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With the calendar year 2010 Form 990 filing date for tax exempt organizations (TEOs) just around the corner (May 15, 2011), some new tax related items should be considered. A few of these items include:
Form 990-N (e-Postcard): The IRS announced in January that small TEO organizations may be able to shift from the simpler Form 990-N (e-Postcard) for their 2010 annual information reporting. For tax years beginning on or after Jan. 1, 2010, most TEOs with gross annual receipts that are normally $50,000 or less can file the e-Postcard. The threshold was previously set at $25,000 or less. However, supporting organizations of any size must file the standard Form 990 or, if eligible, Form 990-EZ.
Electronic Filing (e-file): Effective January 2011, Form 8868 can be filed electronically to request either the Part I, automatic three-month extension (6 months for a corporation required to file Form 990-T) or Part II, additional (not automatic) three-month extension. Electronic filing can be used to request an extension of time to file each of the forms listed in both Parts I and II.
Small Business Health Insurance Premium Credit: A tax credit is available for certain small TEOs providing health insurance coverage for their employees. The credit is specifically targeted to help small businesses and TEOs that primarily employ moderate and lower income workers. For TEOs, the credit is a refundable tax credit limited to the amount of the TEO's payroll taxes.
During the first phase of the credit, (i.e., tax years beginning in 2010, 2011, 2012 or 2013), the amount of a TEO's credit is generally 25 percent of the employer's nonelective contributions toward the employees' health insurance premiums. In the second phase of the credit (i.e., tax years beginning after 2013), the amount of the credit is generally 35 percent of the nonelective contributions.
TEOs will use Form 8941, Credit for Small Employer Health Insurance Premiums, to figure their refundable credit for the 2010 tax year and then claim the credit on Line 44F of Form 990-T. Though primarily filed by TEOs liable for the tax on unrelated business income, Form 990-T will also be used by any eligible 501(c) TEOs to claim the credit, regardless of whether they are subject to this tax.
Updated Revenue Procedures for Tax Exempt Organizations: The IRS issued an updated revenue procedure (2011-5) that explains when and how the Exempt Organizations Technical Division provides technical advice to area managers and appeals offices regarding exempt matters. Also, the agency issued an updated revenue procedure (2001-4) that provides for procedures to be followed for the issuance of exempt organizations letter ruling requests.
This tax tip contributed by:
Michael R Miranda
Williams & Company CPA PC
Sioux Falls, SD
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