Half a Million Nonprofits Could Lose Their Tax Exemptions


An article by Suzanne E. Coffman, January 2009 Newsletter

Did you know that in May 2010, half a million nonprofits could find themselves stripped of their exempt status? The IRS estimates that that’s the number of smaller organizations that have failed to file a Form 990-N. The Pension Protection Act of 2006 requires exempt organizations that don’t meet the income thresholds for Form 990 or 990-EZ to file a new return with the IRS. The IRS created Form 990-N for this purpose, and smaller nonprofits began using it last year to report on tax years ending on or after December 31, 2007. The Pension Protection Act also mandates that the IRS revoke the tax-exempt status of any organization that fails to file a Form 990, 990-EZ, 990-PF, or 990-N for three consecutive years. Revocations will happen automatically beginning in May 2010. A nonprofit that loses its exemption because of failure to file will have to reapply to the IRS for exemption. To read the full article, visit GuideStar.

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