Abstract
In an effort to keep better track of nonprofit organizations, the Pension Protection Act of 2006 mandated that the more than 714,000 nonprofits with gross receipts less than $25,000 needed to file the new Form 990-N, also known as the e-Postcard. This new form requests basic information such as an organization's address, officer name, and website and is the first data to ever be collected on the smallest nonprofit organizations.
This brief provides an overview of the new 990-N filing requirement, profiles the organizations filing the 990-N, compares 990-N filers to larger filers, and provides a brief look at small nonprofits reporting terminations on Form 990-N.
The text below is an excerpt from the complete document. Read the full brief in PDF format.
Introduction
The Pension Protection Act of 2006 requires
all tax-exempt organizations to file a return
with the Internal Revenue Service (IRS)
each year. For smaller organizations, which
were not required to file in the past, a new
electronic notice was created. Form 990-N,
also known as the e-Postcard, requests basic
information, such as an organization's
address, officer name, and web site, and is
the first data to ever be collected on the
smallest nonprofit organizations. The new
filing requirement is also helping the sector
to identify which organizations are active
and which have terminated over the years.
This new information will begin to fill the
gaps in our knowledge of the nonprofit
sector and allow for more in-depth research
on the tax-exempt sector in the future.
This brief presents an overview of the
new 990-N filing requirement, profiles the
organizations filing the 990-N, compares
990-N filers to larger (Form 990 and Form
990-EZ) filers, and provides a brief look at
small nonprofits reporting terminations on
Form 990-N.
Overview of the Form 990-N
In an effort to maintain more current and
accurate information on nonprofit
organizations operating in the United
States, the Pension Protection Act of 2006
mandated that all registered tax-exempt
organizations file a tax return each year.
Previously, only private foundations and
nonprofits with more than $25,000 in
annual gross receipts were required to file.
This meant that information was not
available on the smallest nonprofits—those
with less than $25,000 in gross receipts—
which make up the bulk of the nonprofit
sector. Indeed, over 714,000 of the 1.6
million nonprofit organizations were in
this category in 2010.1
Under the new law, effective in 2008 for
tax year 2007, all registered nonprofits are
required to file a tax return each year. The
specific form required depends on the
annual value of the organization's gross
receipts. Nonprofits with less than $25,000
in gross receipts must now file the new
Form 990-N each year to maintain their
tax-exempt status. There are a few exceptions
to this new rule: churches and their
auxiliary groups as well as organizations
included in a group return are not required
to complete Form 990-N. Organizations
with gross receipts between $25,000 and
$500,000 (starting in 2010) must file either
Form 990-EZ or Form 990, and nonprofits
that exceed $500,000 in annual gross
receipts must file Form 990. Private foundations,
regardless of size, are not affected
by this new requirement and must file
Form 990-PF annually. As an alternative
to the e-Postcard, even the smallest organizations
may complete Form 990 or
Form 990-EZ to satisfy this new filing
requirement.
Form 990-N is otherwise known as
the e-Postcard, reflecting the length of the
form as well as the fact that nonprofit
organizations must complete the return
electronically; no paper forms are accepted.
The e-Postcard requires only eight pieces
of information about the organization:
employer identification number, tax year,
legal name, secondary name, address,
officer name and address, and web site.
The form also requires the organization to
confirm that its gross receipts are less than
$25,000 and asks if the organization is still
active or if it terminated.
Organizations were given three years
to complete Form 990-N before their taxexempt
status would be revoked. For nonprofit
organizations with fiscal years that
end on December 31, the three-year window
closed on May 17, 2010. Organizations that
do not file during these three years will
automatically have their tax-exempt status
revoked. To be reinstated, an organization
will need to reapply for tax-exempt status
and pay the application fee (currently $400
for organizations that average less than
$10,000 in gross receipts and $850 for all
other organizations).
To find out if organizations in your area
are in danger of losing their tax-exempt status,
please visit the National Center for
Charitable Statistics (NCCS) searchable
database at http://nccs.urban.org.
(End of excerpt. The full brief is available in PDF format.)
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