You might be at risk of losing your tax-exempt, 501(c)(3) status and not even know it.
In 2006, a new law was passed that affects nonprofits with an annual income of $25,000 a year or less and potentially threatens their tax-exempt status. The law declares that these small nonprofits must now file the IRS Form 990. If they fail to file for 3 consecutive years, they will automatically lose their tax-exempt, 501(c)(3) status.
Until now, there hasn't really been a way to tell how many of the federally registered nonprofits are still active and alive. The thought is that those who are no longer in existence will not file the form and will eventually be weeded out of the system. The only drawback is that some organizations who don't know about the law may inadvertently get caught up in the wedding.
May 17, 2010 marks the third year since the law came into effect. And, many nonprofit experts fear, countless small nonprofits are in danger of losing their tax exemption because they simply don't know about the requirement. Don't let your organization be one of the casualties. The form is fairly simple to complete.
Here are a few resources that can help you better understand the requirements:
- Guidestar offers an FAQ: Form 990 section on their website.
- The company Form 990 Online will help you e-file and the service is free for organizations with an annual income of $100,000 or less.
- Read the Wikipedia article on Form 990 and other IRS Tax Forms
- Download Form 990 from the IRS
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