IRS Formalizes Form 990-N New Submission Threshold

By Bruce R. HopkinsFebruary 22, 2011 | Print

(Full article first published in the February 22, 2011 issue of Bruce R. Hopkins Nonprofit Counsel, which was available to subscribers electronically on that date.)

The IRS, on January 13, issued formal guidance concerning the annual filing and submission requirements for tax-exempt organizations, for tax years beginning on or after January 1, 2010 (Rev. Proc. 2011-15). One of the principal elements of this guidance is reiteration of the new threshold of $50,000 (previously $25,000) for exempt organizations that are not required to file an annual information return with the IRS (Form 990 or 990-EZ).

The filing/submission rules, applicable to entities that are tax-exempt pursuant to IRC §  501(a) by reason of description in IRC § 501(c), now are as follows:

  • Exempt organizations are not required to file an annual information return where their annual gross receipts are normally (see later in the article for clarification) not more than $50,000. These entities are, however, required to annually submit, in electronic form, a notice (the Form 990-N e-Postcard).
  • This threshold does not apply with respect to private foundations (IRC § 509(a))and supporting organizations (IRC § 509(a)(3)). They are required to file annual information returns (Form 990-PF in the case of foundations) irrespective of their level of gross receipts.
  • Sponsoring organizations with donor-advised funds (IRC § 4966), organizations that operate one or more hospital facilities, and controlling organizations (IRC § 512(b)(13)) are required to annually file Form 990 irrespective of their level of gross receipts.
  • An exempt organization that has annual gross receipts in excess of the $50,000 threshold (other than the foregoing) is required to annually file Form 990-EZ where its gross receipts are less than $500,000 and its total assets are less than $1,250,000 at year’s end.
  • An organization (other than a private foundation) with receipts and assets in excess of the foregoing thresholds must annually file Form 990.
  • An exempt foreign organization or a US possessions organization is not required to file an annual information return if (1) it normally does not receive more than $50,000 in annual gross receipts from sources within the United States and (2) it has no significant activity (including lobbying, political activity, and operation of a trade or business but excluding investment activity) in the United States.
  • If an organization ceases to meet a condition set forth in the first or sixth of these items, it must file an annual information return for the year in which the cessation occurred and for all subsequent years in which it cannot meet the conditions.

For the complete article, subscribe electronically to the Bruce R. Hopkins Nonprofit Business Counsel.

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