Legal Bulletins

Beginning in 2008, small, tax-exempt organizations will have a new requirement--to file the new IRS Form 990-N. Tax-exempt organizations that normally have annual receipts of less than $25,000 and are not required to file Form 990 or Form 990-EZ are now required to electronically file Form 990-N (also known as an “e-Postcard”). Failure to do so may lead to forfeiture of tax-exempt status.

The Pension Protection Act of 2006 requires small tax-exempt organizations with gross receipts of $25,000 or less to file an annual e-Postcard with the IRS for tax periods beginning after December 31, 2006. Starting in 2010, organizations whose annual gross receipts are under $50,000 will be eligible to use the e-Postcard, thereby exempting those organizations from having to file a Form 990 or Form 990-EZ. There is no fee for filing the e-Postcard.

The e-Postcard is due by the 15th day of the fifth month after the close of the organization’s tax period. For example, if an organization’s tax period ends on December 31, 2007, the annual e-Postcard is due May 15, 2008. Filing the e-Postcard late will not incur a fee, but failure to file for three consecutive years will cause automatic forfeiture of the organization’s tax-exempt status. The e-Postcard must be filed electronically; there is no paper form.

There are a number of limited exceptions to the e-Postcard filing requirement. Exceptions to this requirement include: (i) organizations that are included in a group return; (ii) private foundations required to file Form 990-PF; (iii) § 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ; and (iv) churches, their integrated auxiliaries, and conventions and associations of churches.

Organizations that are required to file an e-Postcard should be prepared to provide the IRS with the following information:

• the organization’s legal name
  
• any other names the organization uses
  
• the organization’s mailing address
  
• the organization’s Website address (if applicable)
  
• the organization’s Employer Identification Number (EIN)
  
• the name and address of a principal officer of the organization
  
• the organization’s annual tax period
  
• confirmation that the organization’s annual gross receipts are normally $25,000 or less
  
• whether the organization has terminated or is still in business.

The IRS is in the process of setting up a Website which will publicly disclose all of the information filed on the e-Postcard.

For further information on this new filing requirement for small tax-exempt organizations that have annual gross receipts of $25,000 or less, please contact our Tax Planning Practice Group or go to www.irs.gov/eo.

Jeff Spatz Matt Klaiber