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An Overview of IRS Form 990


Wouldn’t it be great if your nonprofit never had to think about the IRS again, once they approved your 501(c)(3) status, that is?  Well, as you can imagine, that simply isn’t the case.  Nor should it be, truthfully.  As it is, the IRS anxiously awaits hearing from your organization each and every year, specifically through the filing of your Form 990.

What Is Form 990?

The official IRS subtitle of Form 990 is Return of Organization Exempt From Income Tax.  It is tempting to consider this a tax return because it so resembles a corporate tax form, but the IRS calls it an information return.  The reason for this is that nonprofits are tax exempt and, therefore, they typically do not pay corporate income taxes.  What the IRS wants is information, or details, about your nonprofit’s income, expenses, and activities during the past year.

There are 5 versions of Form 990:  Form 990-N, Form 990-EZ, Form 990 (long form), Form 990-PF, and Form 990-T.  Each one is distinctly different.  The version that your nonprofit must file is dependent upon a number of factors, chief among them being organizational gross revenue.  We will explore the details and thresholds for each in separate articles in this series.  Suffice it to say that, at a bare minimum, the IRS wants to know if your nonprofit is still functioning as of the end of your last fiscal year, and if so, how much revenue did it take in?  Depending upon how much money was received, or the value of your nonprofit’s assets, the information disclosure increases considerably.  If your nonprofit must file a Form 990-N, the disclosure level is minimal.  If it is a Form 990 long form, you may have a 30 page return to prepare!

When Is It Due?

Despite the different versions, the IRS is consistent regarding the due date.  Form 990 is always due by the 15th of the 5th month, following the end of the fiscal year.  So, if your nonprofit has its accounting, or fiscal, year ending December 31 each year, your due date is May 15 of the following year.  Similarly, if your fiscal year ends on June 30, your Form 990 due date is November 15.  The IRS does allow organizations to request one, 6-month extension of the due date by filing Form 8868 on or before the original due date of the return.  If your extension is filed late, it will be denied.

Another really critical thing to note is the cost of filing late.  Returns that are filed after the due date or extension date are subject to a penalty of $20 per day, up to a max of $10,000 or 5% of the organization’s gross receipts for that year.  Ouch!  And worse yet, for nonprofits with annual income over $1 million, the penalty increases to $100 per day up to a max of $50,000.  Suffice it to say, don’t file late!

Final Thoughts

Form 990 is the mechanism by which the IRS keeps tabs on America’s nonprofits.  Your return eventually becomes public record, and it is a crucial component in the trust and transparency necessary for a nonprofit to remain in good standing.  Need a refresher on nonprofit compliance? Check out our Nonprofit Compliance Basics post. Be sure and check out each installment in this series to learn the specifics of the Form 990 your nonprofit is required to file.

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Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

This Post Has 5 Comments

  1. Your wording on the filing late penalty for under a Million is not fully clear to me.

    I understand it is a max of $10,000 or 5% , however could it be $10,000 plus 5% of all contributions over $200,000 or is it a MAX of $10,000 provided it is still under one Million?

    By example would $500,000 result in a $25,000 penalty or is it capped at $10,000 if under one Million?

    Your second example’s language of over a Million having a MAX of $50,000 is clear to me.

    I hope that makes sense .

    I am a current client.

    Thank you.

Comments are closed.

Form 990 Explained
1. An Overview of IRS Form 990
2. What Is IRS Form 990-N?
3. What is Form 990-EZ?
4. What is IRS Form 990-PF?
5. Understanding the IRS Form 990
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