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IRS Exempt Organization Update

September, 2010 Banner
EO Update September 7, 2010

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Issue Number:    2010-21

Inside This Issue

  1. IRS Releases Form to Help Small Employers Calculate the New Health Care Tax Credit, Announces How Eligible Tax-Exempts Will Claim Refundable Credit
  2. 2010 International Charity Regulators Conference
  4. IRS Issues Guidance Explaining 2011 Changes to Flexible Spending Arrangements  

  1.  IRS Releases Form to Help Small Employers Calculate New Health Care Tax Credit, Announces How Tax-Exempts Will Claim Refundable Credit

The IRS today announced the release of a draft version of the Form 8941 that both small businesses and tax-exempt organizations will use to calculate the small business health care tax credit during the 2011 tax season.  The credit is designed to encourage small employers to offer health insurance coverage or maintain the coverage they currently offer their employees.

While small businesses will include the amount of the credit as part of the general business credit on their tax returns, tax-exempt organizations eligible for the refundable credit will claim the credit on a revised Form 990-T. The revised Form 990-T will enable eligible tax-exempt organizations to claim the tax credit even though they owe no tax on unrelated business income.

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  2.  2010 International Charity Regulators Conference

The United States hosted the Fourth International Charity Regulators Conference in May 2010. Read the highlights of these meetings attended by regulators from Australia, Canada, New Zealand, Northern Ireland, the Republic of Ireland, Scotland and the United States.

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It's easy to find out whether your organization or an organization that serves those in need in your community is one of the 300,000 charities at risk of losing its tax exemption because it hasn't filed a return for 3 years.  Simply go to and check the list for those at risk!  Many small organizations can take advantage of the  IRS one-time filing relief program and avoid losing their tax-exempt status.  Go to for more information before it's too late.

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  4.  IRS Issues Guidance Explaining 2011 Changes to Flexible Spending Arrangements

The Internal Revenue Service announced that it has issued guidance reflecting statutory changes regarding the use of certain tax-favored arrangements, such as flexible spending arrangements (FSAs), to pay for over-the-counter medicines and drugs.

The Affordable Care Act established a new uniform standard that applies to FSAs and health reimbursement arrangements (HRAs), effective January 1, 2011. Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. Certain expenses are exempted from this new requirement.

Employers, including tax-exempt employers, as well as employees should take these changes into account as they make health benefit decisions for 2011.

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If you have a technical or procedural question relating to Exempt Organizations, visit the Charities and Nonprofits homepage on the Web site.

If you have a specific question about exempt organizations, call EO Customer Account Services at 1-877-829-5500 begin_of_the_skype_highlighting              1-877-829-5500      end_of_the_skype_highlighting.


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