IRS Commissioner Doug Shulman's Remarks from the 990 Filing Extension Conference Call on July 26, 2010
Today, we’re announcing relief for small nonprofit organizations who are at risk of losing their tax-exempt status because they have missed or are about to miss the deadline for filing Form 990-N or Form 990-EZ with IRS. We believe it’s important to give these organizations an opportunity to preserve their valuable tax exemption.
Here’s why relief is needed: Back in 2006, Congress passed legislation mandating that all tax-exempt organizations, except churches and church-related groups, file annual returns with the IRS starting in 2007. This meant that very small organizations that had never filed before would have to start doing so.
This law also said that any organization failing to file for three consecutive years would automatically lose its federal tax-exempt status. So the IRS spent the past three years conducting an extensive and unprecedented outreach effort to alert very small organizations to their new filing responsibility. Among the examples, we have sent over 1 million letters to small nonprofit organizations alerting them about the filing requirement since the law was passed. But even with that effort, we found when we got to May 17, the first date that would trigger the three-year rule, we found that many organizations still had not filed a return.
So here is what we’re doing: We’re offering a two-part program to bring small organizations back into compliance. First, we’re extending the filing deadline to Oct. 15 for the smallest organizations, those with gross receipts of $25,000 or less. These are the groups that have to file the Form 990-N, the e-postcard. It’s very simple. All they need to do is provide eight information items. If an organization goes to our Web site, IRS.gov, supplies those eight items, and files electronically by Oct. 15, it will be back in compliance and its tax-exempt status will be intact.
We’re also offering relief for somewhat larger organizations, which are eligible to file the Form 990-EZ. For these groups, we’re launching a voluntary compliance program. Under this program, you file your three delinquent returns and pay a small fee. As long as you file by Oct. 15, you won’t lose your tax exemption. I should note that none of this relief is open to larger organizations that have to file the Form 990 or to private foundations that file Form 990-PF.
To help these small organizations, today we’re posting a lot of useful material on our website. This includes a list of names and last-known addresses of at-risk organizations, along with guidance about how to come back into compliance. The organizations on the list have return due dates from May 17 through Oct. 15, 2010, but the IRS has no record they filed their required returns.
It’s really important for small charities to pay attention to this announcement. These groups do great work in communities across the United States and are vital to the vibrancy of our nation. The last thing we want to do here at the IRS is have these groups lose their tax-exempt status because they haven’t filed a short, simple form. So we urge these small groups to take a minute and make sure they’ve filed. It’s a very easy, quick process to file, and we decided to extend the deadline to offer this relief to help these groups out. It’s easier to file now than to lose their tax-exempt status and face going back and reapplying.
Our message is simple: If you don’t have your filings up to date, now is the time to take action and get back in compliance. We’re taking these steps today to go the extra mile and help small tax-exempt groups.