A District of Columbia federal district court has ordered the dismissal of a legal challenge to the longstanding church exemption to the filing of IRS Form 990: Return of Organization Exempt from Income Tax filing, an informational return most nonprofits are required to file annually.
Under Code Sec. 6033(a)(1), most organizations that receive tax-exempt status under Code Sec. 501(a) must prepare an annual Form 990. The form is intended to give the government and the public a picture of the organization’s activities each year. The form collects information about the mission, programs, and finances of tax-exempt organizations. It also gives the nonprofit an opportunity to report what it accomplished the prior year, thus making a case for keeping its tax-exempt status. Recent revisions to the Form also mean nonprofits must now disclosure potential conflicts of interest, compensation paid to board members and staff, and other details having to do with financial accountability and avoidance of fraud. Under Code Sec. 6033(a)(3), certain organizations, including churches, receive an exemption from the reporting requirements.