If you’re involved in a nonprofit, you know the basics of Form 990. 990 series forms are returns for tax-exempt organizations that must be filed annually.
They allow organizations to report financial information and program activities to the IRS and the public.
It’s important to understand the significance of public access to these forms. The forms allow the public to research and gain insight into a nonprofit’s spending, funding, and contributions to its program services.
- 1 What Are The Types Of 990 Forms?
- 2 What Kind Of Information Is Found On A 990 Form?
- 3 What Happens If I Don’t File A 990 Return?
- 4 What If I Provide The Wrong Information?
- 5 How Can 990 Forms Be Used For Research?
What Are The Types Of 990 Forms?
There are different versions of the 990 forms that are applicable to different types of organizations.
1.) Form 990-N
The short form or e-postcard intended for organizations with gross receipts less than or equal to $50,000
2.) Form 990-EZ
This form is intended for organizations with gross receipts below $200,000 and assets below $500,000
3.) Form 990
The long form intended for organizations with gross receipts above $200,000 or total assets above $500,000
4.) Form 990-PF
This form is intended for private foundations regardless of gross receipts
5.) Form 990-T
This form is intended for organizations that have more than $1000 in unrelated business income.
If you qualify to file Form 990-EZ or 990-N, you can elect to file a long Form 990 instead.
What Kind Of Information Is Found On A 990 Form?
990 forms are broken down into multiple parts, with each part requiring different information.
You’ll report information like a summary of activities and governance, revenue, expenses, net assets, and liabilities.
You’ll also be required to describe your program service accomplishments or the activities and events you have carried out to serve your exempt purpose.
The IRS also requires details of key employees, officers, directors, trustees, highest compensated employees, and independent contractors. Statements of other IRS filings and tax compliance are required as well.
Furthermore, you may need to attach certain Schedules to report additional information expanding on the details you’ve provided in the form.
There are 16 different Schedules meant for different purposes and organizations, such as one for hospitals, one for schools, one for additional financial statements, one for political activities, and more.
What Happens If I Don’t File A 990 Return?
Filing a 990 return is a requirement for tax-exempt organizations. Without them, the IRS cannot determine whether the organization is fulfilling its exempt purpose or abusing its tax-exempt status.
The IRS may impose penalties for late or incorrect returns. For most late 990 forms, the IRS will impose a penalty of $20 per day past the deadline (for smaller organizations) or $110 per day for larger organizations.
The maximum penalty amount is the lesser of $11,000 ($56,000 for large foundations) or 5% of the gross receipts for the year. This is applicable to Form 990, Form 990-PF, and Form 990-EZ.
Form 990-T is slightly different. Organizations that file Form 990-T past their deadline will be penalized 5% of the unpaid tax for each month or part of a month that the return is late.
The maximum penalty is 25% of the unpaid tax. If your return is more than 60 days late, the maximum penalty is $435.
If you fail to file Form 990 series for three consecutive years, your organization will lose its tax-exempt status.
What If I Provide The Wrong Information?
If you accidentally record your information incorrectly or you forget to include any details, you can file an amended return.
You can also file an amended return to update any information that has changed for any reason.
An amended return can be filed once the original form has been accepted by the IRS.
If filing an amended return, you must provide all of your organization’s information again on a new 990 form, not just the corrected or additional information.
Amended returns must be made public either three years after the filing date or three years from the original deadline of the return, whichever is later.
How Can 990 Forms Be Used For Research?
The public can use your organization’s 990 primarily to research finances. It’s important for the public to know how much of your organization’s funds go towards their exempt purpose and how much your program service activities contribute to your finances.
Secondly, your form can be used to provide your employees’ contact information and roles. It may be necessary for someone to know who is on the board or staff.
Every tax-exempt organization’s form is available for public access. You can find a specific organization’s form using the Tax Exempt Organization Search provided by the IRS.
If you need to do any research on nonprofits or foundations, information is easily available for these reasons. You can view them at your convenience.