Tax-Exempt Organizations News from the Georgetown Law Conference

At the annual Georgetown University Law Center conference on “Representing & Managing Tax-Exempt Organizations,” TE/GE Commissioner Sarah Hall Ingram announced that the IRS will soon be issuing an interim report on its study of colleges and universities and their reporting of unrelated business income tax, endowments, and executive compensation.  According to the BNA Daily Tax Report, the IRS study encompassed approximately 400 colleges and universities.

IRS Director of Exempt Organizations Lois Lerner reported that the EO Division workplan, which was not released this fiscal year, will return next year.

Begininng this week, the IRS is mailing postcards to more than 4 million small businesses and tax-exempt organizations to raise awareness and educate such organizations with respect to the benefits of the recently enacted small business health care tax credit.  The credit, which takes effect this year, is designed to encourage small employers, including tax-exempt organizations, to offer health insurance coverage for the first time or maintain their current coverage.  To be eligible for the credit, an exempt organization must have less than the equivalent of 25 full-time employees and pay an average annual wage of less than $50,000.  In addition, the organization must pay for at least 50% of the cost of health care coverage for some of its employees.

As also reported today by the New York Times, the May 15th deadline is looming for tax-exempt organizations to avoid revocation of their exempt status for failure to file a Form 990 for three consecutive years.  The IRS has been issuing notices to organizations since the law was enacted as part of the Pension Protection Act of 2006.  Prior to the Act, only organizations with gross revenues of $25,000 or more were required to file an annual information return.  Since the Act, all organizations must file some type of annual return, including the Form 990-N for organizations with annual gross receipts of $25,000 or less.  The New York Times estimates that one-fifth to one-fourth of the 1.6 million charities will lose their exemptions due to this law at midnight on May 15, 2010.

NAM