Is your department’s tax-exempt status at risk?
The IRS changed the rules and requirements for volunteer fire department annual filings... and your department may have already lost its tax-exempt status.
This means your department may owe back taxes and donations to your department are no longer charitable, deductible contributions.
The IRS has always required larger tax-exempt organizations (commonly known as 501c(3) organizations) to file an annual report of its activities. This form is known as a form 990 report or a related report such as the 990-EZ.
The IRS changed the rules so that all tax-exempt organizations are now required to file some form of the 990 form. It also created a e-Postcard form 990-N for those organizations that meet the rules (generally meaning under $25,000 of gross receipts and other requirements).
The new filing requirements took effect beginning with the 2007 tax year so departments have been required to file some format of the form 990 for 2007, 2008, and 2009.
Why your exempt status may be revoked
At the same time, the new law provides that any exempt organization will automatically lose its tax-exempt status if the organization does not file the correct form for three consecutive years.
Loss of exempt status means an organization must file income tax returns and pay income tax, and it contributors will not be able to deduct their donations.
Has this already happened to your department?
The IRS has posted a list of organizations that have lost their exempt status. Your department may already be on this list and may be subject to paying income taxes.
Good news: The IRS is providing a one-time relief for small organizations that failed to file for three consecutive years. But take advantage today and consult your accounting/tax/legal counsel for your situation.
To learn more:
Visit the IRS website at www.IRS.gov
For detailed information, you can also visit:
About the new requirements:
About automatic revocation of exempt status:
About the one-time relief:
List of organizations at risk: