Guaranty Fund Laws

In January 2005, the IRS released temporary regulations that required some of the larger tax-exempt guaranty funds to file the annual IRS Form 990 return electronically beginning with tax year 2005. The guaranty funds with $100 million or more in total assets and at least 250 returns annually were required to submit their 2005 annual exempt organization return electronically. Effective with tax year 2006, more guaranty funds will be required to submit electronically as the net asset requirement was lowered from $100 million to $10 million.

What does this mean to your organization? If your firm has $10 million or more in net assets as of your fiscal year end, you may be required to file your annual exempt organization return electronically. What is meant by at least 250 returns filed annually? A return includes income, excise, employment tax and information returns, including for example, W-2s, Form 941, Form 990 and any other similar return filed by the entity.

Tax exempt organizations that use tax professionals to prepare and file tax returns should check whether the tax professional is an IRS Authorized e-File Provider by visiting the IRS.GOV website. If you plan to prepare and file your own return, you may want to discuss electronic filing options with a software vendor as soon as possible and take steps to register and apply for electronic filing.

The IRS does provide a waiver of the electronic filing requirement when the exempt organization cannot meet electronic filing requirements due to technology constraints, or compliance with the requirements would result in undue financial burden on the filer.

Additional information concerning electronically filing can be found on the IRS website at www.irs.gov, specifically looking under the tab “Charities and Non-Profits.”