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IRS Gives Relief to Smaller Not-for-Profit Organizations


5/31/16

Earlier this year, the 990-N filing system moved from Urban Institute’s website to IRS.gov. While it has been reported that most users have experienced little or no interruption with filing as a result of the change, a small percentage of users have been experiencing difficulties in either registering or submitting their 990-N on the IRS website. As a result, the IRS has offered helpful hints in filing:

  • Review the How to File section provided on the IRS website
  • Pay particular attention to the “text character” restrictions
     

On May 17, 2016, the IRS announced that it will not penalize organizations for late filing if it is was caused by its website issues.  All organizations should continue to file their 990-N, even if the submission is late. Any organization that fails to file a Form 990-N, 990-EZ, or 990 for three consecutive years will ultimately lose its tax exempt status. As such, annual compliance is strongly encouraged.

Additionally, on May 31, 2016, the IRS announced that it has reduced the user fee for Form 1023-EZ from $400 to $275.  Form 1023-EZ is the application that smaller organizations can elect to use and file online for a streamlined application process when applying for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.  According to the Internal Revenue Bulletin 2016-22, Revenue Procedure 2016-32 modifies Revenue Procedure 2016-8, 2016-1 I.R.B. 243 by reducing the required user fee. This revenue procedure is set to become effective July 1, 2016.

What Does CohnReznick Think?
If users are still experiencing difficulties either registering or submitting their 990-N, they are encouraged to call customer service at 877-829-5500, where an IRS tax-exempt representative will take the necessary information and assist with filing the 990-N.

With respect to the IRS user fee reduction for Form 1023-EZ, this is a welcomed relief for smaller not-for-profit organizations.

Contact

For more information, please contact Thomas Lanning, partner in CohnReznick’s Not-for-Profit and Education Industry Practice, at 646-834-4108 or thomas.lanning@cohnreznick.com, or Lori Rothe Yokobosky, senior manager, at 973-403-6940 or lorirothe.yokobosky@cohnreznick.com. To learn more about CohnReznick’s Not-for-Profit and Education Industry Practice, click here.

Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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