Introduction to IRS 990 Filings Non-Profits: A Guide For Organizations

As a nonprofit, understanding the importance of maintaining accurate financial records and submitting required tax paperwork is essential to success for many nonprofits. The Internal Revenue Service (IRS) requires most nonprofit organizations to file forms - in this case, a federal tax return and an annual Form 990, Return of Organization Exempt From Income Tax.

The main purpose of an IRS 990 form for a nonprofit organization is to provide an overview and information, as well as financial transparency and accountability of charities. Filings require detailed information about the organization’s income, expenses, fundraising activities, program services, governance functions, and more. By providing this information in a standardized form to the IRS annually, nonprofits can demonstrate their commitment to good stewardship of resources and compliance with applicable laws and regulations.

The filing also serves as an important tool for potential donors, stakeholders or board members to review the organization’s financial health. Additionally, nonprofits that file Form 990 can be eligible for grants, loans, and other popular funding opportunities.

The filing requirements for Form 990 vary depending on the size of the nonprofit organization, but in most cases, any nonprofit with gross receipts of at least $200,000 or assets worth a minimum of $500,000 is required to file a 990 form for all tax years. Exemptions do apply, and these are largely religious organizations such as churches, or political organizations.

Keen to learn more about 990 forms? Then we have put together an overview and a series of must-know details to help make your return as painless as possible and ensure that you are fully compliant.

Understanding the Different Types of 990 Forms 

As you may expect, there are several different types of 990 form, and understanding the differences will help you to determine the suitable option for your organization.

The four main types of 990 form, available in PDF format include:

990-N (e-Postcard)

This is the simplest form and is suitable for organizations with annual gross receipts that are generally less than $50,000. It requires a minimal amount of information to be submitted to the IRS such as the name of the organization, address, and type of organization, as well as a general overview.

990-EZ

A 990-EZ form is required for organizations whose gross receipts are more than $50,000 but less than $200, 000 must file the 990-EZ form. This form requires more detailed information such as a description of the organization's activities, assets, and liabilities - see the instructions to ensure that nothing is missed out.

990 PF

The 990-PF is a form specifically for private foundations. Organizations that must file this form have been recognized as a 501(c)(3) public charity or private foundation, and they must report their financial activities such as investments, credit, grants, and donations on all forms.

990 Full Form

Finally, organizations with annual gross receipts that are greater than $200,000 or total assets of at least $500,000 are required to file Form 990. This is the most comprehensive form option and requires the most detailed data about the organization, including a full financial report.

No matter which type of 990 form you fill in, there are a few rules that remain the same. All forms must be submitted electronically to the IRS and must be filed by the 15th day of the 5th month after the tax period ends - for example, if your organization's fiscal year ends on June 30, the 990 must be filed by November 15. 

By familiarizing yourself with the different types of 990 form options, following the instructions, and understanding their filing requirements, you can ensure that your nonprofit is compliant with IRS regulations and maintains financial transparency for donors and potential investors.

Who Needs to File the 990 Form? 

The 990 form is required to be filed by organizations that meet specific criteria, and these include:

Organizations that are eligible for tax exemptions - this means you must have already registered with the IRS, and have already submitted a 1023 Form to apply for a tax-exempt status. This tax exemption status must be intact, and you must not run an organization that is exempt - we will take a closer look at this in a moment.

Organizations that are recognized as 501(c)(3) public charities or private foundations

Organizations with annual gross receipts of at least $200,000; and organizations with total assets of at least $500,000 must file a form

Exemptions and Exclusions

As with any taxation filing or form, exemptions may apply. Always check the instructions in the PDF thoroughly, but generally exempt organizations include:

Religious organizations such as churches, synagogues, and mosques do not need to file a form

Political organizations that are exempt from taxation do not need to file a form

Governmental agencies or entities

Organizations with gross receipts that are less than $50,000, can file a 990-N e-Postcard form

Organizations whose gross receipts have been consistently below $ 200,000 over three years do not need to file a form

In these cases, an exempt organization may be able to avoid 990 tax filings. However, it is important to note that non-filing for exempt organizations does not equate to exemption from taxation - even if you are exempt, you still need to be aware of and remain compliant with IRS regulations and instructions each tax year.

Key Information Disclosed in 990 Filings And The Nonprofit Explorer

So, just what information is included in a 990 tax return form? According to the overview and instructions, the IRS form requires the disclosure of a variety of filing data details, including:

Organizational Details

The first thing that needs to be disclosed on the form is an overview of information about the organization itself. This includes its legal name, address, contact details, and web address. Follow the instructions to ensure that nothing is missed.

Financial Information

The form must also include financial disclosure information about the organization. Ad the instructions state, this may include an overview which includes the full financial report and gross receipts, as well as details such as total receipts and expenses, credit, assets, liabilities, endowment funds, investments, grants made to other organizations or individuals, and any taxes paid.

Compensation and Loans

In addition, the filing needs to include details about any compensation that was paid out to directors, trustees, officers, or key employees in the organization. Any loans or credit taken out by the organization must also be disclosed in this filing.

Mission Statement

The 990 also requires the disclosure of an organizational mission statement. This should include information about what the organization seeks to achieve, how it will go about it, and any activities it may undertake to reach its goals. This information is important for potential donors and investors, as it allows them to know more about the organization’s cause and what they are supporting.

Operational Details

Lastly, operational details such as board meetings held during the year and program activities should also be included. These may include information about the organization’s programs, services, and goals that it seeks to achieve.

Consequences of Not Filing or Late Filing For Organizations

As the instructions state, the consequence of not filing a 990, or filing after the deadline can be severe, such as owing back taxes and penalties. There are a series of consequences, which can include:

Financial Penalties 

The IRS can impose financial penalties for failure to file or late filing. This includes assessing fines up to $20 per day for every day that the form is late, with a maximum penalty to pay of up to $10,000 or 5% of the organization’s gross receipts, whichever is greater.

Loss of  Federal Tax Exempt Status

Failure to file or late filing may also result in the loss of an organization’s tax-exempt status. This can have dire consequences on the organization’s ability to operate and receive donations - always read the instructions, and make sure your returns are in on time. Thanks to electronic filing, this should be a smooth, painless process - always follow the instructions, which are available in PDF format.

Revocation of Deductible Contributions

Failure to submit a form can also mean that the IRS revokes an organization’s ability to receive deductible contributions from donors. This means that individuals and companies who donate money to the organization may not be able to deduct their donations from their taxes.

Ineligibility for Grants 

Depending on the grantor, failure to file or late filing may disqualify organizations from receiving grants or other forms of funding.

It is important for organizations to understand the implications of not filing or filing late. Nonprofits should consult with tax professionals to ensure that they remain compliant and up to date with their filings.

Benefits of 990 Filings for Non-Profits and the Public 

A 990 filing is more than merely a way for a nonprofit to meet IRS regulations; it also serves several important purposes.

Transparency and Accountability

The public disclosure of 990 forms provides transparency regarding the operations of a non-profit. It offers the public an overview to see how an organization is using its resources, what loans or credit are in place, and whether or not it is adhering to its mission statement, and this can be accessed through the nonprofit explorer. This helps build trust with potential donors and volunteers, as they can see how their contributions are being used.

In addition, the filing and form are important for accountability purposes. It allows donors to review and ensure that the non-profit is following the rules and regulations set forth by the IRS. This helps ensure that non-profits are adhering to ethical standards and not misusing donations.

Without 990 filings, it can be easy for non-profits to hide behind a veil of secrecy and mismanage their funds. Providing the public with access to these forms, encourages non-profits to have more accountability and transparency and provides a clear, accessible overview of proceedings.

Regulatory Compliance With The IRS

Filing a form also helps ensure that non-profits are in compliance with the IRS and other regulatory bodies. The tax return forms act as an important tool for monitoring their activities, credit and financial status and ensuring they remain in good standing with the law. This is why it is so crucial to follow the instructions in the PDF closely and ensure that your details are accurate.

Overall, this is a federal tax return that can provide numerous benefits to both non-profits and the public. The forms offer an overview of key information and promote transparency, accountability, and regulatory compliance. For these reasons, it is important for non-profits to understand their filing requirements and remain compliant with them, and to ensure forms are completed correctly and filed on time.

FAQs

How often do nonprofits need to file 990?

Most nonprofits and individuals are required to file an electronic tax return and form annually, however, the federal tax filing requirements vary depending on the size and type of organization. Generally, instructions state that smaller non-profits with gross receipts of less than $50,000 per year may not have to file a tax return at all. On the other hand, larger organizations with gross receipts of more than $200,000 in any given year must file a 990 Form annually. Some individuals, charities and businesses are exempt from returns if they fall into one of the listed categories.

Can the public access a non-profit's 990 form?

A 990 form is a public tax record, and so individuals can search for and access a PDF version of a non-profit’s 990 form to gain an overview and key information regarding a charities work and financial information, including checking which charities are exempt. The IRS requires all non-profits to make their 990 form available to the public, either through their website or at a physical location. This ensures accountability and transparency and allows donors and other interested parties to review the organization’s financial activities.

What happens if a non-profit fails to file for three consecutive years?

If nonprofits, other than exempt organizations, charities and individuals, fails to file a form for three consecutive years, the IRS may revoke their tax-exempt status. This means that that individuals and charities are no longer recognized as a non-profit by the federal government and can no longer accept credit or deductible contributions from donors, so will have to pay federal tax according to the IRS instructions. In addition, they may also be ineligible for grants or other forms of funding, depending on the grantor. Furthermore, failure to file a form can result in penalties from the IRS, including a removal of the right to be tax-exempt.

Conclusion

Here at Paybee, we know that running a successful nonprofit can be a real challenge - and that is why we are here to help. Our comprehensive team can help you take care of all elements of fundraising, from initial idea to successful event, and are on hand to help ensure that your organization has the support it needs to make a real difference. Get in touch today, and see how we can help.

‍

‍