Louis E. Michelson, A Professional Corporation

An updated Publication 557 is now available on the IRS website.  The last version was published in June, 2008.  Four topics are listed in the “What’s New” section:

New penalty provisions for nonfiling. For annual tax periods beginning after 2006, the law requires most tax-exempt organizations, other than churches, to file an annual Form 990, 990-EZ, or 990-PF with the Internal Revenue Service (IRS), or to submit an annual electronic notice, Form 990-N (e-Postcard), to the IRS. If an organization fails to file an annual return or submit an annual notice as required for 3 consecutive years, it will automatically lose its tax-exempt status.

Redesigned Form 990 and Instructions. The Form 990 has been redesigned for 2008 and future years. The new form con­sists of an 11-page, 11-part core form that is required to be completed by all organi­zations that file Form 990. It also consists of 16 schedules to be completed by those organizations that satisfy the applicable requirements for each schedule.

Elimination of the advance public char­ity status. New regulations eliminate the advance ruling process for a section 501(c)(3) organization. Under the new reg­ulations, a new section 501(c)(3) organiza­tion will be classified as a publicly supported organization and not a private foundation if it can show when it applies for tax-exempt status that it reasonably can be expected to be publicly supported. The new rules no longer require the or­ganization to file Form 8734 after complet­ing its first 5 tax years. The new rules apply to organizations with advance rul­ings expiring on or after June 9, 2008.

Report significant new or changed pro­gram services and changes to organi­zational documents. An organization should report new significant program services or significant changes in how it conducts program services, and significant changes to its organizational documents, on its Form 990 rather than in a letter to the IRS Exempt Organizations Determina­tions (EO Determinations). EO Determina­tions no longer issues letters confirming the tax-exempt status of organizations that report new services or significant changes, or changes to organizational documents.