Most nonprofit organizations know and follow the requirement to file either Form 990, 990-EZ, 990-PF or 990-N (e-Postcard) on or before the 15th day of the fifth month after year-end. For most organizations, that date is May 15. In addition, tax-exempt organizations with Unrelated Business Income (UBI) may also be required to File Form 990-T by the same filing due date. Unfortunately, some smaller nonprofit organizations may not be aware of this filing requirement and the fact that failure to comply may result in loss of tax-exempt status.
By law, organizations that fail to file whichever of these annual reports as is applicable for three consecutive years will see their federal tax exemptions automatically revoked as of the due date of the third required filing. The Pension Protection Act of 2006 mandates that most tax-exempt organizations file annual Form 990-series informational returns or notices with the IRS. The law, which went into effect at the beginning of 2007, also imposed a new annual filing requirement on small organizations. Churches and church-related organizations are not required to file annual reports.
Which of those forms should be filed?
Small tax-exempt organizations with average annual receipts of $50,000 or less may file an electronic notice called a Form 990-N (e-Postcard), which requires the tax-exempt organization only to answer a few basic pieces of information onlline. Tax-exempt organizations with average annual receipts above $50,000 must file a Form 990, or 990-EZ, depending on their receipts and assets. Private foundations file a Form 990-PF. Organizations that need additional time to file a Form 990, 990-EZ or 990-PF may obtain an extension; however, no extension is available for filing the Form 990-N (e-Postcard).
Any of these organizations exempt under section 501(a) or section 529(a) if it has gross income of $1,000 or more from a regularly conducted unrelated trade or business (see Regulations section 1.6012-2(e)) is also required to file Form 990-T. For this purpose, gross income is defined as gross receipts minus the cost of goods sold (see Regulations section 1.61-3).
Check Tax-Exempt Status Online
The IRS publishes the names of organizations identified as having automatically lost their tax-exempt status for failing to file annual reports for three consecutive years.
Organizations that have had their exemptions automatically revoked and wish to have that status reinstated must file an application for exemption and pay the appropriate user fee.
The IRS offers an online search tool, Exempt Organizations Select Check, to help users more easily find key information about the federal tax status and filings of certain tax-exempt organizations, including whether organizations have had their federal tax exemptions automatically revoked.
If you need help in the preparation of any of these annual reports for nonprofit organizations, Roy & Associates, PC may be able to provide assistance. Our firm or its predecessor firms have been providing services to tax-exempt organizations since 1942. Any tax-exempt organization in need of assistance in the preparation of its Form Form 990, 990-EZ, 990-PF, 990-N or 990-T, whichever applies, or other consultation on tax-related issues, may make an appointment with one of our Directors of Audit and Tax Services, all of whom are well-versed in accounting and taxation issues for tax-exempt organizations. See the CONTACTS page above. Standard rates and terms for service will apply.
DISCLAIMER: This information is extracted with permission from IRS releases. We are not responsible for the application of this general information to the specific circumstances of a reader unless we have been engaged as the reader’s accounting firm.