Federal Tax Law Compliance Attorney in Grand Prairie

Recurring Federal Filing & Tax Obligations

A nonprofit’s required federal filings depend on its tax-exempt classification, financial activity, and filing history. Missing a return or overlooking taxable income can jeopardize its status and create obligations beyond the reporting period involved.

Annual Information Returns

Most organizations exempt under Section 501(a) generally must file Form 990, Form 990-EZ, or Form 990-PF. Some eligible organizations instead submit Form 990-N, an electronic notice commonly called the e-Postcard. Failing to file a required annual return or notice for three consecutive years can result in automatic revocation of federal tax-exempt status.

Unrelated Business Income

Unrelated business income generally comes from a regularly conducted trade or business that isn’t substantially related to the nonprofit’s exempt purpose. An organization with $1,000 or more in gross income from such an activity generally must file Form 990-T in addition to its annual information return. Determining whether revenue qualifies requires a fact-specific analysis of the activity and its connection to the exempt purpose.

Activities That May Put Tax-Exempt Status at Risk

Compensation, transactions involving insiders, the use of charitable assets, and advocacy activities may raise issues under the rules governing a nonprofit’s exemption.

Private Benefit & Inurement

A Section 501(c)(3) organization must operate for recognized exempt purposes and can’t allow its net earnings to benefit private shareholders or individuals. Inurement involves prohibited benefits provided to insiders. Private benefit can extend to advantages given to other private interests beyond what is incidental to the exempt purpose.

Political & Legislative Activity

Section 501(c)(3) organizations can’t participate or intervene in a political campaign for or against a candidate. Legislative activity is subject to different limitations, and the appropriate analysis depends on the organization’s classification, conduct, and specific facts.

Responding to IRS Reviews, Revocation, & Reinstatement

An IRS compliance review or audit may examine exempt activities, financial records, use of funds, reporting, and governance-related information. If your nonprofit receives IRS correspondence, we can review the request, prepare supporting documentation, and communicate with the agency on your organization’s behalf.

A nonprofit that has lost its exemption through automatic revocation may apply for IRS reinstatement. The appropriate procedure depends on its filing history, eligibility, and the circumstances surrounding the missed returns or notices.

Clarify Your Nonprofit’s Next Compliance Step

A free consultation is an opportunity to discuss missed filings, an IRS notice, operational questions, or another federal tax concern. We can review the circumstances, explain the available legal services, and help your organization determine an appropriate next step.

Call (214) 865-7542 to schedule a free consultation with Perliski Law Group.