Does a nonprofit need to file any tax returns before they apply for tax exempt status?

I was advising a small homeschool organization about applying for tax exempt status and explained that they had 27 months after their date of formation to file an application with the IRS.

Hi Carol,

I just read this and was concerned that I would need to file something during the 27 months time frame.  Please explain if possible.
http://www.irs.gov/charities/article/0,,id=156389,00.html

Teri

Teri,

The link to the IRS website concerns IRS requirements before you apply for tax exempt status. The link above states this (in part)

Tax Law Compliance Before Exempt Status Is Recognized

An organization that claims tax-exempt status under section 501(a), but has not yet received an IRS letter recognizing exempt status, is generally required to file an annual exempt organization return.

This is a fairly new requirement from the IRS. I used to tell nonprofit organizations that if they had not yet applied for 501c3 status, they did not have to file the Form 990. It came to my attention only a week ago that the IRS wants Form 990 from all nonprofits.

Fortunately, the form your organization (and all small nonprofits with annual gross revenues of less than $50,000) would need to file is the 990N, an electronic postcard that asks about 5 questions: Name and address of organization, the principle officer’s name and check a box that your annual gross revenues are under $50,000. It is very short and would take less than 5 minutes once a year.

Here’s a blog post that answers your question. http://homeschoolcpa.com/does-new-irs-990n-apply/

I hope that helps.

Carol Topp, CPA

Comments

  1. Carol,

    I have recently become very concerned about my position in leadership for our local home school support group and co-op. I have many questions. We have grown rapidly in the last year and I am worried we are not following through with all the leagal requirements we need to follow. Help!!!

    I read on a post to the Old Schoolhouse Magazine’s leadership group that you do phone consultations. Is there a charge for this service?

    Judy K.

  2. Carol Topp says:

    Judy,
    Yes I do phone consultations with homeschool leaders. It’s a great opportunity to get answers for your specific situation. I am sometimes put on speaker phone and talk to an entire homeschool board or leadership team at once.
    I charge $50 an hour for a phone consultation and we can discuss a lot in an hour. I prorate for a partial hour.

    You can drop me an email at Carol@HomeschoolCPA.com and we’ll set up a mutually convenient time to talk!

    Carol Topp, CPA

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