Tips to Help If You Miss Filing Your Non-profit 990 Form
Running a non-profit organization is hard, yet rewarding work. There is often a benefit to the general public. Because these groups have other main goals instead of profits, they are usually exempt from having to pay federal taxes.
However, this does not mean a non-profit does not have to file anything with the Internal Revenue Service. They are required to file form 990, which is an informational return that the general public can view. Information about the non-profit’s operations, mission, programs, and finances are included in the 990. The return is due on the 15th day of the 5th month after the end of the organization’s taxable year. For example, if an organization follows the calendar year of January 1 through December 31, the return would be due on May 15.
What happens if a non-profit miss the tax deadline? The following tips can help if you miss the tax deadline.
File as soon as you can
File the 990 as soon as possible. For organizations that have gross receipts of less than $1,000,000, the IRS imposes a penalty of $20 per day for every day the return is late. It is $100 per day if receipts are over $1,000,000. This can add up quickly.
If penalties are incurred, abatement may be requested by the organization in order to avoid the costs. The non-profit must show reasonable cause for either a late or incomplete return by submitting a written statement with all of the supporting facts. This should include reasons for the delay, what prevented the organization from requesting an extension if it did not do so, how the non-profit was not careless but exercised ordinary business care, and what steps have been taken to prevent the situation from happening again in the future. This written declaration should be attached to the 990 form.
Most tax-exempt organizations are required to file an annual return. Which form an organization must file generally depends on its financial activity, as indicated in the chart below.
|Status||Form to File||Instructions|
|Gross receipts normally ≤ $50,000|
Note: Organizations eligible to file the e-Postcard may choose to file a full return
|Gross receipts < $200,000, and|
Total assets < $500,000
|Gross receipts ≥ $200,000, or|
Total assets ≥ $500,000
|Private foundation – regardless of financial status||990-PF||Instructions|
Avoid filing late 3 years in a row
If an organization fails to file its 990 form three years in a row, the IRS will automatically revoke its tax-exempt status. Simply put, don’t let this happen. It is tough enough to keep tax-exempt status without having to worry about an automatic revocation for failing to file an information return. Also, an organization would have to reapply for the federal tax exemption again.
Keep track of information all year
Instead of scrambling to gather information about the organization at tax time, keep track of required information all year long to avoid filing late again. For example, keep track of volunteers and employees and any monies paid to them. Also, keep detailed information on all accomplishments of the non-profit, especially those in specific program areas which reflect its mission. Track all expenses and revenue for these areas, and capture information about any grant money received as well. It’s a good idea to review the 990 form to understand what information is required. The form can be found on the IRS website.
You also need to keep records detailed from donors and include them on Schedule B of your 990 report if your gross receipts are over $50,000 per year.
Failing to file a tax form is not going to be the end of the world, but organizations could face penalties and possibly losing tax exempt status. By filing as soon as possible, avoiding filing late three years in a row, and proactively keeping records organized, non-profits can continue doing the work that they hope will make a valuable contribution to society.
Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.
At FAS CPA & Consultants we have helped both religious and lay organizations to receive their 501(c)3 exemption status. For a clarification on all requirements and procedures give us a call or mail us and we will help you to choose the most convenient nonprofit structure according to your plan and objectives.
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