New Exempt Organization Filing Thresholds

The IRS dramatically altered the long-form tax return (Form 990) for tax-exempt organizations in 2008.  Use of the new long-form was phased in over several years because of the increased record keeping and costs of compliance.  For 2010 tax returns, Form 990 must be used by tax-exempt organizations if 2010 gross receipts were $200,000 or more (down from $500,000 for 2009 tax returns) or 2010 ending assets were $500,000 or more (down from $1,250,000 for 2009 tax returns).

The short-form tax return (Form 990-EZ) can be used for 2010 tax returns for those exempt organizations having 2010 gross receipts of less than $200,000 and 2010 ending assets of less than $500,000.

The so-called electronic postcard, Form 990-N, can be used for 2010 tax returns for exempt organizations having 2010 gross receipts not in excess of $50,000 (up from $25,000 for 2009 tax returns).

Private foundations must use Form 990-PF, and there are not shorter, alternative forms based upon the size of gross receipts or total assets of the foundation.

Checklist of "Other" Major 2011 Tax Changes

My recent articles reviewed some of the many tax law changes Congress enacted on December 17, 2010.  The following list highlights many of the other important changes taking effect in 2011, some of which have previously been discussed in earlier blog posts.

1. Tax return preparers must register with the IRS and obtain preparer tax identification numbers in order to prepare tax returns after 2010.
2. Tax return preparers who expect to file 100 or more individual, estate, and trust income tax returns in 2011 must do so by electronically filing the tax returns.  The threshold drops to more than 10 returns in 2012.  Clients may elect to continue to file paper tax returns, but they must sign an IRS-prescribed statement and attach new Form 8948 indicating the reason for not filing electronically.
3. Employers must pay all federal taxes after 2010 using electronic funds transfer.  The old method of making a federal tax deposit at a bank with Form 8109 is no longer permitted.
4. Securities brokers are already required to report the gross proceeds of securities sold.  Beginning in 2011, securities brokers must also report the income tax basis of the securities sold.  Basis must be tracked only for securities purchased after 2010.  The sale proceeds and basis information reporting will enable the IRS to monitor taxpayers' reporting of capital gains and losses.
5. The IRS requires corporations to file information returns reporting the impact on tax basis of stock for any corporate reorganization, such as a stock split, merger, or acquisition occurring after 2010.
6. Financial institutions must file information with the IRS reporting the gross amount of credit and debit card payments a business receives during the year, beginning after 2010.
7. Persons renting real estate to tenants must file Form 1099-MISC for payments totaling $600 or more during the year, beginning after 2010, to service providers such as a plumber, painter, grounds keeper, etc.
8. The penalties for not filing necessary information returns due after 2010 have dramatically increased.
9. The cost of over-the-counter medicines after 2010 can no longer be reimbursed by health flexible spending accounts under cafeteria plans, a health reimbursement plan of the employer, a health savings account (HSA), or an Archer medical savings account.  If a doctor prescribes such medicines, then the cost is eligible for reimbursement.
10. For tax years starting after 2010, the tax penalty on nonqualifying HSA reimbursements increases from 10% to 20%, and the penalty on nonqualifying Archer MSA reimbursements increases from 15% to 20%.