All nonprofit organizations are required to file IRS Form 990. Filing the Nonprofit Form 990 ensures that charitable organizations are accountable to funding sources.
Since the 990 is available to the public, it is an easy way for donors and other funding sources to evaluate the transparency of the organization. If filled out correctly and completely, the organization can present its mission and achievements in a favorable light.
Viewing a nonprofit’s 990 answers important questions such as revenue sources, sustainability, and how well the organization pays its employees can easily be found. Potential board members can see who else is on the board and what the cash reserves look like.
Latest revisions of the 990 have added even more information such as disclosing possible conflicts of interest, board member and staff compensation, and additional details about accountability and the prevention of fraud.
Nonprofit Accounting Fundamentals
Who Must File a Nonprofit Form 990
- All private foundations file Form 990-PF.
- Tax-exempt organizations with gross receipts of $200,000 or assets worth $500,000 file the Form 990.
- Nonprofits with gross receipts of less than $200,000 but more than $50,000 file Form 990 or 990-EZ.
- Small nonprofits with gross receipts of $50,000 or less file the 990N (e-Postcard) in order to keep their exempt status.
- Any organization that is tax exempt under Sections 501c, 527, or 4947(a)(1) of the US tax code, and do not qualify for exemptions.
Who Is Exempt from filing Nonprofit Form 990
- Churches and faith-based organizations such as religious schools, missions or missionary organizations are exempt from filing Form 990.
- Subsidiaries of other nonprofits, if the parent group files.
- Nonprofits who are not registered yet, such as an incorporated nonprofit, or an incorporated nonprofit not planning to apply to the IRS for exemption from federal income tax.
- State institutions that provide essential services such as a university are exempt from filing.
- Government corporations are also exempt.
If your organization is registering to be tax-exempt and intends to file with the IRS by the 27th month from date of incorporation, you must file the appropriate Form 990 during the 27 month period, even though determination has not yet been received.
When to File the Nonprofit Form 990
You must file your applicable 990 by the 15th day of the 5th month after your accounting period ends. For example, if your fiscal year ends on December 31, the 990 is due on May 15 of the following year. Two ninety-day extensions are allowed with the exception of the 990-N postcard filers.
If you don’t file Form 990 for three consecutive years, your tax-exempt status will automatically be revoked by the IRS. Keep in mind, if you lose your exempt status for not filing the 990, there is no appeal process with the IRS. Your nonprofit may have to pay income taxes, user fees and have to file additional paperwork.
How to View a Nonprofit Form 990
Nonprofits are required to make their 990 and exemption application available to the public. You can find any nonprofit’s 990 by visiting the IRS website and searching by name. You also may be able to view it by visiting the nonprofit or their website. In addition to this, you may be able to view 990s at websites like Guidestar.
990s provide valuable information and are widely available. Nonprofits must be conscientious about filing them on time and correctly.
In our next blog post, we’ll cover the information you need from your accounting and fundraising system to complete the Form 990.
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