The Internal Revenue Service requires that not-for-profit organizations file a Form 990, 990-EZ, 990-N or 990-PF. Even though most not-for-profits are exempt from paying federal taxes, most need to file the annual reporting return Form 990. This form allows the IRS and the general public to view and evaluate the financials of your organization’s operation. Information on this form includes your mission, projects, programs, and finances.
The amount of your gross receipts for a filing year determines which type of Form 990 you file. The type of Form 990 an organization files depends on the filing year and the gross receipts of the organization. Except for churches and state institutions, most federally tax-exempt organizations file a Form 990. All 501(c)(3) private foundations file a 990-PF.
The IRS uses the following points to determine which form to file:
Form 990-N - Smaller than $50,000 in gross receipts the organization needs to file form 990-N, Electronic Notice (e-Postcard).
Form 990-EZ - If an organization has gross receipts less than $200,000 and total assets at the end of the tax year less than $500,000, it can choose to file Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, instead of Form 990.
Form 990-PF - All 501(c)(3) private foundations file a 990-PF.
Form 990 - Form 990 must be filed by an organization if it has either (1) gross receipts greater than or equal to $200,000 or (2) total assets greater than or equal to $500,000 at the end of the tax year.
If an organization eligible to submit the Form 990-N or Form 990-EZ chooses to file the Form 990, it must file a complete return.
Entities that do NOT have to file:
Government corporations
State institutions that provide essential services
Most faith-based organizations, religious schools, missions or missionary organizations
Subsidiaries of other not-for-profit organizations; a group return filed by the parent organization may cover these subsidiaries.
IRS Form 990 Due Date
Your organization’s Form 990 is due on the 15th day of the 5th month after the end of the organization’s taxable year. For example, if your organization follows the calendar year (January 1 – December 31), your Form 990 would be due on May 15th of each year. Your organization can file an automatic 6- month extension of time to file its return. So, the final deadline for December year-end organizations is November 15.
If an Organization Does Not File Form 990
If an organization does not file Form 990 three years in a row, the IRS automatically cancels its tax-exempt status. This has happened to more than 500,000 not-for-profits over the last seven years.
The IRS is very firm about adhering to these reporting rules. The IRS does not offer an appeal process for automatic revocations due to failure to file a Form 990 for three years. If your organization loses this classification, you would become subject to paying income taxes. The IRS can impose fines and fees, as well as requiring additional paperwork, if you do not submit Form 990 each year.
IRS Form 990 is a Public Document
The public is allowed to review your organization’s Form 990. Your exemption application is also available to the public. Since the information is public knowledge, many not-for-profit organizations present this information on their websites for inspection. You can also view them at www.guidestar.org.
Stay In-touch with Your Accountant
You do not want your organization to lose its tax-exemption. To avoid any problems or worrisome situations, keep in close touch with your accountant. Your accountant can steer you in the right direction and help you maintain your not-for-profit status. This relationship is important for accurate and prompt reporting, and your accountant can alert you of any impending situations.
When your organization comes across perplexing information and you have questions--we are here with the answers. Keep in touch with our blog. We have ideas to share and solutions to management and organizational questions. If you have questions about any other not-for-profit accounting topics, contact our non-profit team leader at trent@tbfosteraccounting.com.