Articles Posted in Nonprofit Corporation Issues

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In June 2011 the IRS announced that 275,000 nonprofit groups (around 18% of all nonprofits in the US) lost their tax-exempt status for failing to file the Form 990. The IRS Form 990 is the tax document that tax-exempt nonprofit organizations file each year with the IRS. The Form 990 (or (Form 990-N, 990-EZ, or 990-PF) allows the IRS and the public to evaluate nonprofits and how they operate.

Up until 2006, nonprofits with annual revenues under $25,000 generally did not have to file these informational returns. Generally speaking theses organizations didn’t have much income and didn’t pay large salaries. But under 2006 legislation, the rules changed. Now, even small nonprofits must file an informational return. And if they have failed to do so for three consecutive years (and plenty have failed), the IRS has now revoked their exemptions. The deadline for compliance was May 17, 2010. And sure enough, the IRS has now notified hundreds of thousands of small nonprofits (and the public via the IRS website) that their tax-exempt status was revoked.

The nonprofit sector is often overlooked in discussions of a state or the country’s economy. But it’s important to remember that this sector includes churches and many academic institutions and major foundations, as well as the familiar social-service agencies. In addition, they employ a significant amount of employees throughout the United Sates.