PODCAST: What Nonprofits Need to Know to Avoid Losing Tax-Exempt Status


Written by Jeff Dvorachek

April 18, 2024

Welcome to the Tax Insights Podcast, where we break down complex tax topics into bite-sized how-tos. In this episode of Tax Insights Podcast, Jeff Dvorachek explores the world of tax deadlines and extensions for nonprofit businesses. Listen to the new podcast below!

On today’s episode of Tax Insights, Jeff shares crucial information about an upcoming deadline that every nonprofit organization needs to be aware of. Neglecting the May 15th deadline for nonprofit tax returns can jeopardize an organization’s tax-exempt status, risking their hard-earned benefits. Join the conversation and stay informed to maintain your tax benefits.

Host: Hey, you know, in the accounting world, it feels and it seems like it’s all about deadlines. Obviously, Tax Day was April 15th, but there is another deadline coming up and that is May 15th, correct?

Jeff: That’s right. You know, so the number one question I get from friends and things like that is, so what do you do after April 15? Do you, like, have the summer off and go golfing? Yeah, and no, like you said, Terry, public accounting is just basically deadline after deadline after deadline. And yeah, the next one is May 15th, which is nonprofit returns.

Host: Alright so let’s talk about that, so if you are in a nonprofit, this is a very important day because I know you and I were talking before the show began but if you miss this deadline I think you said like three years in a row, you run the risk of losing that nonprofit status.

Jeff: Right. You know, so it takes a lot of effort to get to be a nonprofit in the United States. You know, you have to fill out the forms. You have to work through the IRS to prove that you’re a charitable type organization. And so you’d hate to throw that all away by missing a filing deadline. And what we see happen a lot is, you know, in a lot of small charitable organizations that board just changes. So the treasure is different every year. And sometimes these filing requirements get lost. And like you said, Terry, if you don’t file a 990 for three consecutive years, you essentially have to start the whole process over and reapply to be a tax-exempt organization.

Host: Sure. And I would imagine just like in the for-profit world that if you missed this deadline, I’m sure that the IRS has penalties and fees and things like that as well. Correct.

Jeff: There are penalties and fees for missing the deadline. That’s why, you know, just like with an individual or business return. If for some reason you’re not going to be able to get it filed by May 15th, make sure you file that extension so that you can get a little more time now that extension actually is a really nice one because it gets you all the way out to November.

Host: Okay. So again, for nonprofits out there coming up in just a couple of weeks, May 15th, that is your deadline to get all your tax filings done for the nonprofit. However, you’re saying you can’t do it. You can do an extension all the way till November.

Jeff: That’s right. Yeah. And if you’re not sure if your organization is exempt or not exempt, you can go right to the website of the IRS. They have a really nice tool to be able to search to see if you’re listed on their records as a tax-exempt organization.

Host: Sure. And I would imagine, Jeff, that depending on the size of the nonprofit, there’s a lot of paperwork. There’s a lot of information that they’re going to need. They’re going to need to provide you for their nonprofit tax status is correct.

Jeff: There is. Yeah. It has a lot to do with the financials. But in a 990, there is a lot of questions that get asked because the IRS wants to make sure that you’re still continuing to be a charitable type organization. And then they also want to know, okay, who gave you money and who did you give money to just to make sure that you’re checking all the boxes.

Host: Sure. That’s why it’s important if you’re on a board of directors and especially if you’re that treasure, you need to know this stuff because it is your responsibility for that nonprofit.

Jeff Correct. If you’re a new treasurer to a board, that would be the first question that I asked is show me the 990s because that’s the last thing that you want to do as treasurer is have to go through this process again.

Host: Jeff, great information listeners connect with Jeff and the team at Hawkins Ash. Jeff. What’s the best way of reaching out to you guys.

Jeff: Go right to our website, HawkinsAsh.CPA. Go to that CPA HQ section. And we do have a really good nonprofit section there too to take a look at.

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Jeff Dvorachek
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.

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