Time is Running Out to Save Your Tax Exemption Organization

This article is from the California State Grange but it applies to all granges and other non-profits.

Time is Running Out to Save Your Tax Exemption

by Inger Bevans, Executive Committee
The IRS will be revoking the tax exemption of thousands of non-profit organizations on October 16, 2010. The Pension Protection Act of 2006 requires the IRS to revoke the exemptions of those nonprofits that have not filed for three consecutive years, beginning with tax year 2007. This list is currently on the IRS website and includes over 35,000 organizations in California alone, including 92 Granges! Is your Grange subject to losing its exemption?
If your annual gross receipts were $25,000 or less, you needed to file a form 990-N for the years 2007-2009. If your average gross receipts were over $25,000 you must have filed Form 990-EZ or a full 990. The IRS has issued guidance for relief to these small organizations. Forms may be filed no later than October 15, 2010 to obtain relief. The 990-N for 2009 must be filed electronically.
For back years you must file a 990-EZ (for 2007 or 2008) with the notation “Filed in lieu of Form 990-N” printed on top of the first page. Instructions are at the IRS website (http://www.irs.gov).
For organizations that needed to file 990-EZ (because of more than $25,000 in gross receipts) they will need to complete these back years returns and attach a Voluntary Compliance Program Checklist and pay a fee. This is also on the IRS website. There is no relief for organizations that were required to file other than a 990-N or a 990-EZ return.
For more information on forms and required headings, contact Inger Bevans at (831) 449-4021 or the California State Grange office. Our Group Exemption number is 1160 and legal name is “Grange Patrons of Husbandry” with your Grange name as the DBA.

Exempt Organizations - Public Disclosure Requirements in General

In general, what public disclosure requirements apply to tax-exempt organizations?

In general, exempt organizations must make available for public inspection certain annual returns and applications for exemption, and must provide copies of such returns and applications to individuals who request them.  Copies usually must be provided immediately in the case of in-person requests, and within 30 days in the case of written requests.  The tax-exempt organization may charge a reasonable copying fee plus actual postage, if any. The IRS must also make this same information available to the general public.

Page Last Reviewed or Updated: October 29, 2010 from: http://www.irs.gov/charities/article/0,,id=139231,00.html

Exempt Organizations - Documents Subject to Public Disclosure

What tax documents must an exempt organization make available for public inspection and copying?

An exempt organization must make available for public inspection its exemption application. An exemption application includes the Form 1023 (for organizations recognized as exempt under § 501(c)(3)), Form 1024 (for organizations recognized as exempt under most other paragraphs of § 501(c)), or the letter submitted under the paragraphs for which no form is prescribed, together with supporting documents and any letter or document issued by the IRS concerning the application. A political organization exempt from taxation under § 527(a) must make available for public inspection and copying its notice of status, Form 8871.

In addition, an exempt organization must make available for public inspection and copying its annual return. Such returns include Form 990 , Return of Organization Exempt From Income Tax, Form 990-EZ , Short Form Return of Organization Exempt From Income Tax, Form 990-PF, Return of Private Foundation, Form 990-BL , Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons, and the Form 1065 , U.S. Partnership Return of Income. 

An organization exempt under § 501(c)(3) must make available for public inspection and copying any Form 990-T, Exempt Organization Business Income Tax Return, filed after August 17, 2006.  Returns must be available for a three-year period beginning with the due date of the return (including any extension of time for filing).  For this purpose, the return includes any schedules, attachments, or supporting documents that relate to the imposition of tax on the unrelated business income of the charity.  See Public Inspection and Disclosure of Form 990-T for more information.

An exempt organization is not required to disclose Schedule K-1 of Form 1065 or Schedule A of Form 990-BL. With the exception of private foundations, an exempt organization is not required to disclose the name and address of any contributor to the organization.

A political organization exempt from taxation under § 527(a) must make available for inspection and copying its report of contributions and expenditures on Form 8872, Political Organization Report of Contributions and Expenditures. However, such organization is not required to make available its return on Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.

Page Last Reviewed or Updated: June 14, 2010 from:  http://www.irs.gov/charities/article/0,,id=135008,00.html

Exempt Organization Public Disclosure - Costs for Providing Copies of Documents

What does the IRS consider to be a reasonable charge for copying costs?

A tax-exempt organization may charge a reasonable fee for providing copies, which is generally defined as the amount charged by the IRS for providing copies. Under regulations issued in July 2004, the IRS may not charge more for copies than the fees listed in the Freedom of Information Act (FOIA) fee schedule.  In addition, although the FOIA fee schedule directs the IRS to provide the first 100 pages free, the regulations allow the exempt organization to charge a fee for all copies.  For non-commercial requesters, the FOIA schedule currently provides a charge of $.20 per page.

An organization may require payment before it provides copies, but must advise requesters of the total cost of the copies requested if adequate payment is not included with the request.  The organization may also charge the actual postage costs
it incurred to mail copies to the requester.

Page Last Reviewed or Updated: October 29, 2010 from:  http://www.irs.gov/charities/article/0,,id=135014,00.html

Exempt Organizations Public Disclosure - Penalties for Noncompliance

What are the penalties for failure to comply with the disclosure requirements, and who must pay them?

Responsible persons of a tax-exempt organization who fail to provide the documents as required may be subject to a penalty of $20 per day for as long as the failure continues.  There is a maximum penalty of $10,000 for each failure to provide a copy of an annual information return.  There is no maximum penalty for the failure to provide a copy of an exemption application.

Page Last Reviewed or Updated: October 29, 2010 from:  http://www.irs.gov/charities/article/0,,id=135028,00.html