Issue Number: 2011-1
1. IRS Reminds Small Charities to Review Their Filing Requirements; More Organizations May File Form 990-N
The Internal Revenue Service today announced that small tax-exempt organizations may be able to shift to the simpler Form 990-N (e-Postcard) for their 2010 annual information reporting. The IRS today issued guidance (Revenue Procedure 2011-15) that will allow more tax-exempt organizations to file the e-Postcard rather than the Form 990-EZ or the standard Form 990.
For tax years beginning on or after January 1, 2010, most tax-exempt organizations whose gross annual receipts 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).
A tax-exempt organization’s annual gross receipts or total assets are used to determine which of the three versions of Form 990 it is required to file. Go to IRS.gov for more information about which form to file.
2. Updated Procedures for Issuance of Ruling and Information Letters, Technical Advice
The IRS has issued annual updates to many of the procedures that apply to tax-exempt organizations.
3. 2011 User Fees for Exempt Organization Matters
Revenue Procedure 2011-8 provides guidance for complying with the user fee program of the Internal Revenue Service as it pertains to requests for letter rulings, determination letters, etc., on matters under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division.
The new exempt organizations user fees are effective as of January 3, 2011.
4. Procedures for Issuance of Determinations and Rulings on Exempt Status; Foundation Status
The IRS has issued procedures for the issuance of determinations and rulings on exempt status as well as foundation status.
5. U.S. Supreme Court Upholds Regulation Denying FICA Exemption to Medical Residents
In a unanimous opinion in Mayo Foundation for Medical Education and Research v. United States, Sup. Ct. Dkt. No. 09-837 (January 11, 2011) , the Supreme Court upheld a Treasury regulation that makes medical residents ineligible for the student FICA tax exemption. Since 1951, the regulation exempted from FICA taxation amounts received by students for performing work that is incident to and for the purpose of pursuing a course of study. The regulation was amended in 2004 to clarify that the services of a full-time employee normally scheduled to work 40 or more hours a week are not incident to or for the purpose of pursuing a course of study. The Supreme Court upheld the regulation, thus making residents, who typically spend between 50 and 80 hours a week caring for patients, ineligible for the exemption.
In March of 2010 the IRS announced that it had made an administrative determination to accept the position that medical residents are excepted from FICA taxes based on the student exception for tax periods ending before April 1, 2005, when new regulations went into effect. The decision in this case will not adversely affect properly filed FICA refund claims for tax periods ending before April 1, 2005.
6. Register Now for Free Webinar on Small Business Health Care Tax Credit
The IRS Small Business/Self-Employed & Tax Exempt and Government Entities Divisions will co-sponsor a free webinar for the Small Business Health Care Tax Credit on February 2, 2011.
The Small Business Health Care Tax Credit, created as part of the Affordable Care Act, was designed to encourage eligible small employers, including tax-exempt organizations, to provide health insurance coverage to their employees.
7. IRS Issues Guidance on Rules Governing Tax Preparers
Beginning January 1, 2011, all tax return preparers who prepare all, or substantially all, of a tax return or claim for refund for compensation must have a Preparer Tax Identification Number (PTIN) before preparing returns.
The IRS recently issued Notice 2011-6 to provide guidance regarding the implementation of new Treasury regulations governing tax return preparers. As discussed in section 1 of this notice, all tax returns, claims for refund, or other documents submitted to the IRS unless otherwise provided for in section 1 of this notice or other guidance are tax returns for purposes of the PTIN regulations. Section 2 provides interim rules applicable to certain PTIN holders during the implementation phase of the new regulations governing tax return preparers.
8. Payroll Tax Cut and 2011 Withholding Information
The Internal Revenue Service has released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011. Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011, but not later than Jan. 31, 2011.
If you have a technical or procedural question relating to Exempt Organizations, visit the Charities and Nonprofits homepage on the IRS.gov Web site.
If you have a specific question about exempt organizations, call EO Customer Account Services at 1-877-829-5500.
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