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Listen Up, One-Time Only! Filing Relief for Tax-Exempt Organizations

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Listen Up, One-Time Only! Filing Relief for Tax-Exempt Organizations

By JamieD
Published: September 8, 2010

Does your small business currently hold tax-exempt status? Have you failed to file the proper returns with the IRS?

If you answered yes to these questions, there is a good possibility that you're business is at-risk of losing its tax-exempt status. Luckily, the IRS has issued a one-time filing relief to owners in this situation. Her;s how it work-

Certain small organizations can obtain a tax-exempt status. Most people automatically assume that all non-profits do-t pay taxes. Although many non-profit organizations receive state tax benefits, not all non-profits are eligible for a federal tax-exempt status.

If you are unsure if your business qualifies, follow the IRS guide Types of Tax-Exempt Organizations.

Organizations that hold a tax-exempt status must file an annual return with the IRS. With a few exceptions (ex. churches), the type of return that should be filed depends on the financial activity of that organization. For example, if Business 's gross receipts total $23,000 and Business 's gross receipts total $450,000, they would fall into different categories and therefore file returns using different forms.

For more information on filing requirements, follow the IRS chart that details financial brackets and the proper filing procedures.

Tax-exempt organizations that fail to file for three consecutive years will lose their status. If your business loses its status, you must file income tax returns and pay income tax. Additionally, these organizations are no longer considered tax-deductable for their donors. After losing a tax-exempt status, organizations can reapply to have it reinstated. Unfortunately, income received before your status is reinstated may be considered taxable.

If you are unsure of whether or not your business is in compliance with its filing requirements, search the IRS List of Organizations at Risk of Automatic Revocations of Tax-Exempt Status.

The IRS guide to Reinstating Tax-Exempt Status provides more information on the procedure for businesses that want to reapply.

Organizations can avoid losing their status by filing a one-time relief by October 15, 2010. If a business successfully files this relief, their business will be designated as compliant and retain their tax-exempt status with the IRS. The relief does not apply to all tax-exempt organizations that may be at-risk. Eligible organizations can file their relief (and pay a fee if applicable) through the IRS website. Visit the IRS filing relief homepage for more information on eligibility and filing requirements.

If you are unsure of whether or not your business is in compliance with its filing requirements, search the IRS List of Organizations at Risk of Automatic Revocations of Tax-Exempt Status.

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