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New rules for small tax-exempt organizations - Many may now have to file an Annual Notice

Beginning in 2008, small tax-exempt organizations that were previously not required to file a return may be required to file an annual electronic notice. The notice is Form 990-N, Electronic Notice (e-Postcard) for Tax Exempt Organizations Not Required to File Form 990 or 990-EZ, and the new filing requirement applies to tax years beginning after December 31, 2006.

The electronic notice (or e-Postcard) is a provision of the Pension Protection Act of 2006 and applies to small tax-exempt organizations – organizations not required to file Form 990 or 990-EZ because their gross receipts are normally $25,000 or less. Not all small tax-exempt organizations will have to file the e-Postcard. Some exceptions are organizations included in a group return and private foundations required to file Form 990-PF. Also, the e-Postcard requirement does not apply to churches, their integrated auxiliaries, and conventions or associations of churches.

The Internal Revenue Service started mailing letters to small tax-exempt organizations in July 2007. The letters notify these organizations of their potential requirement to file the e-Postcard. IRS is developing an electronic filing system for the e-Postcard and will publicize filing procedures when the system is completed and ready for use. There will not be a paper Form 990-N.

It’s very important that organizations required to file the e-Postcard do so each year or they risk losing their tax-exempt status. The Pension Protection Act requires the IRS to revoke the tax-exempt status of any organization that does not meet its annual filing requirement for three consecutive years

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