Most organizations believe that once they receive their exempted status from the IRS, 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 political organizations.
There are several types of Form 990 that your organization could be required to file:
- If your organization’s gross receipts average $50,000 or less, your organization can file Form 990-N (epostcard).
- If gross receipts are below $200,000, total assets are less than $500,000, and your organization is not a supporting organization, you can file Form 990-EZ.
- If your organization does not meet either of the above 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 calendar year filers 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 your organization can be made when filing Form 990. These types of changes include year-end, accounting period, accounting method change, change of address, and changes in program (exempt purpose). You can also report changes to bylaws or other governing documents.
If your 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 your organization fails to file a series Form 990 for three consecutive years, then the IRS will revoke your organization’s exempt status. Once your 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 about filing Form 990 and which type of form applies to your organization, we encourage you to contact the experts at SST Accountants & Consultants.