Nonprofit Tax Form 990

It’s tax time! But one of the benefits of being a nonprofit organization is being exempt from paying taxes on revenue. So, why should a nonprofit concern itself with tax time?

The IRS still requires the nonprofit file a return using IRS Form 990. This form is known as the Return of Organization Exempt from Income Tax. It becomes the primary source of information for the public and government about the standing of the organization. Because of this, it is an important tool for demonstrating good stewardship and financial status.

The nonprofit will most likely receive requests from concerned citizens to see its Form 990. It is considered public record and should be kept handy. The nonprofit may even consider posting it on their website for easy access.

Three Form 990s

The nonprofit’s gross receipts and total assets from grants, donations, and contracts etc. will determine which form it must file. Check the IRS website for the most up-to-date information for concluding which form is appropriate for the nonprofit.

  • Form 990-N: The e-Postcard is for smaller nonprofits.
  • Form 990-EZ: The Short Form Return of Organization Exempt from Income Tax is for medium-sized nonprofits.
  • Form 990: The Return of Organization Exempt from income Tax is for large nonprofits.

Even though the payment of taxes is not required, filing the Form 990 is. If it is not filed or filed late, there are consequences. When a return is filed late, small nonprofits are charged $20 per day, not to exceed the lesser of $10,000 or 5% of the gross receipts of the organization for the year. Large nonprofits with annual gross receipts exceeding $1 million must pay $100 per day with a maximum of $50,000. In addition, the organization risks losing its tax exempt status.

If the form is incomplete or contains incorrect information, the organization is give a fixed time period to resubmit the form.