Introduction to Nonprofit 990 Filing
The IRS requires most tax-exempt organizations to file an annual information return, known as Form 990. This form provides the public with financial information about the organization, including income, expenses, and governance practices.
Not all nonprofits are required to file a 990, however. Certain organizations, such as churches and small nonprofits, may be exempt from filing. Understanding these exemptions is crucial for ensuring compliance with IRS regulations.
Types of Nonprofits Exempt from Filing a 990
The IRS exempts certain types of nonprofits from filing a 990, including churches, synagogues, mosques, and other religious organizations. Additionally, small nonprofits with annual gross receipts of $50,000 or less may also be exempt.
Other exempt organizations include governmental units, such as public schools and hospitals, as well as organizations that are part of a larger tax-exempt organization, such as a subsidiary of a university.
Consequences of Failing to File a 990
Nonprofits that are required to file a 990 but fail to do so may face penalties, including fines and loss of tax-exempt status. The IRS may also impose additional penalties for failure to file or for filing late.
In addition to these penalties, nonprofits that fail to file a 990 may also face reputational damage and loss of public trust. Donors and grantmakers often review a nonprofit's 990 before making funding decisions.
How to Determine if Your Nonprofit is Exempt
To determine if your nonprofit is exempt from filing a 990, review the IRS's exemption criteria. This includes reviewing your organization's annual gross receipts, as well as its purpose and activities.
Nonprofits that are unsure about their exemption status should consult with a tax professional or attorney to ensure compliance with IRS regulations. It is also important to review the IRS's website for the most up-to-date information on exemption criteria.
Best Practices for Filing a 990
Nonprofits that are required to file a 990 should ensure that they file accurately and on time. This includes reviewing the IRS's instructions for filing a 990 and ensuring that all required information is included.
Nonprofits should also ensure that they maintain accurate and detailed financial records, as these will be needed to complete the 990. It is also important to review the 990 before filing to ensure that it is accurate and complete.
Frequently Asked Questions
What is the purpose of the 990 form?
The 990 form provides the public with financial information about a nonprofit, including income, expenses, and governance practices.
Are all nonprofits required to file a 990?
No, not all nonprofits are required to file a 990. Certain organizations, such as churches and small nonprofits, may be exempt.
What are the consequences of failing to file a 990?
Nonprofits that fail to file a 990 may face penalties, including fines and loss of tax-exempt status, as well as reputational damage.
How do I determine if my nonprofit is exempt from filing a 990?
Review the IRS's exemption criteria, including annual gross receipts and purpose and activities, and consult with a tax professional or attorney if necessary.
What is the deadline for filing a 990?
The deadline for filing a 990 is the 15th day of the 5th month after the close of the organization's tax year.
Can I file a 990 electronically?
Yes, the IRS allows nonprofits to file a 990 electronically through its website. Electronic filing is faster and more secure than paper filing.