The Internal Revenue Service (IRS) and Department of the Treasury have promulgated final regulations impacting tax-exempt organizations with gross annual receipts that generally do not exceed $25,000. The final regulations, and removal of temporary regulations, became effective July 23, 2009. The regulations are applicable to annual periods beginning after 2006.
In 2006, the Pension Protection Act was passed, including a requirement that the Treasury Secretary promulgate regulations regarding the time and manner in which certain tax-exempt organizations must file annual electronic notification. The regulations that followed amend the Income Tax Regulations (26 CFR Part 1, section 6033(i)(1)), which relate to requirements for notification by entities that are not currently required to file an annual information return under section 6033(a)(1).
After establishing temporary regulations in 2007, and twice revising the regulations in the same year, the regulations were again published in the Federal Register. The IRS and Department of the Treasury responded to four comments regarding the published regulations, confirming that there is no de minimis exception which would allow organizations with minimal income to avoid reporting under the rule, that all submissions must be made electronically, and that the regulations do not apply to Qualified State and Local Political Organizations. In addition, the IRS and Department of the Treasury stated the intent of the regulations is to provide the public with accurate information about tax-exempt organizations. The agencies noted that if an organization is the subordinate of a parent organization and is already included on the parent organizations return, the subordinate organization need not submit separate notification.
Under the final regulation, 26 CFR § 1.6033-6, tax-exempt entities under § 501(a) that are not required to file annual information returns as described in § 1.6033-2(a)(2) must submit electronic notification containing the legal name of the organization, any assumed business names, mailing and web address, tax identification number, name and address of principal officer, evidence of ongoing basis for exemption under § 6033(a)(1), and any additional information required for processing. Excluded from this requirement, however, are certain employer-created qualified pension, profit-sharing, and stock bonus plans, as defined in § 401(a) and certain religious and apostolic organizations, as defined in § 501(d). Additionally exempt are organizations that are tax-exempt under § 501(a) that are required to file, do file, or are not required to file returns under § 1.6033(a)(1).
By submitting the electronic notification, an organization acknowledges it is not required to file a return under § 1.6033(a) because its annual gross receipts do not normally exceed $25,000. The regulation contains requirements for record maintenance, as provided in § 1.6001. If the organization submits a complete Form 990 or 990-EZ, however, the requirements of annual electronic notification will be deemed satisfied. The final regulation does not relieve an organization from any other filing requirements.
The notification must be filed based on the annual accounting period of the organization; however, if the organization does not have an annual accounting period, notice shall be filed on the basis of the calendar year. Electronic notification must be submitted on or before the 15th day of the 5th calendar month after the close of the period for which the notification is being submitted.
The statements contained herein are for informational purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.