What You Need to Know About IRS Form 990

By: Alfredo T. Muniz, Cover & Rossiter

What is the 990?

IRS Form 990 is a document that most federally tax-exempt organizations, including charitable nonprofit organizations or foundations, file each year with the IRS. This form does not convey tax-exempt status; approval must be filed for separately. This form is intended to provide the government and interested members of the public with a snapshot of the organization’s activities for that year. In addition, it is an easy way for donors to find and evaluate the best charities to support, as it displays important financial information about an organization’s activities. The Form 990 is a public document as soon as it is filed. Once filed, it usually takes a few months before it is available on the IRS website or on www.Guidestar.org, the world’s largest source of nonprofit information, connecting people and organizations with data on 2.5 million current and formerly IRS-recognized nonprofits. After a few months, it will become available on the IRS website and Guidestar.org.

Watch our Great Advice for Nonprofits Vlog on this topic

Who has to file the 990?

The easiest way to know whether or not you have to file Form 990 is by checking the upper right hand side of your IRS Determination Letter. Most organizations exempt from income tax under section 501(a) are required to submit an annual informational return. This includes organizations described in section 501(c)(3), the designation most nonprofits operate as today. Some other examples of organizations that have to file a 990 form are sponsoring organizations of donor advised funds, section 509(a)(3) supporting organizations, and private foundations.

Who does NOT have to file the 990?

There are a few nonprofits that are not required to file a 990. For example, Churches and most faith-based organizations do not have to file a 990. Also exempt are state institutions, such as colleges and universities, and government corporations, such as state governments and counties. If you’re not sure whether or not you have to file, it’s advised that you make sure. Failure to file for 3 consecutive years results in automatic revocation of tax-exempt status.

There are a few nonprofits that are not required to file a 990. For example, Churches and most faith-based organizations do not have to file a 990. Also exempt are state institutions, such as colleges and universities, and government corporations, such as state governments and counties. If you’re not sure whether or not you have to file, it’s advised that you make sure. Failure to file for 3 consecutive years results in automatic revocation of tax-exempt status.

Watch our Great Advice for Nonprofits Vlog on this topic

Types of 990 Forms

There are several types of 990 forms: 990-N, 990-EZ, 990-PF, and the form 990. There are different requirements for each 990 which are displayed in the table below. Organizations with gross receipts less than $50,000 should file form 990-N, also known as an E-postcard, which can take less than 15 minutes online. Organizations with gross receipts of less than $200,000 and total assets less than $500,000 have the option of simplified filing with the 990-EZ or the full 990 form. Organizations that are above either of the thresholds previously mentioned are required to file the full Form 990. The exception here is private foundations, which are required to file form 990-PF.

StatusForm to File
Gross receipts ≤ $50,000990-N (e-Postcard)
Gross receipts < $200,000 and total assets < $500,000990-EZ or 990
Gross receipts ≥ $200,000 or total assets ≥ $500,000990
Private foundation – regardless of financial status990-PF

Note: 509(a)(3) supporting organizations and sponsors of donor-advised funds always need to file long form 990, regardless of size.

When, Where, and How to File

Organizations need to file their respective 990 form on the 15th day of the 5th month after the organization’s accounting period ends. For example, if an organization’s accounting period ends December 31, 2020, your 990 is due by May 15, 2021. You may apply for a six month extension, which is automatic so long as it is received by the original filing due date. All forms must be submitted electronically unless the name of the organization has changed, the reporting period was shortened by an accounting period change, or an application for exemption is pending.

Failure-to-File Penalties

Even though the 990 is an informational return, there are significant penalties for not submitting the 990 on time or for submitting an incorrect return. Nonprofit organizations that are required to file a form 990 return will be penalized for every day after the deadline they do not file the form. There is a penalty of $20 per day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the organization for the year. The fee can be waived if the late filing was due to a reasonable cause. Organizations with annual gross receipts exceeding $1,067,000 are subject to a penalty of $105 per day after the filing deadline has passed, not to exceed $53,000. Persons responsible for filing the 990 can also be penalized $10 per day with a maximum penalty of $5,000. If you are in this situation, please let us know as it is often possible to get these penalties waived.

For more information

Alfredo T. Muniz is a Staff Accountant in the audit department at Cover & Rossiter. He joined the firm in May 2020 and is a graduate of the University of Delaware with a Bachelor’s degree in Accounting and Finance. Contact information: AMuniz@CoverRossiter.com or 302-656-6632 x202