Efficiency, Transparency and Protection

You may have noticed that the IRS has been pushing us more and more toward electronic filings, as opposed to paper. Up until now, most nonprofits have escaped that push. That exemption from electronic filing requirements vanished this summer, however, with the enactment of the federal Taxpayer First Act. Effective for taxable years beginning after July 1, 2019, ALL tax-exempt organizations must file their annual Form 990 information returns electronically.

The Taxpayer First Act brings two other significant changes. First, in an effort designed to improve transparency and protect the public, the IRS must now make all electronically filed Form 990s available online.

Second, the IRS must now give notice before a nonprofit’s tax exemption is revoked for failure to file annual returns. If a nonprofit doesn’t file its Form 990s for two consecutive years, the nonprofit will receive written notice that its tax-exempt status is in jeopardy. This is good news as many a small organization has been sadly surprised to learn, after the fact, that its tax exemption was revoked when it didn’t even realize the exemption was at risk. (Tax-exempt status is automatically revoked if returns aren’t filed for three consecutive years.)

If you have questions about achieving, maintaining or reinstating tax-exempt status for your church or charitable organization, please give us a call at (248) 477-6300.

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