Non-profit organization filed 1023-EZ; now gross receipts

Technical topics regarding tax preparation.
#1
Keyad22  
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Non-profit organization filed 1023-EZ; now gross receipts received over threshold

Non-profit organization get an 501(c )(3) exempt status approved by IRS five years ago. The CPA originally filed form 1023-EZ, which is very easier and a streamlined form for Form 1023 and it was approved very fast. Now actually the annual gross receipts are over the threshold.
The CPA filed form 1023 to furnish more information to IRS and the form was rejected. Reason: the NPO already got exempt status.
I think they just need to file 990 for tax return rather than 990-N e-postcard for the future years when NPO’s gross receipts are over threshold.
Anyone can see any potential risk?
Thank you!
 

#2
Joan TB  
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I don't see how a new 1023 would be required just because the NPO has grown into a larger organization with more gross receipts.

However, the specific 990 version required to be filed definitely changes as gross receipts increases. If they were filing 990-N before, the next step is probably 990-EZ (not 990). The only risk would be to continue to file 990-N for which the NPO does not qualify to file.
 

#3
Frankly  
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Keyad22 wrote:Non-profit organization get an 501(c )(3) exempt status approved by IRS five years ago. […]
The CPA filed form 1023 to furnish more information to IRS and the form was rejected.

Why was that done? Furnish what information, for what purpose?

The annual return filing is either 990-N, or 990-EZ, or 990, depending on the income and value of assets at the end of the year.
 

#4
Keyad22  
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Actually, I have no idea. Their CPA think it is too easy to get an exempt status through form 1023-EZ and file form 1023 may reduce his liability as third party when the organization received more than threshold.

I am more comfortable now. Thank you!
 

#5
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They already received exempt status via 1023-EZ, which is just a simplified method based on gross receipts. Once you have the tax exemption, you file the appropriate 990 based on gross receipts. Once the exemption is obtained, it is only a matter of properly reporting information on the appropriate Form 990--nothing else with the 1023 unless they lose their tax exempt status, such as through an automatic revocation for failure to file for three consecutive years.

I hope the CPA or IRS refunded the user fee for the 1023 that did not need to be filed...
 

#6
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While I agree with the above thread, I only encourage careful attention to the following:

1) Make certain NO inurement has taken place. See 222 F. Supp 151, Spokane Motorcycle Club -vs- US, August 9, 1963. Inurement happens at the smallest dollar amount.

2) If inurement has taken place, under 1.501c3-1c2 and 1.501a-1 and section 13703 of Trumps new tax law you now have unrelated business income requiring Form 990-T under section 511.

3) Also, carefully consider excess benefit tax per section 4958.

My entire theory is this. By reviewing these areas, possibly you can remove some of the revenue from the 990 by instead reporting on 990-T. Given the complexity of 990 - vs - 990 EZ (and the associated public disclosure requirments), well, just saying.

Enjoy,,,,,,,,
 

#7
sjrcpa  
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OregonTaxMan wrote:possibly you can remove some of the revenue from the 990 by instead reporting on 990-T

All 990-T revenue is also reported on the 990.
 

#8
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I do not read it that way. Please help me "see" what you are saying. Section # perhaps?

Thanks,,,,,,,,,,,,,
 

#9
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Never mind, I see it now.

Thanks for the catch!!!
 


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