Not-for-Profit Organization Tax Returns
Many charitable or not-for-profit (NFP) organizations need to file tax returns to report their activities and compliance with their tax exempt status.
Organizations with gross receipts of $50,000 or less can file a simple e-postcard electronically for Form 990-N. Tax returns are required to be filed with the IRS on Form 990-EZ if fiscal year gross receipts are under $200,000 and total assets at end of fiscal year are less than $500,000. All others must file Form 990. An organization eligible to use Forms 990-N or 990-EZ that decides to file Form 990, must file it completely. There is no minimum IRS tax or fee.
Returns are due May 15. An automatic extension until August 15 can be obtained but must be applied for. Afterwards, an additional extension until November 15 can also be applied for, but reasonable cause must be shown. Extensions are not permitted for Form 990-N. Fiscal year organizations should adjust these dates to their schedule.
NFPs that need to file are charitable organizations under Code Section 501c3, and also other organizations under other 501 code sections such as private foundations, trade associations, unions, and fraternal organizations. If you are a NFP and are not filing, you better check the requirements. There are steep penalties for non-filers and late filers. Churches, synagogues and mosques are exempt and do not have to file these returns.
If your NFP received more than $1000 gross revenue from an unrelated profit making activity such as renting space, running a business, selling products or providing services that are unrelated to your organization’s purpose it would have to file a Form 990-T reporting this income. This also applies to churches and similar religious organizations and other exempt organizations such as an employee benefit plan or IRA. The returns are due if a gross receipts test is met even though there is no profit. If there is a profit, a tax would be payable. Timely filing is necessary to avoid any late payment or filing penalties.
Form 990s for 501 organizations are public information (except for Schedule B) and are posted on the web for anyone to view. Likewise you can check out any charity you want. For strategic reasons, you might want to check out similar or competing organizations.
NFPs that expend $500,000 or more in federal or state assistance within a fiscal year are required to have their financial statements audited. If they expend less than $500,000 but more than $100,000 from such assistance, they would need a program specific audit.
Each state has different filing requirements and some have filing fees. The above only addresses federal filing requirements. Additional information can be obtained from the IRS instructions for Form 990 at https://www.irs.gov/pub/irs-pdf/i990.pdf , For state requirements, contact the charities registration division of the states involved. Some states also require the publication of a notice of availability of the form for certain 501 entities; the IRS does not.
Board members of a NFP need to be aware of the tax filing requirements and should inquire whether their organization is in compliance with them.
Kevin Fellin, CPA tax manager at WS+B provided technical assistance with the above.
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