2010 Tax-Exempt Gross Income Threshold Raised for Filing E-Postcard

The IRS announced on January 13, 2011, that it has raised the annual gross receipts threshold at which tax-exempt organizations must file Form 990 from $25,000 to $50,000, for tax years beginning on or after January 1, 2010.  Under this new rule, qualifying tax-exempt organizations whose gross annual receipts are normally $50,000 or less can file the simpler e-Postcard.

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Background on Tax-Exempt Filing Requirements.  Under Code Sec. 6033(a), most tax-exempt organizations, other than churches, must file an annual Form 990, Form 990-EZ, or Form 990-PF.  Under the discretionary authority of Code Sec. 6033(a)(3)(B), the IRS provided that exempt organizations, other than private foundations, whose annual gross receipts do not normally exceed $25,000 do not have to file Form 990, but instead can file the simple Form 990-N (e-Postcard).  The e-Postcard only requires eight items of information.

Form 990-series information returns are due on the 15th day of the fifth month after an organization’s fiscal year ends.  Non-church exempt organizations that fail to file for three consecutive years automatically lose their tax-exempt status.  In an effort to help them keep their status, IRS offered a one-time, two-part filing relief program in July of 2010 to bring small organizations back into compliance.

The New Reporting Rule.  Revenue Procedure 2011-15, Sec. 3.01, provides that an exempt organization (other than a private foundation or a Code Sec. 509(a)(3) supporting organization) that normally has annual gross receipts of not more than $50,000 (as opposed to the previous $25,000) is not required to file an annual return under Code Sec. 6033(a) (i.e., Form 990).  Instead, it may file the simple Form 990-N (e-Postcard).  According to the Revenue Procedure, the annual gross receipts of an exempt organization are normally not more than $50,000 if:

  1. in the case of an organization that has been in existence for one year or less, its gross receipts, including amounts pledged by donors, are $75,000 or less during its first tax year;
  2. in the case of an organization that has been in existence for more than one year, but less than three years, its average annual gross receipts for its first two tax years are $60,000 or less; or
  3. in the case of an organization that has been in existence for three years or more, its average annual gross receipts for the immediately preceding three tax years, including the tax year for which the return is filed, is $50,000 or less.

If at any time an exempt organization ceases to meet the conditions set out in Revenue Procedure 2011-15, the organization must file an annual return on Form 990 for the year in which it first ceased to qualify for relief, and for all later years in which the organization does not qualify.

Tax-exempt organizations exempt from filing an annual return under Revenue Procedure 2011-15 must submit a Form 990-N (e-Postcard) annually in electronic format.  By submitting an e-Postcard, an organization acknowledges that it is not required to file a return because its annual gross receipts are not normally more than $50,000.  Further, the Revenue Procedure does not affect an organization’s obligation under the Code to file any tax or information return other than Form 990.  For example, if an exempt organization earns sufficient gross unrelated business income, it is still required to file Form 990-T (Exempt Organizations Business Income Tax Return).