Tax-exempt organizations are generally required to file annual information returns with the Internal Revenue Service (IRS) using the Form 990 series. While these entities are exempt from paying federal income tax, they are still subject to rigorous disclosure and reporting requirements. Timely and accurate filing of Form 990 is essential not only to remain in compliance with IRS regulations but also to maintain tax-exempt status.
What Is Form 990?
Form 990 is an annual information return filed by organizations that are exempt from income tax under section 501(a), including charitable organizations under section 501(c)(3), as well as other nonprofit groups. Unlike traditional tax returns, Form 990 is designed to promote transparency by requiring tax-exempt organizations to disclose financial information, governance structures, and operational data. It helps the IRS and the public evaluate the organization’s operations and compliance with tax laws.
Types of Form 990
The IRS offers several variations of Form 990 depending on the size and type of the organization. These include:
- Form 990: For organizations with gross receipts ≥ $200,000 or total assets ≥ $500,000.
- Form 990-EZ: For organizations with gross receipts < $200,000 and total assets < $500,000.
- Form 990-N (e-Postcard): For organizations with gross receipts normally ≤ $50,000.
- Form 990-PF: For private foundations, regardless of revenue or assets.
- Form 990-T: Filed by organizations with unrelated business income of $1,000 or more.
General Due Date for Filing Form 990
The due date for Form 990 (and its variants) is the 15th day of the 5th month after the end of the organization’s accounting period. For example:
- If the fiscal year ends on December 31, the Form 990 is due by May 15 of the following year.
- If the fiscal year ends on June 30, the Form 990 is due by November 15.
It is important to note that this date is not based on the calendar year unless the organization uses a calendar fiscal year.
Automatic Extension with Form 8868
Organizations can apply for an automatic 6-month extension to file their Form 990 returns using Form 8868 – Application for Extension of Time to File an Exempt Organization Return. This applies to the following forms:
- Form 990
- Form 990-EZ
- Form 990-PF
- Form 990-T (with limitations)
Form 8868 must be filed on or before the original due date of the return. No reason is required to request the extension, and the IRS grants it automatically upon receipt.
Electronic Filing Requirements
The IRS mandates that most Form 990 series returns be filed electronically. Exceptions are rare and only granted under specific hardship waivers. Organizations filing:
- Form 990, 990-EZ, or 990-PF must use IRS-approved e-file providers.
- Form 990-N must be filed exclusively through the IRS e-Postcard system.
Failure to file electronically when required may result in penalties or rejection of the return.
Consequences of Late Filing or Non-Filing
Failure to file Form 990 on time can lead to serious consequences:
- Late Filing Penalties: $20 per day for small organizations and $110 per day for large organizations (those with gross receipts exceeding $1 million), up to a maximum penalty of $10,000 or 5% of gross receipts, whichever is less.
- Automatic Revocation: An organization that fails to file a required Form 990-series return or notice for three consecutive years will automatically lose its tax-exempt status.
State-Level Filing Considerations
In addition to federal filing obligations, many states require nonprofit organizations to file annual returns or financial statements. Some states may also require submission of a copy of the federal Form 990 or its equivalent. It is important to consult the relevant state agency (often the attorney general’s office or the department of revenue) for applicable rules.
Best Practices for Staying Compliant
- Track Your Fiscal Year End: Know your organization’s accounting period and mark your calendars well in advance of the filing deadline.
- Organize Your Records Early: Gather financial statements, board meeting minutes, and relevant policies ahead of time.
- File Form 8868 if Needed: If you’re not ready by the original due date, file for an extension before the deadline to avoid penalties.
- Use E-Filing Services: Stay compliant with IRS requirements by choosing an approved e-file provider for filing.
- Monitor IRS Communications: Keep your contact information up to date with the IRS to receive important reminders and notices.
Key Takeaways
- Form 990 is due on the 15th day of the 5th month after the end of the fiscal year.
- Form 8868 allows for a 6-month automatic extension for most 990-series returns.
- Electronic filing is generally mandatory for Form 990, 990-EZ, and 990-PF.
- Failure to file timely can result in penalties and automatic revocation of tax-exempt status.
- Always check both federal and state-level filing obligations.
Conclusion
Timely and accurate filing of Form 990 is a critical part of maintaining compliance and transparency for tax-exempt organizations. Understanding the due dates, extension options, and filing requirements can help nonprofit entities avoid penalties and preserve their tax-exempt status. By adopting strong internal controls and leveraging IRS tools like Form 8868, organizations can ensure they meet all necessary deadlines with confidence.
