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Wednesday, March 14, 2007


Two reminders regarding exempt organization filing requirements:

  • Non-Reporting Exempt Organizations Obligated to File an Electronic Notice with the IRS. The Pension Protection Act of 2006 provides that for tax periods beginning after Dec. 31, 2006, tax-exempt organizations whose gross receipts are normally less than $25,000 (and thus are exempt from the need to file an annual Form 990 or 990PF), must electronically file an annual notice with the IRS disclosing certain information regarding the entity. This filing requirement arises under Code Sec. 6033(i). At present, there are no specific methods for compliance, but the IRS is in the process of developing a filing system for these notices. Affected taxpayers should monitor these developments, since the penalty for noncompliance is revocation of exempt status (if the nonfiling occurs for 3 years).
  • Receipts from Private Foundations. Individuals making significant contributions to a charitable organization are required to obtain a receipt from the charitable organization to evidence their contribution. This receipt must be obtained before the filing date of the contributor's income tax return for the tax year of the contribution. In regard to contributions to a family private foundation, contributors often overlook this requirement since they are effectively on both sides of the transaction. They either don't know about the requirement, figure they don't need to comply since it involves their own foundation, or think they can just issue a receipt later if the IRS asks for one on audit. Since there is no "private foundation" exception, and issuing a receipt later is ineffective, private foundations need to issue these receipts to their contributors each year and on a current basis.

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