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IRS Targets Nonprofits with Unrelated Business Income

February 29, 2012 Posted by The Law Firm for Non-Profits, P.C. in IRS, News, Taxes

Nonprofits need to be aware that the IRS is targeting organizations with unrelated business income. Concerned about unrelated business activity, the IRS will be watching closely for organizations that report unrelated business income on the Form 990 but then do not file a Form 990-T. Form 990-T is the tax return required from exempt organizations that have gross unrelated business income of $1,000 or more.

In addition, the IRS will be scrutinizing organizations that consistently file Forms 990-T reporting significant gross receipts from unrelated business activity but declaring no tax due. The IRS has already identified several well-known nonprofits that regularly report a loss on significant unrelated business income.

If you are concerned about unrelated business activity or how to report it to the IRS, contact us.

A second focus of note in the 2012 Work Plan for the IRS’ Exempt Organizations Unit is oversees activity by U.S. nonprofits. Check back tomorrow when we will blog on that topic.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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  1. IRS to Watch US Nonprofits With Overseas Activity | The Law Firm For Non-Profits wrote:
    March 1, 2012 at 11:27 am

    […] about the release of the IRS Exempt Organizations Unit’s 2012 Work Plan. Specifically, we posted on the plan’s focus on organization’s with unrelated business income. Today we explore a second […]