Nonprofit and tax exempt organizations, other than religious organizations, must file a
form 990 with the IRS every year. Even though an organization does not owe any taxes,
the penalties for filing late can be substantial, $20 a day up to a maximum of $10,000 per
return or 5% of the organization’s gross receipts.
Attorneys at Magill and Rumsey have helped organizations abate tens of thousands of
dollars in penalties. We have even recovered penalties already paid to the IRS. On one
occasion we were able to get a refund for a client of over $10,000 plus interest that had
been seized from their bank account.
A director of a nonprofit came to us with some concerns about the Board he had just joined. The nonprofit was formed more than thirty years ago and no one had looked at their organizing documents since then! We talked about the nonprofit’s mission and their current activities. Then we looked at the organizing documents. As a result we helped the Board to restate their Articles of Incorporation to give more protections to the directors; we updated the bylaws; and we helped the directors craft policies to better guide the directors’ decisions and avoid conflicts of interest. The process not only established a better legal structure but also helped the board to define their mission more clearly.
Since 2010 many nonprofits have lost their tax exemption because they failed to file an annual return for 3 years. At Magill and Rumsey, P.C. our attorneys have helped many nonprofits reinstate their tax exempt status – usually backdated to the date when it was lost.