Sasser Sefton Tipton & Davis

Sasser, Sefton, Tipton & Davis, P.C.
Montgomery, Alabama

Some small nonprofit organizations that missed the May 17 deadline to file their Form 990-N information returns may not face loss of federal tax-exempt status after all. Until recently, nonprofits with gross receipts of $25,000 or less yearly were not required to file annual information returns. However, the Pension Protection Act of 2006 changed the law to make all organizations subject to annual reporting. Nonprofits that fail to file annual returns for three consecutive years automatically lose recognition of federal income tax-exemption and must re-apply. To implement the Pension Protection Act, in 2008, the IRS introduced a new simplified, electronic return for small nonprofits, Form 990-N (also known as the e-Postcard). This year was the first year that the loss-of-exemption penalty for failing to file for three consecutive years was to apply. However, IRS Commissioner Doug Shulman has issued an official statement "to reassure these small organizations that the IRS will do what it can to help them avoid losing their tax-exempt status" and has promised "additional guidance in the near future on how [the IRS] will help these organizations maintain their important tax-exempt status--even if they missed the May 17 deadline.