Last month was ... exciting for many of us in the nonprofit sector. The first round of automatic revocations of tax-exempt status, which was triggered by the May 17 Form 990 filing deadline, brought to light widespread confusion about which organizations needed to file and the revocation process in general. On May 18, when it became apparent that many smaller organizations had missed the deadline for filing Form 990-N and would therefore lose their exemptions, IRS Commissioner Doug Shulman issued a statement assuring them, "The IRS will do what it can to help them avoid losing their tax-exempt status." He noted further that guidance would be forthcoming and urged small nonprofits that had missed the deadline "to go ahead and file" Form 990-N. Read the statement
Although the guidance has not been issued as of this date (June 3, 2010), we want to take this opportunity to answer the questions we heard last month. We have also posted a nonprofit resource center on the revocations, which we will update with information about the guidance once it is released as well as any other developments in the revocations process. Go to the resource center
Which organizations must file?
Most tax-exempt organizations. There are exceptions, such as churches and state institutions; see the list. Any exempt organization that does not fall under one of the exceptions must file an annual return.
Note: If the only reason your organization has not filed a 990 or 990-EZ in the past is that its annual gross income was $25,000 or less, you probably should be filing Form 990-N, also known as the ePostcard. Double-check the list of filing exceptions. If none of them apply to your organization, read on for information about how to file Form 990-N.
My organization never applied for tax exemption, because our income is $5,000 or less. Do we need to file a 990-N?
Yes. Some organizations in this category have reported problems filing the 990-N, because they are not in the IRS Exempt Organizations Master List (also known as the IRS Business Master File or BMF), and the system therefore does not recognize them. If you encounter this problem, call IRS Customer Account Services at (877) 829-5500.
What are the consequences of not filing?
Automatic loss of tax-exempt status after failure to file for three consecutive years, as required by the Pension Protection Act of 2006. The May 17, 2010, filing deadline is the first time that this provision of the Pension Protection Act has been put into effect.
How do I determine which version of the 990 to file?
For organizations that are not 501(c)(3) private foundations, your gross annual income and assets determine which form you must file (private foundations of all sizes are required to file a Form 990-PF). For tax years that began in 2009, the following thresholds apply:
|Financial activity||Filing requirement|
|Gross receipts normally < or = $25,000
Note: Organizations eligible to file the e-Postcard may choose to file a full return.*
|Gross receipts < $500,000 and
Total assets < $1.25 million
|990-EZ or 990|
|Gross receipts > or = $500,000, or
Total assets > or = $1.25 million
|Private foundation (regardless of financial activity)||990-PF|
*Note: If a 990-N filer chooses to file a 990-EZ or full 990 instead, it must complete the entire return. Failure to provide an accurate and complete return can endanger an organization's tax-exempt status. Learn more
When does my organization need to file?
On the 15th day of the 5th month after your fiscal year ends. The May 17 deadline therefore applied to organizations whose fiscal years end on December 31. (The deadline was May 17 because May 15 was a Saturday.) Organizations whose fiscal years end on different dates will have different filing deadlines. Learn more about filing deadlines
Are there any filing extensions?
Form 990, 990-EZ, and 990-PF filers can obtain an automatic three-month extension by completing and filing IRS Form 8868. They can apply for a second three-month extension by submitting a new Form 8868. Note: Organizations that are two or more years in arrears filing their annual returns must submit Form 8868 by the filing deadline (or extended filing deadline) in order to preserve their tax-exempt status.
Technically, no extensions are available to Form 990-N filers, unless they choose to file a Form 990-EZ or 990 and apply for a filing extension for one of those forms. Commissioner Shulman's statement, however, promises relief to Form 990-N filers required to file by May 17 who missed the deadline. Until the IRS says otherwise, it is wise to assume that this is a one-time exception to the "no extensions for 990-N" rule.
How often must we file?
Our 990-N was due May 17, and we missed the deadline. What should we do?
File it immediately. See the next question for information on the mechanics of filing a 990-N.
I can't find Form 990-N on the IRS site. What should I do?
Form 990-N is an entirely electronic form; no paper copies are available. The form must be filed online at http://epostcard.form990.org/. Individuals without computers should be able to file the return using computers at a public library, community center, or similar facility.
The following information is required to complete Form 990-N:
- Employer identification number (EIN), also known as a Taxpayer Identification Number (TIN).
- Tax year
- Organization's legal name and mailing address
- Any other names the organization uses
- Name and address of a principal officer
- Web site address, if the organization has one
- Confirmation that the organization's annual gross receipts are normally $25,000 or less
- If applicable, a statement that the organization has terminated or is terminating (going out of business)
At GuideStar, we're keeping our eyes open and our ears to the ground (figuratively, of course). We'll keep you informed as new developments occur. Watch our Web site, especially the revocation resource center, and your in-box for updates.
Suzanne E. Coffman, June 2010
© 2010, GuideStar USA, Inc.
Suzanne Coffman is GuideStar's director of communications and editor of the GuideStar Newsletter. She spent the second and third week of May 2010 answering reporters' questions about the revocations and filing away what the reporters told her nonprofits had told them.