10 Things to Know About Form 990
Posted on Wednesday, January 31, 2024
Share1. There are 4 versions of Form 990 – 990-N, 990-EZ, 990, and 990-PF. The version that your organization must file primarily depends on your gross receipts and assets. (However, there are certain tax-exempt organizations that are required to file Form 990.).
- If an organization normally has gross receipts of $50,000 or less, it must submit Form 990-N.
- 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, Return of Organization Exempt From Income Tax, must be filed by an organization that has gross receipts greater than or equal to $200,000 or has assets greater than or equal to $500,000 at the end of the tax year.
- All private foundations must file Form 990-PF, Return of Private Foundation.
2. Form 990 must be filed electronically with the IRS, no paper filings.
3. Your organization’s Form 990 is due on the 15th day of the 5th month after your year-end. For organizations with a December 31 year-end, the due date is May 15th. For organizations with a June 30 year-end, the due date is November 15th. A 6-month extension can be filed if your organization cannot complete its 990 by the due date, but the extension must be filed with the IRS by the original due date.
4. Penalties are charged when a return is filed late. Penalties of $20 per day, not to exceed the lesser of $12,000 or 5% of the gross receipts of the organization for the year can be charged for a late return. Organizations with annual gross receipts exceeding $1,208,500 are subject to a penalty of $120 for each day failure to file continues (with a maximum penalty for any one return of $60,000). Penalties can also be assessed against the person within the organization failing to comply with the filing of $10 per day with a maximum penalty of $6,000 for any one return.
5. Filing an incomplete return is considered not filing. You must file a complete return in order to meet the annual filing requirement. A complete return includes one in which all applicable questions have been answered, all required schedules have been completed, and the correct version of the form has been prepared.
6. Failure to file for 3 consecutive years will result in automatic revocation of your organization’s tax-exempt status. As a result, your organization will lose all the benefits of being a tax-exempt organization. You may need to file income tax returns and pay income taxes and any donations made to your organization will not be considered charitable deductions.
7. Form 990 is not an income tax return. Unlike for-profit tax returns that calculate net income and the amount of tax owed to the IRS, Form 990 is an informational return. It includes information about your organization’s financials, as well as program and governance activities. No tax is calculated on Form 990.
8. Form 990 is open to public inspection. You are required to provide a copy of your organization’s Form 990 to anyone wanting a copy. Donor names and addresses reported on Schedule B are not open to public inspection, but the amounts are, and all other forms and schedules are.
9. The IRS wants to know if your board reviewed the 990 prior to filing. Although not required, it is best practice to have your board of directors review your 990 before it is filed, and the IRS wants to know if that has been done. You can only answer this question yes, if an exact copy of Form 990 that will be filed with the IRS (including all schedules and donors’ names and addresses) was provided to each person that was a voting member of the board of directors. If you merely informed your board members that a copy of the Form was available for their review, you must answer this question no.
10. Form 990 should be considered a marketing tool. Although the form is an annual requirement by the IRS in order to maintain your tax-exempt status, it is also a tool that your organization can use to share its work and accomplishments. Since the form is open to public inspection and many funders ask for a copy, often times it is the only source of information that someone may have about your organization. This is your opportunity to share all of the great things that our organization is doing in your community through the questions it asks.
Contributed by: Carrie Minnich, MAcct, CPA | Partner | DWD CPAs & Advisors
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.