All nonprofit organizations are required to file one of the IRS Form 990s. There have been some changes made to these forms that nonprofit organizations need to be aware of.
Form 990 is due on the 15th day of the fifth month following the year-end. For organizations with a December year-end, the due date would be May 15. An extension of time to file the return can be applied for by using Form 8868. A timely and accurate request for an extension provides an automatic three month extension of time to file.
Form 990―Filed by all organizations not eligible to file Form 990-EZ or Form 990-N
Form 990-EZ―For 2009, use this form if the gross receipts are less than $500,000 and the total assets are less than $1,250,000. For 2010, use this form if the gross receipts are less than $200,000 and the total assets are less than $500,000.
Form 990-N―This is required by all organizations with less than or equal to $25,000 of annual gross receipts. This is the so-called E-Postcard.
Due to lowering the thresholds, more organizations will be required to file Form 990 instead of Form 990-EZ. The new Form 990 now contains 16 schedules. This expanded form requires more narrative information regarding program service accomplishments, governance and management disclosure, and employees, director and contractor compensation.
There are extensive penalties for failure to file:
- $20 per day, not to exceed the smaller of $10,000 or 5% of the gross receipts of the organization
- Organizations with $1 million of gross receipts or more are subject to a $100 per day penalty, not to exceed $50,000
- Penalties may be assessed against “responsible person(s)” for $10 per day, not to exceed $5,000
- Organizations that fail to file their required form for three consecutive years will automatically lose their tax-exempt status
Penalties may also be assessed if the organization files an incomplete return.
ACTION ITEM: All nonprofit organizations should be familiar with Form 990 so that they can file the appropriate form.
Thomas F. Scanlon, CPA, CFP®