Louis E. Michelson, A Professional Corporation

Providing Legal and Tax Advisory Services to Nonprofit Organizations

Update Regarding Revocations of Exempt Status: Federal and California

July 26th, 2010 · No Comments · California Exempt Status, Federal Income Taxes, Loss of Tax-Exempt Staus

There is good news (Federal) and not-so-good news (California).  First the good news.  The Internal Revenue Service today announced a one-time offer to small nonprofit  organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008, and 2009.  The organizations can preserve their exempt status by filing returns by October 15, 2010.   The IRS has frequently asked questions on this program.

Two types of relief are available for small exempt organizations.  One type of relief is a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice (e-Postcard).  The second type of relief is a voluntary compliance program  (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

The not-so-good news is that starting on January 1, 2011, California is conforming with federal law and will require smaller tax-exempt organizations with normal gross receipts of $25,000 or less annually, other than churches and church-related organizations, to electronically file an annual informational notice, using Form 199-N.  For additional information, see  the following link to the FTB announcement.

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