The Internal Revenue Service has thrown a lifeline to small exempt organizations in danger of losing their tax-exempt status through failure to file 990-EZ or 990-N for three consecutive years (2007, 2008 and 2009). Under a one-time relief program announced July 26^th, small exempts can preserve their tax exempt status if they file either form 990-N or Form 990-EZ by October 15, 2010. This relief program applies only to Form 990-N or 990-EZ-eligible filers. Organizations that must file Form 990 or 990-PF are not eligible and are subject to revocation if they have failed to file for 3 consecutive years.

In addition, IRS has released a list, generated on June 30, 2010, of all organizations on its potential revocation list. The List of Organizations At Risk of Automatic Revocation is provided in state-by-state format, and includes the last-known address of each organization. (Tate & Tryon has created one large searchable listing in PDF format on the Tate & Tryon website. The file is 19 megabytes, so please allow for sufficient download time.)

IRS has provided complete instructions for meeting the October 15^th relief deadline:

• Small organizations eligible to file the Form 990-N electronic notice (the "e-postcard") simply have to file the notice by October 15^th, 2010. (Click here for the e-postcard filing system.) In lieu of filing 990-N, organizations may file a paper Form 990-EZ, as long as the form is both complete and postmarked by October 15^th (Click here for more information on the 990-N relief program).
• Organizations required to file Form 990-EZ may do so under a Voluntary Compliance Program (VCP).  To file under the VCP, the organization must: (a) be eligible to file a Form 990-EZ; (b) file, by October 15^th, complete and accurate Forms 990-EZ (or 990, if desired) for the current and two prior tax periods; (c) submit a signed checklist agreeing to the VCP terms, and (d) submit a check for the VCP filing fee ($100 to $500). (Click here for more information on the VCP.)

Several important considerations:

• The IRS list may be incomplete, as some at-risk organizations do not appear on the list: (a) subordinates in group rulings for which no group return has been filed; (b) very small section 501(c)(3) organizations not required to file an exemption application; and (c) other section 501(c) organizations not required to file an exemption application.  Organizations not required to file applications should contact IRS in order to be "rostered" into the IRS exempt organization database, so that they may file Form 990-N or EZ, as required.
• The IRS list may contain typographical errors preventing effective name searching. Accordingly, organizations should search not only by name and/or EIN, but also by street address (both current and prior addresses).
• All small organizations should search the list to ensure that neither they nor their affiliates are listed. National organizations with small chapters especially should conduct a thorough search, as chapters could be on the list in error. IRS has provided a page with information on procedures to follow, for organizations erroneously listed.
• IRS will keep the at-risk list on its web site through October 15^th, 2010. Organizations that have failed to file by that date will have their exempt status revoked. IRS will publish a listing, in early 2011, of the revoked organizations. Donors contributing to at-risk organizations will be protected until the final revocation list is published.
• Organizations suffering revocation of exempt status will need to reapply for exemption, and may be subject to tax for the period between revocation and reapplication.

Further useful links:

Filing Relief Program FAQ - Overview, Program Eligibility, Requirements, and Consequences

Exempt Organization Annual Filing Requirements

Form 990-EZ Filing Thresholds

Internal IRS Directive - Filing Relief Program

IRS Press Release - Relief Program