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Two new electronic filing requirements have gone into effect this year for tax exempt organizations. One is a new notice requirement for small exempts. The other is an electronic filing requirement for larger exempts.

New notice requirement for small exempts:

 

The Pension Protection Act of 2006 provides that for tax periods beginning after December 31, 2006, tax-exempt organizations whose gross receipts are normally less than $25,000 (and so were previously exempt from filing requirements) must electronically file an annual notice. ( Code Sec. 6033(i) ) IRS is developing a filing system for the annual electronic notice and will publicize filing procedures upon completion of the filing system.

 

Note: Although there is no monetary penalty for failure to file the above Code Sec. 6033(i) notice, under Code Sec. 6033(j), an exempt organization with normal annual gross receipts of no more than $25,000 that fails to file the notice for three consecutive years may have its exempt status revoked.

 

Electronic return requirement for larger exempts:

 

For tax years ending on or after December 31, 2006, tax-exempt organizations must electronically file their Forms 990, Return of Organization Exempt from Income Tax, if they have $10 million or more in total assets and file 250or more returns a year. In addition, private foundations and charitable trusts must e-file Forms 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as a Private Foundation, regardless of their asset size, if they file at least 250 returns. ( Reg. § 301.6033-4T )

 

Interested parties can find more information about e-filing for charities and non-profits, including the list of approved e-file providers, at the Charities & Non-Profits page on the IRS Web site at http://www.irs.gov/efile/article/0,,id=108211,00.html.

 

Note: Failure to file electronically as required can result in liability under the Code Sec. 6651 or Code Sec. 6652 failure to file penalties, unless it can be established that the failure to file the return electronically was due to reasonable cause and not due to willful neglect.