If your tax-exempt organization has a calendar-year taxable year (i.e., its tax year ends on December 31 of each year), then yesterday was the deadline to file your yearly tax return (assuming you did not apply for a filing extension).
The due date for tax-exempt organizations to file their annual returns (990-N, 990-EZ, 990, or 990-PF, depending on which return is the proper one for the particular tax-exempt organization in question) is the 15th day of the 5th month after the end of the organization’s tax year. So, if your organization’s tax year ends on December 31, your organization’s return is due on May 15. Since May 15, 2011, fell on a Sunday, the due date this year was yesterday, May 16.
Although not all tax-exempt organizations are required to file returns, MOST ARE! The most commonly cited example to the rule is for churches, which are not subject to the filing requirement. If you have a tax-exempt organization, you should file an annual return with the IRS unless you are certain that your organization is not subject to the filing requirement. As always, if you are in doubt about your tax obligations, you should consult with a tax advisor with respect to your questions and concerns.
So, what is the big deal about missing the filing deadline by a day or two? Well, if a tax-exempt organization fails to file its required annual return for 3 consecutive years, then its tax-exempt status is AUTOMATICALLY REVOKED! No ifs, ands or buts–if your organization’s return was due yesterday, and it has failed to file its annual return for 3 consecutive years, then the bad news is that your organization’s tax-exempt status has been revoked automatically.
What can you do if this has happened to you?
Well, the good news is that you can apply to the IRS to have your organization’s tax-exempt status reinstated, but you will have to file a new application and pay the user fee to seek reinstatement. If you are successful in having your organization regain its tax-exempt status, it will nonetheless be a taxable entity until you get a determination letter from the IRS reinstating the organization’s tax-exempt status. In other words, generally reinstatement of tax-exempt status will not be retroactive–there will be a gap period during which your organization will be subject to income tax on its income and donors’ contributions to your organization will not be tax-deductible.
When an organization files an application to have its tax-exempt status reinstated, it can request that the IRS make its tax-exempt status retroactive back to the date its tax-exempt status was automatically revoked, but the IRS will only consider doing this if the organization can provide a reasonable explanation as to why it failed to make its annual return filings for 3 years.
Still, if your organization has had its tax-exempt status automatically revoked, you should take steps as soon as possible to seek reinstatement of its tax-exempt status so that the organization’s tenure as a taxable entity is as short as possible.