IRS Requires Certain Large Tax-Exempt Organizations to E-file Form 990

The IRS requires certain tax-exempt organizations to comply with electronic filing requirements for tax years ending on or after December 31, 2006.

(PRWEB) February 20, 2007 -- For tax years ending on or after December 31, 2006, the IRS electronic filing requirement applies to exempt organizations with $10 million or more in total assets ($100 million in 2005) if the organization files at least 250 returns in a calendar year, including income, excise, employment tax and information returns. Private foundations and charitable trusts that file at least 250 returns annually are required to file Forms 990-PF electronically regardless of their asset size.

For example, a tax-exempt organization that meets the asset criteria and that has 245 employees must file Form 990 electronically because it is supposed to file a total of 250 returns annually: 245 W-2's for its employees, four 941's (one for each quarter), and one 990 (each Form W-2 and quarterly Form 941 is considered a separate return.)

According to the IRS, tax-exempt organizations that are required to file electronically but do not are deemed to have failed to file the return, even if a paper return is submitted. Penalties apply, as detailed below.

Waiver From E-Filing Requirement: IRS Notice 2005-88 establishes the following grounds for tax-exempt organizations to request waivers from the electronic filing requirement: where the exempt-organization can not meet electronic filing requirements due to technology constraints; or where compliance with the requirements would result in undue financial burden on the filer.

Penalties For Failure To Comply With E-Filing Requirement: Tax-exempt organizations that are required to file electronically but do not are deemed to have failed to file the return, even if a paper return is submitted. For organizations with gross receipts exceeding $1 million, the penalty for non-filing is $100 for each day the failure continues, up to a maximum of $50,000 per return. The penalty begins on the due date of the return. In addition, the person responsible for non-filing will be charged a penalty of $10 a day up to a maximum of $5,000, unless he or she shows that not complying was due to reasonable cause.

Organizations that are eligible to receive tax deductible contributions are listed in IRS Publication 78 (Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986. Organizations that fail to comply with the Form 990 filing requirements risk loss of listing in IRS Publication 78.

About Adrienne N. Newsom
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Adrienne N. Newsom, Attorney At Law provides legal counsel and develops preventive strategies for churches with an emphasis on nonprofit corporate, employment practices and risk management issues.

Contact:
Adrienne N. Newsom, Attorney At Law
9595 Wilshire Boulevard, Suite 900
Beverly Hills, CA 90212
Telephone: 888-439-2246
http://www.annlaw.com

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