Tax Filing Responsibilities

Tax filing responsibilities for Units



Beginning in 2008, small tax-exempt organizations, including AFS Subunits, who previously were not required to file a return, will be required to file an annual electronic notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ. This filing requirement applies to tax periods beginning January 1, 2007 and after.

Small tax-exempt organizations whose gross receipts are normally $25,000 or less have not been required to file Form 990 or Form 990-EZ, Return of Organization Exempt From Income Tax. With the enactment of the Pension Protection Act of 2006, these small tax-exempt organizations will now be required to file an electronic Form 990-N with the IRS annually. Exceptions to this requirement include organizations that are included in a group return, private foundations required to file Form 990-PF, and section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ.  AFS Units do not fall into these exception categories.

Each subunit must determine its own IRS and state filing  requirements, based on gross annual receipts, each year. Gross annual receipts are all revenue before any expenses, including dues, special event revenue, advertising, meeting and seminar registration fees, raffle ticket receipts and contributions to scholarship funds. [ex. subunit collects $90,000 in dues. It spends $80,000 in 2007 on meetings, travel and other expenses. Its net income is $10,000. Because gross revenue exceeds $25,000 (but is less than $100,000)
the chapter must file an IRS form 900-EZ.]

If your chapter has gross receipts of $25,000 or less, it is subject to this new IRS filing requirement. The e-Postcard will be due every year by the 15th day of the fifth month after the close of your tax period. For example, if your tax period ends on December 31, 2007, the e-Postcard is due May 15, 2008.

The e-Postcard must be filed electronically. There is no paper version. If your chapter prefers, the 990 or 990-EZ, can be filed in place of the e-Postcard on paper, but must be filled out completely.

If a subunit fails to meet the new filing requirement for three consecutive years, the IRS will revoke its tax-exempt status. The chapter must reapply and pay the related fees to regain that status. The IRS will notify AFS that your unit no longer qualifies.

If your unit has gross receipts of $25,000 to $100,000, IRS Form 990-EZ (including Schedule A) must be filed. Units with gross receipts greater than $100,000 are required to file IRS Form 990 (including Schedule A).

AFS Units must also file IRS 990T if gross “unrelated business income” exceeds $1,000. Advertising revenue is usually considered unrelated business income. There are exceptions to this rule. If the sales of advertising or other unrelated activity is carried on by volunteers, then it is NOT unrelated business income. The table below summarizes the filing requirements.

Annual Gross Receipts* Unrelated Business Income Filing Requirements
$25,000 and under Under $1,000 Form 990-N e-Postcard
$25,000 and under Over $1,000 Form 990-N e-Postcard and Form 990T
$25,000-$100,000 Under $1,000 Form 990-EZ
$25,000-$100,000 Over $1,000 Form 990-EZ and From 990T
Over $100,000 Under $1,000 Form 990
Over $100,000 Over $1,000 Form 990 and Form 990T

* Annual Gross Receipts includes dues, special event revenue, advertising, meeting and seminar registration fees, raffle ticket receipts and contributions to scholarship funds.

For more information, please download the full guide below.