Non-Profits Receive Deadline Extension

July 27, 2010 Taxation in USA

Preparing for the 2008 Tax SeasonOver 300 000 US charities are at risk of losing their tax exemption status, unless they make use of the Government’s new tax return filing deadline extension.

To stem the potential influx of US charities losing their tax-exempt status this year, the Internal Revenue Service (IRS) has announced an extension to the tax filing deadline for not-for-profit organization. Under the one-time relief program, announced on July 26th, charities will now have until October 15th 2010 to complete necessary returns and declarations. The exemption is being offered after repeated calls from tax preparers with claims that more time is needed to adequately fulfill all necessary documentation requirements. The filing date for tax-exempt organizations is based on the entity’s own accounting period, with the deadline for most charities falling between May 17th and early October. The filing extension has not been offered to large charities, with annual gross receipts in excess of USD 500 000 and assets of more than USD 1.25 million.

Under the Pension Protection Act of 2006, charities are liable to lose their tax-exempt status if necessary returns are not filed for three years. The 2010 year will be the first in which the new rules will be enforced, and non-compliance will lead to organizations losing their status in early 2011. Current IRS records indicate that 321 091 non-profit entities are at risk of forgoing their tax exemption.

Tax-exempt charities provide an invaluable set of services to US communities, which would typically fall outside the scope of Federal or local Government spending. Explaining the need to for charities, Doug Shulman, IRS Commissioner, said that they “are vital to the vibrancy of our nation.” He went on to say, “The last thing we at the IRS want to do is to have these groups lose their tax-exempt status because they haven’t filed a short, simple form.”

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