In 2009, your chapter may have received a postcard from the Internal Revenue Service explaining a change that will affect your chapter or colony. Board members or other Fraters may have also read very confusing language about this change in who needs to file tax forms. Below you will find a simple explanation of what the changes are, who they apply to and what the future holds for this new tax law.
October 15 - IRS Form 990 due (if June 1 to May 31 Fiscal Year).
Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice(e-Postcard) , and a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
Small organizations required to file Form 990-N should go to the IRS Web site, supply the eight information items called for on the form, and electronically file the form by Oct. 15. That will bring them back into compliance. Under the VCP, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee. Details about the VCP are on the IRS website, along with frequently asked questions.
This relief is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
The Pension Protection Act of 2006 made two important changes affecting tax-exempt organizations, effective the beginning of 2007. First, the law mandated that all tax-exempt organizations, other than churches and church-related organizations, must file an annual return with the IRS. The Form 990-N was created for small tax-exempt organizations that had not previously had a filing requirement. Second, the law also required that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status. The IRS conducted an extensive outreach effort about this new legal requirement but, even so, many organizations have not filed returns on time.
If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.