COVID-19 Alert for Nonprofits

Question: If a Virginia nonprofit organization suspends its operations for a few months in response to the COVID-19 pandemic, is it required to notify the IRS?

Answer: No. The IRS has no special reporting requirements for organizations that go dormant (i.e., suspend their operations). There is a question on the annual IRS Form 990 about whether the organization ceased conducting or made any significant changes in how it conducts, any program services. However, there is no specific question about “suspension” of services. If you should answer “yes” to the question for any reason, it would go on the Form 990 covering the year 2020 (which would be filed in 2021), not on the Form 990 coming due for the 2019 tax year. (SPECIAL NOTE: The IRS has just extended the date for Form 990 filings that were due on May 15 for the 2019 calendar year until July 15, 2020).

Just be sure that you file a Form 990, 990-EZ, or 990-N for each year, whichever type is applicable, including 2019. An exempt organization (including exempt organizations other than 501(c)(3)) that fails to file the applicable version of a required Form 990 for three consecutive years will automatically lose its exemption.