September 16, 2010

IRS To Revoke Tax Exempt Status of Some Small Museums-Relief Available

The IRS has announced that small tax exempt organizations that have failed to submit required tax forms will automatically have their tax exempt status revoked after October 15, 2010. The rules have changed as a result of the Pension Protection Act of 2006 which requires revocation of tax exempt status for those failing to file for 3 consecutive years. The IRS is providing one-time relief for such organizations that normally file form 990N or 99EZ. This limited relief program helps small organizations preserve their status, but does not excuse them from reporting; the organizations affected by the ruling are those with gross receipts of $25,000 or less (990N) and those with gross receipts of less than $100,000 and total assets of less than $250,000 (990EZ).  To comply with the relief program 990N filers must submit their forms online prior to October 15, 2010. More…

   Those eligible to file Form 990-EZ for all three years – can use a one-time voluntary compliance program (VCP) to come back into compliance. To participate an eligible organization must: File complete and accurate paper Forms 990-EZ and/or Forms 990 for its current and two prior tax periods by the extended due date of October 15, 2010; submit a signed checklist agreeing to the terms of the VCP; and mail a check for the correct compliance fee (ie fine). Go to the IRS website, www.irs.gov for details.

   A quick perusal of the list of at-risk organizations in the mid-Atlantic states of Pennsylvania, New Jersey, Delaware, Maryland, North Carolina, Virginia and West Virginia found 114 museums and support groups who will automatically have their tax exempt status revoked after October 15, 2010. Many of these are small museums known to be in operation and it is hoped will get the word that they are at risk of losing their status and therefore ineligible to receive tax-deductible contributions.

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