LUTZ BUSINESS INSIGHTS
what is form 990?
deyna rouse, tax shareholder
The Form 990 series represents the annual informational tax form group that is required to be filed with the IRS by tax-exempt organizations, including charitable and educational organizations, trade associations, foundations, and certain political organizations. Form 990 also helps organizations meet their public disclosure requirements, share information about their financial management, and emphasize their mission accomplishments. Disclosing this information allows donors and stakeholders to assess the management and performance of an organization, and it can be instrumental in encouraging donors and grantors to support an organization as well.
What Form 990 Version Is Required?
Different levels of disclosure are required depending on the size and type of non-profit organization. Generally, the requirements are as follows:
- Private foundations file Form 990-PF
- Small public charities with gross receipts of less than $50,000 file Form 990-N (E-Postcard)
- Large public charities with gross receipts in excess of $200,000 or assets in excess of $500,000 file Form 990
- Midsize public charities with gross receipts between $50,000 but less than $200,000 file Form 990-EZ. These organizations can also voluntarily file Form 990 if they prefer.
Certain types of public charities, such as churches and certain other faith-based organizations, are generally not required to file Form 990. Similarly, most governmental agencies are also not required to file Form 990.
Nonprofit organizations with income from sources unrelated to their tax-exempt mission may also be required to file Form 990-T to report unrelated business income tax (UBIT). This form is required to be filed at the same time as the regular Form 990. Organizations should review their various revenue sources with their tax advisors to ensure that any UBIT obligations are appropriately reported and paid.
Form 990 or its counterpart is due by the 15th day of the 5th month after the organization’s tax year-end. Organizations may file for a six-month extension of time to file if they are unable to file the return by its original due date. Some states, but not all, also require annual tax filings by nonprofit organizations in addition to the Federal Form 990 requirements. The due dates of these state filings vary by jurisdiction.
Why Is Form 990 Important?
With very few exceptions, the IRS requires most tax-exempt entities to file Form 990 each year. In exchange for tax-exempt status, organizations must disclose certain information about the organization to the public. Form 990 provides a mechanism to do so. It also provides insight into the operations, management, governance, and financial health of nonprofit organizations which enables potential funders to analyze and make funding decisions based on what is disclosed. Tax-exempt organizations should consider viewing their annual Form 990 filing as “picture day”, as it provides an opportunity to demonstrate to outside stakeholders what the organization is doing to accomplish its mission, and the organization’s stewardship of contributed funds or program service revenues in executing its programs. This can attract new funding sources, additional volunteers, and other valuable resources to help the organization continue its efforts. The Form 990 and its narrative disclosures can also help differentiate an organization from other comparable organizations that may be competing for support from similar donors.
The consequences of not filing Form 990 can be considerable. Late filing penalties apply if organizations do not submit their Form 990 filings by the required due dates. If organizations do not file Form 990 for 3 consecutive tax years, their tax-exempt status is automatically revoked by the IRS, and the organization must go through an administrative process to have that status reinstated. This can be both costly and time consuming, and it can potentially jeopardize the organization’s funding during the time period where that status is revoked. Due to this, significant importance should be placed on the process of preparing, reviewing, and filing Form 990.
All nonprofit organizations should consult with a tax advisor to ensure that their filing requirements are being met, and that the Form 990 series is being utilized to its fullest advantage to help the organization put its best foot forward. It can be a valuable tool to attract resources when prepared with that viewpoint in mind.
ABOUT THE AUTHOR
DEYNA ROUSE + TAX SHAREHOLDER
Deyna Rouse is a Tax Shareholder at Lutz with over 15 years of experience in taxation. She leads the IRS audit consulting and representation efforts at Lutz and regularly advises on IRS collections and procedural issues.
AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
- American Institute of Certified Public Accountants, Member
- Nebraska Society of Certified Public Accountants, Member
- Certified Public Accountant
- BSBA in Accounting, with highest distinction, Creighton University, Omaha, NE
- Great Plains Federal Tax Institute, Board Member
- Gesu Housing, Board Member
- Friends of Nebraska Children, Board Member
- Rose Theater Guild, Board Member
- Nebraska Children & Families Foundation, Past Board Member
- Junior League of Omaha, Past Board Member
- Junior League of Omaha Foundation, Past Board Member
- Literacy Center of the Midlands, Past Board Member
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