IRS Issues Announcements for Tax-Exempt Organizations

This week the IRS was full of activity issuing numerous announcements that relate to tax-exempt organizations and their respective tax filings.

First, the IRS has announced roughly 275,000 organizations have automatically lost their tax-exempt status due to failure of filing the required annual reports for three consecutive years. If you recall, the Pension Protection Act of 2006 required most tax-exempt organizations to file an annual information return or notice with the IRS. This included small organizations that may not have had a filing requirement until 2007. Furthermore, the law automatically revoked an organization’s tax-exempt status if the required filing was not completed for three consecutive years.

Secondly, and to expand on the above announcement, the IRS issued guidance on how organizations can apply for reinstatement of their tax-exempt status, including retroactive reinstatement. Those organizations must complete an application and pay a user fee regardless of whether they were originally required to file such an application. 

Lastly, the IRS has given tax-exempt organizations that operate one or more hospital facilities a break in their Schedule H filing requirement for 2010. Part V, Schedule B is optional for the 2010 tax year to give the hospital community more time to familiarize itself with the types of information the IRS will be collecting in relation to the facility’s community health needs assessment, financial assistance policy, billing and collections, and charges for medical care. This optional filing will also allow the hospital community to address any ambiguities arising from the extensive revisions of the form and instructions. Please note that this announcement does not affect the effective dates of the Section 501(r) provision or any other provision added to the Code by the Affordable Care Act.

More information can be obtained by visiting the IRS website at http://www.irs.gov.