New Annual Electronic Filing Requirement for Small Tax-Exempt Organizations

February 15, 2009

Small tax-exempt organizations (charitable organizations such as youth athletic leagues) that previously were not required to file returns because their gross receipts were normally $25,000 or less may be required to file an annual electronic notice. The Pension Protection Act (PPA) of 2006 added this filing requirement to improve transparency within the non-profit sector and ensure that donors and the IRS have current information about these organizations. 

The first annual electronic notice, Form 990-N, Electronic Notice for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, also known as the e-Postcard, is due in calendar year 2008. The e-Postcard will require organizations to provide basic information, such as their name and address, any other names they use, a Web address if they have one, the name and address of a principal officer of the organization, and a statement that the organization’s annual gross receipts are still normally $25,000 or less. 

Exceptions to the e-Postcard filing requirement include organizations that are included in a group return; private foundations required to file Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as a Private Foundation; and Section 509(a)(3) Supporting Organizationsrequired to file Form 990 or Form 990-EZ. In addition, this filing requirement does not apply to churches, their integrated auxiliaries, and conventions or associations of churches. 

The PPA requires the IRS to revoke the tax-exempt status of any organization that fails to meet its annual filing requirement for three consecutive years. Therefore, organizations that do not file the e-Postcard or an information return will have their tax-exempt status revoked as of the filing due date of the third year

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