Preserving Tax Exempt Status for Your Nonprofit Client

Abstract:     
In order to preserve a nonprofit’s tax-exempt status, counsel for the organization should stay current on how to appropriately file the IRS Form 990. Many American nonprofit organizations are at risk of losing their tax-exempt status due to changes in the tax code and filing deadlines. The Internal Revenue Service released a new version of the Form 990 in August of 2008, which became effective on December 31 the same year. This article tracks the changes on the form, as well as offers advice on who should file, when, and how. New tax law requires filing the Form 990 every year. Failing to file for three consecutive years will result in the loss of tax-exempt status. However, counsel for nonprofits should be aware that the IRS has indicated a one-time relief is available for specific Form 990 filers whose filing deadlines are after May 17, 2010 and prior to October 15, 2010. This article also includes several online sources where information on how to properly maintain a tax-exempt status can be found. Counselors for nonprofit organizations should review available resources in order to preserve the tax-exempt statuses of their clients.

Number of Pages in PDF File: 16

Keywords: tax-exempt, nonprofit, organization, Internal Revenue Service, IRS, Form 990

JEL Classification: H2, H25, K3, K34

Accepted Paper Series