Q&A on IRS Form 990

November 4, 2021
What is IRS Form 990 – Return of Organization Exempt From Income Tax? Do you need to file a 990?

A non-profit organization that is tax-exempt is required by the IRS to file a 990 Form on an annual basis. The 990, otherwise known as the informational tax form, provides the IRS a detailed outline of an organization’s financials, activities, and governance. Filing this return allows the government as well as donors to evaluate an organization’s financial health and determine if it is a trustworthy and reliable institution. The form also includes a section that requires an outline of the organization’s accomplishments in the past year. This is because the IRS wants to ensure that an organization still qualifies for the tax-exempt status even after it has been approved.  

There are several versions of this form and each of them are different: Form 990-N, Form 990-EZ, Form 990 (long form), Form 990-PF, and Form 990-T. The version you are required to file for your organization is contingent upon various factors – the main one being organizational gross revenue.

We will dive further into this factor in the next question. However, at a bare minimum, the IRS is concerned with your organization’s ability to function as of the end of your last fiscal year and the amount of gross revenue that was earned. Based on the amount of your organization’s revenue and assets, the information that you are required to release to the IRS increases; hence the different 990 forms. If you are required to file a 990-N, the disclosure level is minimal; but, if you are required to file a 990-long form, then you could be looking at a 30+ page tax return to prepare. Isn’t that insane!?          

Which IRS Form 990 do you need to file?

As mentioned earlier, the form you are required to complete is mainly based on the gross revenue. Gross receipts are the total amount received during your fiscal year prior to any deductions of costs and expenses.  

Refer to this example provided by the IRS:  

XYZ Organization’s gross receipts yearly totals: $55,000 in 2009, $51,000 in 2010, and $45,000 in 2011. The sum of these yearly totals amount to $151,000. If you calculate the 3-year average, it comes out to $50,333. Therefore, XYZ Organization would be required to file a Form 990 or 990-EZ because the average of gross receipts from 2011, 2010 and 2009 is more than $50,000. If the 3-year average was $50,000 or less, XYZ Organization would have to complete a Form 990-N electronically.

Once you have a finalized dollar amount of gross receipts, you will know which form to complete for your organization.

Small non-profits  
Mid-size organizations  
  • Gross receipts < $200,000 and Total assets < $500,000
  • File a 990 or 990-EZ  

Large organizations  
  • Gross receipts ≥ $200,000 or Total assets ≥ $500,000
  • File a 990  

Private Foundations

Click here for more info: An Overview of IRS Form 990

What if I can’t meet the deadline?  

The IRS offers a three month extension for the 990 if you fill out the Form 8868, also known as the Application for Extension of Time to File an Exempt Organization Return. You can also file for an additional three months after the end of your first extension, but the IRS requires that you provide a reason for the extension request. Note that the three month extensions cannot be requested at the same time, but must be filed consecutively as needed.  

However, if the extension request is filed even a day late, it will not be considered valid and the IRS will charge a penalty for each day the Form 990 is late.  

What happens if I don’t file?  

If you fail to request an extension or file the extension late, the IRS imposes penalties starting from the first day you are late.  

  • If your nonprofit’s gross receipts (the cash that a business receives during a certain time period without costs deducted) are less than $1,000,000: Penalty of $20 per day up to $10,000, or 5 percent of organization’s gross receipts, whichever is less.  
  • If your nonprofit’s gross receipts are more than $1,000,000: Penalty of $100 per day up to $50,000

However, it is possible to avoid these fees if you submit a written statement providing reasonable cause for the late filing.

Other possible consequences for filing late:  

  • 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  
  • Loss of donor confidence, and often donors themselves!  

Do I have to file with my state?
  • Each state has different requirements, and some states require more detail or forms to accompany your 990 filing
  • Click here to see more info about different state’s requirements

Who can see my organization’s 990?
  • Anyone
  • It’s a requirement to make your organization’s 990 available for public inspection  

A copy can be viewed on Guidestar.org or by request through the IRS

When are 990's due?

Form 990 is due by the 15th of the 5th month following the end of the fiscal year. For example, if your fiscal year ends on June 30, then your due date will be November 15th. There are different versions of the 990 but this due date is true for all. 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.  

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. For nonprofits with annual income over $1 million, the penalty increases to $100 per day up to a max of $50,000.  

When is our organizations?

Your organization's fiscal year is located on the upper right section of your IRS determination letter. The date will be labeled as "Accounting Period Ending".

HTH & Accounting Associates help organizations and business owners with accounting and/or financial consulting services.

For Help with accounting or Bookkeeping contact us at accounting@thaddeus.org or call us at 909-599-2111.

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