Thank the IRS for Small Mercies: Filing Small Nonprofit Tax Notices are Quick and Easy

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The Internal Revenue Service isn’t known for compassion and forgiveness. On the contrary, those three simple dry words, “Internal Revenue Service,” have come to epitomize dread and oppression, especially for those individuals who have fallen behind in filing returns or paying taxes. The IRS is after all a law enforcement agency as well as a revenue collection service. In the fiscal year 2010, the IRS (1) collected $2.3 trillion Dollars from taxpayers, (2) processed 230 million tax returns, (3) assessed $114 billion dollars in additional tax, penalties and interest, (4) opened about 2.3 million taxpayer delinquency investigations, (5) filed over 1 million Federal tax liens, and (6) filed over 3.6 million notices of levy. It’s not the kind of organization that exudes a warm and fuzzy feeling.

On the positive side, the IRS does its job well. It is one of the world’s most efficient tax administrators. In 2009, it spent only 50 cents for every $100 Dollars it collected. The IRS also strives to provide quality service. The IRS mission is to:

“Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”

When it comes to small nonprofit organizations, the IRS has done truly laudable work providing educational materials online and making the filing of required tax notices quick and easy for hundreds of thousands of organizations. Tax-exempt organizations with gross annual receipts of $50,000 or less can complete their annual filing requirement by filing Form 990-N electronically in less than five minutes.

If you consider the alternative of filing Form 990 or Form 990EZ, the Form 990-N offers considerable time-savings. The estimated time to prepare a Form 990 according to the Paperwork Reduction Act Notice is about 23.5 hours. The estimated time to prepare a Form 990EZ is about 14.5 hours. For this reason, Form 990-N, also known as the e-Postcard, is a small mercy for which we can be thankful.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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