to any of the questions, you will need to provide the name of the person involved and an explanation of the circumstances.
Attachments to Your Return
You will need to provide a certified copy of your articles of dissolution or merger, resolutions and plans of liquidation or merger along with your Form 990 or 990-EZ. You may also need to provide any other relevant documentation.
State Filings
Organizations in certain states must notify the state attorney general or other appropriate state office of the organization’s intent to dissolve, liquidate, or terminate.
Additional information
-
-
Form 990, Return of Organization Exempt From Income Tax
-
Form 990-EZ, Short Form Return of Organization Exempt From Income Tax
-
Schedule N, Liquidation, Termination, Dissolution, or Significant Disposition of Assets
-
Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ
-
-
-
-
Return to Life Cycle of a Public Charity
Return to Life Cycle of a Social Welfare Organization
Return to Life Cycle of a Labor Organization
Return to Life Cycle of an Agricultural or Horticultural Organization
Return to Life Cycle of a Business League (Trade Association)
|
