Your IRS Form 990 Questions Answered
It’s officially 2014, with any luck your nonprofit is revamped from the influx of donations in December, new budgets and goals, and a fresh team of volunteers resolving to dedicate more of their time this year. If you’re experiencing any of this, then you are off to a great year. However, you’re not out of the woods just yet. Remember that year end procedures are just around the corner. Now is the time to focus on the upcoming months and the tax deadlines they hold. Today we’ll give you some valuable information concerning your 990 filings, written in plain English with links to forms, websites, and information that will hopefully keep your yearend stresses at bay.
Scare tactics
Nobody likes them, but we should begin with a mild bit of intimidation so you grasp the seriousness of filing your 990. You need to know that the IRS is the real deal. Worse than Santa, and far more aggressive, they have a list that tells them whether or not your nonprofit has filed its 990 consistently and on time. It’s called the IRS Automatic Revocation of Exemption List.
Nobody likes them, but we should begin with a mild bit of intimidation so you grasp the seriousness of filing your 990. You need to know that the IRS is the real deal. Worse than Santa, and far more aggressive, they have a list that tells them whether or not your nonprofit has filed its 990 consistently and on time. It’s called the IRS Automatic Revocation of Exemption List.
The IRS website states that “the Internal Revenue Code automatically revokes the exemption of any organization that fails to satisfy its filing requirement(s)
for three consecutive years.” This means you have to file your 990 completely and on time each
to year to avoid joining the 56,000 + nonprofits that were named and received automatic revocation in 2013. Keep in mind that even
if you’re reinstated after revocation, you remain on this list.
Ignorance is not bliss
While you may be happier, and a great deal less stressed out ignoring your IRS requirements, it will not have a happy ending. Below are the bare bones to begin cultivating your 990 knowledge.
While you may be happier, and a great deal less stressed out ignoring your IRS requirements, it will not have a happy ending. Below are the bare bones to begin cultivating your 990 knowledge.
What is a 990?
In “IRS Speak” The 990 Form is the annual reporting tax return document required to be filed by all federally tax-exempt organizations. This form is the easiest way for the government (the IRS) to manage your compliance, and your donors to evaluate how your institution is doing financially.
In “IRS Speak” The 990 Form is the annual reporting tax return document required to be filed by all federally tax-exempt organizations. This form is the easiest way for the government (the IRS) to manage your compliance, and your donors to evaluate how your institution is doing financially.
In plain English, the 990 is the report card for your nonprofit. Like your personal tax returns, it allows the government, and your donors to ascertain
whether you are a reliable, honest institution. It is the easiest way for the government (the IRS) to manage your compliance
Do we have to file?
If you are a tax-exempt organization, you are probably a 501c3 public charity or private foundation, and are required to file a 990.
If you are a church or state institution, your filing requirements are different. The links below detail how the IRS defines a church or state institution.
If you are a tax-exempt organization, you are probably a 501c3 public charity or private foundation, and are required to file a 990.
If you are a church or state institution, your filing requirements are different. The links below detail how the IRS defines a church or state institution.
Which form do we need?
Determining which form you need is based on the amount of Gross Receipts your nonprofit has earned. Gross receipts are the total amount your organization received from all sources during your accounting period (fiscal year), without subtracting costs or expenses.
The IRS offers this example: The Math of Gross Receipts
Say your organization’s gross receipts were $55,000 in 2009, $51,000 in 2010, and $45,000 in 2011.
The total of your gross receipts for those years is $151,000. The average over the three years comes out to $50,333 per year. So, for 2011, your organization would have to file a Form 990 or 990-EZ, because the average of the gross receipts for that year plus the previous two years is greater than $50,000. And remember, even if the three-year average had worked out to be $50,000 or less, your organization would be required to submit an electronic Form 990-N.
The total of your gross receipts for those years is $151,000. The average over the three years comes out to $50,333 per year. So, for 2011, your organization would have to file a Form 990 or 990-EZ, because the average of the gross receipts for that year plus the previous two years is greater than $50,000. And remember, even if the three-year average had worked out to be $50,000 or less, your organization would be required to submit an electronic Form 990-N.
Once you know your gross receipts, it’s easy to figure out which form you need to complete:
- Smaller nonprofits (Gross receipts ≤ $50,000) can file a 990-N (e-postcard).
- Mid-size organizations (Gross receipts < $200,000, and Total assets < $500,000) file a 990 or 990-EZ.
- Larger organizations (Gross receipts ≥ $200,000, or Total assets ≥ $500,000) file a 990
- Private Foundations file a 990-PF.
Is my nonprofit using the correct 990 Form?
When is our 990 due?
Form 990 is due on the 15th day of the 5th month following the end of your organization’s taxable year. For organizations on a calendar fiscal year, your
due date will be May 15th of the following year.
When is our organization’s fiscal year?
You can find your organization’s fiscal year printed on the upper right section of your IRS Determination Letter. It will be listed as “Accounting Period Ending.”
You can find your organization’s fiscal year printed on the upper right section of your IRS Determination Letter. It will be listed as “Accounting Period Ending.”
What if we can’t meet the deadline?
To obtain an automatic three-month extension for your 990, you need to file a Form 8868, also known as the Application for Extension of Time to File an Exempt Organization Return. You can also utilize this form to request an additional (not automatic) three-month extension; however your organization must describe in detail the reasons causing the additional delay to receive an additional extension. Keep in mind that you cannot apply for these concurrently.
To obtain an automatic three-month extension for your 990, you need to file a Form 8868, also known as the Application for Extension of Time to File an Exempt Organization Return. You can also utilize this form to request an additional (not automatic) three-month extension; however your organization must describe in detail the reasons causing the additional delay to receive an additional extension. Keep in mind that you cannot apply for these concurrently.
What happens if we don’t file?
Many consequences can come from not filing your 990 return, including (but not limited to):
Many consequences can come from not filing your 990 return, including (but not limited to):
•Ineligibility to receive tax-deductible contributions
•Losing your 501(c)(3) status
•Your organizations name and information being added to the IRS Automatic Revocation List
•Liability to pay federal income taxes
•Fees can average $20 a day, up to $10,000
•Loss of donor confidence, and often donors themselves!
•Your organizations name and information being added to the IRS Automatic Revocation List
•Liability to pay federal income taxes
•Fees can average $20 a day, up to $10,000
•Loss of donor confidence, and often donors themselves!
Do I have to file with my state?
Each state has individual requirements for tax exempt filings. Some of which require greater detail or forms to accompany your 990 filing. For example, the state of New York requires Form CHAR500 when filing. The IRS has compiled a list of states, and their requirements to ease your journey.
Each state has individual requirements for tax exempt filings. Some of which require greater detail or forms to accompany your 990 filing. For example, the state of New York requires Form CHAR500 when filing. The IRS has compiled a list of states, and their requirements to ease your journey.
Who can see my organization’s 990?
Anyone can view the 990 you file-- in fact, many donors will specifically search for them (among other details) prior to making donations to your organization. You are required to make your organization’s 990 available for public inspection (without charge) at regional and district offices during regular business hours. A copy can also be viewed on Guidestar.org or by request through the IRS.
Anyone can view the 990 you file-- in fact, many donors will specifically search for them (among other details) prior to making donations to your organization. You are required to make your organization’s 990 available for public inspection (without charge) at regional and district offices during regular business hours. A copy can also be viewed on Guidestar.org or by request through the IRS.
Death and Taxes
The only thing certain in life are death and taxes, it was as true in the 1700's (when Ben Franklin originally said it) as it is now. For that reason, you should keep your relationship with the IRS a healthy one. If you haven’t had any extenuating issues with them as of yet, 2014 isn’t the year to start. If you have, set a resolution that it won’t happen again. Look for our next 990 focus blog, which will provide helpful tips and resources to conquering your 990 filing.
Cassie Strain, Sales Associate for Jitasa
The only thing certain in life are death and taxes, it was as true in the 1700's (when Ben Franklin originally said it) as it is now. For that reason, you should keep your relationship with the IRS a healthy one. If you haven’t had any extenuating issues with them as of yet, 2014 isn’t the year to start. If you have, set a resolution that it won’t happen again. Look for our next 990 focus blog, which will provide helpful tips and resources to conquering your 990 filing.
Cassie Strain, Sales Associate for Jitasa
Jitasa’s bookkeeping and accounting services are affordable and cater to every nonprofit.
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