What You Need to Know About Filing Form 990

by SST Tax Supervisor, Christina Nichols Morris

Most organizations believe that once they receive their exempted status from the IRS, then they have fulfilled their requirements and are exempt. This is not always the case. While an organization is exempt from paying federal income taxes on their exempt activities, they are not exempt from filing a tax return for the organization. Most nonprofit organizations, exempt under code section 501(a), as well as certain political organizations and nonexempt charitable trusts are required to file a Form 990 with the IRS.

Organizations not required to file Form 990 are generally churches, church-affiliated organizations, church affiliated schools (excluding colleges), mission societies sponsored by churches, certain government organizations, and certain political organizations.

There are several types of Form 990 that the organization could be required to file. If the organizations gross receipts average $50,000 or less then the organization can file Form 990-N (epostcard). If gross receipts are below $200,000 and total assets are less than $500,000 and the organization is not a supporting organization, the organization can file Form 990-EZ. If the organization does not meet either of these conditions then the organization must file Form 990. If the organization is a private foundation, then Form 990-PF is required regardless of gross receipts or annual activity. Form 990-T is required for any organization exempt under code section 501(a) that has unrelated business income greater than $1,000.

Series Form 990 is due the 15th day of the 5th month after year end. For calendar year filers, the due date is May 15th unless this is a Federal holiday or weekend, then the due date is the next business day.  There is a 6-month extension, which would extend the due date to November 15th unless this is a Federal holiday or weekend, then the due date is the next business day.

Several changes to the organization can be made when filing Form 990. These types of changes include accounting period, accounting method change, change of address, changes in program (exempt purpose). You can also report changes to bylaws or other governing documents.

If an organization files a late tax return, then a failure to file penalty will apply. This penalty is $20 a day, not to exceed the lesser of $10,000 or 5% of the gross receipts for that year. If gross receipts exceed $1,028,500 then the penalty is $100 a day with a maximum penalty of $51,000.

If an organization fails to file a series Form 990 for 3 consecutive years, then the IRS will revoke the organization’s exempt status. Once the organization’s exemption has been revoked, the organization must go through the reinstatement process which includes re-filing the application for exemption and filing the tax returns that are delinquent.

For more information on filing Form 990 visit here. Or give us a call, our team of tax consultants are on hand to answer your questions.