Form 990N deadline approaches

Hundreds of small American Legion posts and American Legion Auxiliary units stand to lose their tax-exempt status if they have not filed Form 990N with the Internal Revenue Service by Oct. 15, 2010, or have not filed any other 990s for three consecutive years, regardless of their annual revenues and expenses.

A listing of American Legion entities at risk of losing tax-exempt status as of June 30, 2010, was posted by the IRS on the Web.

The filing requirement, previously unnecessary for entities with $25,000 or less in annual revenue, is imposed as part of the Pension Protection Act of 2006.

Those entities that have not filed a 990 for a number of years may find that their Employer Identification Numbers (EIN) have been removed from the IRS system. In that case, according to American Legion National Judge Advocate Philip B. Onderdonk, posts are strongly urged to file a form SS-4 and apply for a reinstatement or new number.

Once the new number is obtained, a post will need to report it immediately to their department headquarters and copy the Internal Affairs Division at National Headquarters so paperwork can be updated. All information must be in by Sept. 28 in order to assure it will be included in the report.

Posts with valid EINs but did not yet file Form 990N are urged to do so immediately, “or they’re going to lose their tax-exempt status,” Onderdonk said. “The real problem is for posts that accept donations. Tax-exempt status is necessary for tax-deductible contributions.”

Posts that lose their tax-exempt status can appeal to the Department of Treasury with a letter of justification for not obeying the law. The secretary of the Treasury has discretion to grant tax-exempt status.