The Michigan Chapter of the National Children’s Alliance recently received information regarding new regulations from the IRS that may impact small nonprofit agencies with budgets of less than $25,000. This new tax rule for non-profits may not affect any of our Member CAC’s as it refers to a change of filing for non-profits with budgets of $25,000 or less. However, if you agency budget has been or is less than $25,000 or if you are unsure if your agency has filed IRS form 990 in the past, you should ensure that your agency has met the IRS rules for filing to protect your tax exempt status. In the past, non-profits, were exempt from filing if their budget was less than $25,000. However, that has now changed and all non-profits have to file now or they will lose their tax exempt status.
If your nonprofit has previously been exempt from filing a Form 990 with the IRS, it is most likely now required to file a Form 990-N. A provision in the Pension Protection Act of 2006 requires most small nonprofits to file the Form 990-N if they had been exempt from filing the Form 990 because their annual gross receipts are $25,000 or less.
Non-filers will be subject to automatic revocation for the first time beginning in 2010. A provision of the law allows the IRS to remove nonprofits from the “rolls” if they fail to file a 990-N (or other applicable Form 990s) for three consecutive years. Effective midnight May 15, 2010, any agency that has not filed a tax form for the past three years will have its tax-exempt status automatically revoked, according to the IRS". Those that are removed will have to re-apply for tax exempt status.
We have compiled a list of links to the IRS web site with additional information and the links are listed below.
We would encourage you to contact your accountant for additional information if you believe this information may apply to your agency.