A major deadline for most small nonprofits to file their Form 990-N, also known as the e-Postcard, came and went on May 17, 2010 (Time’s Up! What You Need to Know about Your 990). How did small nonprofits fare in meeting the deadline? A new analysis of IRS data gathered by the Urban Institute’s National Center for Charitable Statistics shows a massive flood of last minute May filings—over 40,000 nonprofits completed their return on deadline day alone.
However, 196,000 nonprofits did not meet the deadline and had their tax-exempt status revoked (more on their uncertain fate in a moment). The filing deadline for many others will come later this year. Here we hope to provide guidance to some of the nearly 200,000 who may have missed their deadline.
Between May 1 and May 19, an impressive 96,000 nonprofits submitted their e-Postcard to the IRS. Since then, another 45,000 have filed, with an average of 1,000 filing every day through June 15. Outreach efforts from nonprofit infrastructure organizations and organizations with local chapters or affiliates as well as ongoing efforts by the IRS in the weeks prior to the deadline appear to have made a difference. But with this major deadline now past, important work still remains in reminding small organizations not operating on the calendar year that their filing deadline may be yet to come.
The IRS requires an e-Postcard to be filed annually by the 15th day of the 5th month after the close of the organization’s fiscal year. More than two-thirds of small nonprofits operate on the calendar year and had a deadline of May 17 (May 15 was a Saturday). But IRS data show there are 67,000 nonprofits that must file the e-Postcard by deadlines between July 15 and December 15 and another 25,500 that must file by April 15, 2011. Of these, more than half operate on a May 1–June 30 fiscal year and must file by November 15. Small organizations can verify their operating year and filing deadline date by visiting the Urban Institute’s National Center for Charitable Statistics’ searchable database of organizations that are required to file the e-Postcard.
Although nonprofit filings did increase significantly in May, more than 196,000 organizations failed to meet the deadline, or 18 percent of all registered nonprofits. An unknown number of these are believed to be defunct organizations that did not notify the IRS upon the group’s dissolution. Only 18,600 organizations (or 6 percent) that missed the deadline have ever filed a financial return with the IRS. Nearly 4,000 organizations filed as recently as fiscal year 2006, suggesting some may still be operating.
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The path forward for active organizations that missed the deadline is uncertain. The Pension Protection Act of 2006, which created the e-Postcard requirement, specified that an organization’s tax-exempt status would be revoked “on or after the date set . . . for the filing of the third annual return” if no return was filed in three consecutive years. An organization could then apply for retroactive reinstatement if it can show “reasonable cause” for its failure to file. On its face, this doesn’t appear to give the IRS much if any discretion to delay immediate revocation.
IRS Commissioner Doug Shulman pledged in a public statement on May 17 that “the IRS will be providing additional guidance in the near future on how it will help [organizations just now learning of the deadline] maintain their important tax-exempt status—even if they missed the May 17 deadline.”
We may have to wait until the New Year before we know the fate of these organizations since the IRS does not plan to make the revocations public until 2011. Whatever guidance may come, the best advice for organizations that missed the deadline is, as Shulman recommended, to file as soon as possible. Filing takes less than 10 minutes to complete and is free. If you are unsure of an organization’s filing status, start by visiting the Urban Institute’s National Center for Charitable Statistics searchable database of organizations that are required to file but have not. If you find your organization on the list and it’s gross receipts are less than $25,000, an officer from the organization should file Form 990-N at http://epostcard.form990.org. If the organization’s revenues are higher, you will need to complete a Form 990 or 990-EZ. (A list of IRS-approved e-filing providers—including the Urban Institute Form 990 Online website– is available online.)
For more information on organizations that have not completed their e-Postcard please see the Urban Institute report coming soon, “Here Today, Gone Tomorrow: A Look at Nonprofit Organizations that May Have Their Tax-Exempt Status Revoked.”
Jeff Narabrook is the public policy assistant at the Minnesota Council of Nonprofits; Katie L. Roeger is the Assistant Program Director of the National Center for Charitable Statistics at the Urban Institute; Thomas H. Pollak is the Program Director of the National Center for Charitable Statistics at the Urban Institute.