2010 Federal Tax Filing Requirements for Tax-Exempt Organizations

February 16, 2011

The 2010 tax season is here for tax-exempt organizations – the due date for filing the required information return for an exempt organization on a calendar year taxable year is May 15, 2011, unless the organization obtains an extension. Changes in the law in 2006 that now impose a filing requirement upon all tax-exempt organizations, including those previously exempt from any annual reporting requirement, as well as changes to Form 990 beginning with the 2008 tax year, have made it imperative that an organization review filing requirements annually to determine whether it is required to file Form 990, Form 990-EZ, or Form 990-N.

Of course, all section 501(c)(3) organizations classified as private foundations must file Form 990-PF. In addition, under changes made by the Pension Protection Act of 2006, all section 501(c)(3) organizations classified as supporting organizations must file either Form 990 or Form 990-EZ. For all other tax-exempt organizations, the form that the organization may file (Form 990, 990-EZ or 990-N) depends upon its gross receipts and assets. The filing requirements have changed from 2009 to 2010. For fiscal years beginning on or after Jan. 1, 2010, the following filing requirements apply.

Organizations with gross receipts that are normally less than $50,000 are eligible to file Form 990-N for their 2010 tax year, although they may choose to file Form 990 or Form 990-EZ. The annual gross receipts of any organization are not normally more than $50,000 if: (a) the organization has existed for one year or less and has $75,000 or less in gross receipts (including pledges); (b) the organization has existed for more than one year, but less than three years, and has average gross receipts of $60,000 or less; or (c) the organization has existed for three or more years and has average annual gross receipts for the immediately preceding three taxable years (including the year for which the filing is being made) of $50,000 or less. Previously, only organizations with gross receipts normally less than $25,000 could file Form 990-N.

Organizations with gross receipts normally greater than $50,000, but less than $200,000, and total assets less than $500,000 are eligible to file Form 990-EZ for their 2010 tax year, although they may also choose to file Form 990. (In 2009, organizations with gross receipts less than $500,000 and assets less than $1.25 million were eligible to file Form 990-EZ.) If an organization has gross receipts of $200,000 or more, or if the organization has total assets of $500,000 or more for its 2010 tax year, the organization is required to file Form 990.

If a tax-exempt organization fails to file the appropriate information return for three consecutive years, the organization’s tax-exempt status will be revoked as of the filing due date for the third year. If the tax-exempt status is revoked, the organization would have to reapply to the IRS for the exemption.

McGuireWoods Nonprofit & Tax-Exempt Organizations Group

Our nonprofit and tax-exempt organizations lawyers provide advice and guidance that enable charities and other nonprofits to operate more efficiently and effectively in today’s increasingly complicated, regulated and competitive environment.

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