IRS 990 Explained
What is IRS 990?
The IRS 990 is a tax form used by tax-exempt organizations to provide the IRS with essential information about their activities, finances, and compliance with federal regulations. This form is crucial for ensuring transparency and accountability within nonprofit organizations. The IRS 990 helps the government understand how these organizations operate and the nature of their financial resources. It's primarily used by charitable organizations, foundations, and other tax-exempt entities.
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Purpose of IRS 990
The IRS 990 serves several critical purposes. First, it allows the IRS to monitor tax-exempt organizations to ensure compliance with tax laws. Second, it provides valuable information to the public regarding how much money these organizations collect and spend. This enhances transparency and helps donors make informed decisions about where to allocate their contributions. Additionally, the form helps maintain the integrity of the tax-exempt sector by ensuring that organizations adhere to the rules governing their tax-exempt status.
Where is IRS 990 used and by whom?
The IRS 990 is primarily used by nonprofit organizations as part of their legal and tax reporting requirements. Here are some of the typical user groups:
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1.Charitable Organizations: Registered charities must file this form annually to maintain their tax-exempt status.
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2.Nonprofits: Organizations classified as tax-exempt under section 501(c)(3) or other sections of the tax code are required to file IRS 990.
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3.Foundations: Private foundations and some public charities must submit the IRS 990 to report their financial activities.
For example, a local food bank would file an IRS 990 to disclose its funding sources, expenditures, and overall financial health, making it accountable to both the IRS and the community it serves.
Step-by-step: how to fill out IRS 990
Filling out the IRS 990 can be straightforward if you approach it methodically. Here’s a step-by-step guide:
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1.Gather Necessary Information: Before starting, collect all requisite information, such as financial statements and details on your organization's activities.
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2.Use pdfFiller: Access the IRS 990 form via pdfFiller, where you can edit and complete the form online.
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3.Complete the Form by Sections: Fill out each part of the IRS 990, including:
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4.Part I: Summary
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5.Part II: Signature Block
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6.Part III: Statement of Program Service Accomplishments
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7.Part IV: Checklist of Required Schedules
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8.Review: Always double-check the information you've entered for accuracy.
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9.Submit: Follow the submission guidelines, which you can read more about in the next section.
Who is required to complete IRS 990?
Many tax-exempt organizations are required to complete the IRS 990. Generally, any organization that has gross receipts exceeding $200,000 or total assets greater than $500,000 must file this form. Additionally, organizations with gross receipts under $200,000 may nonetheless need to file a simpler version of the form, known as IRS 990-EZ.
Organizations created under state law for charitable purposes are included in this requirement, ensuring a wide range of nonprofits are covered. Notably, private foundations are usually required to file IRS 990-PF instead.
Information you need to complete IRS 990
To successfully fill out the IRS 990, ensure you have the following information readily available:
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1.Organization's name, address, and Employer Identification Number (EIN).
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2.Detailed financial statements (income, expenses, and assets).
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3.Program service accomplishments and descriptions.
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4.Names and addresses of current board members.
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5.Items for disclosure, such as compensation for top employees and any potential conflicts of interest.
Gathering this information beforehand can make the process smoother and more efficient.
How to submit IRS 990
Organizations can submit the IRS 990 via several channels. Here are common submission methods:
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1.Online: Use the IRS electronic filing system (e-file) for faster processing.
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2.Mail: Print the completed form and send it to the IRS at the designated address for your region.
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3.Third-party Services: You can also use services like pdfFiller to submit electronically or through mail.
Remember to keep an eye on submission deadlines, which generally fall on the 15th day of the 5th month following the end of your organization’s fiscal year.
When to update or refile IRS 990
Organizations may need to refile or update the IRS 990 under certain circumstances, including:
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1.Change of Address: If your organization's address changes, you must update this information.
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2.Major Changes: Significant alterations in programs, activities, or finances should be reflected in the filing.
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3.Correcting Errors: If you notice any inaccuracies after filing, you will need to submit an amended return.
Keeping your IRS 990 current helps maintain your organization’s tax-exempt status and public trust.
What happens if you don’t file IRS 990?
Failing to file the IRS 990 can lead to several serious consequences. Organizations risk penalties, which can amount to thousands of dollars if the form is not submitted on time. Furthermore, the IRS may revoke your tax-exempt status, which can severely impact your organization’s ability to operate and raise funds.
In some cases, nonprofit organizations face increased scrutiny or audits from the IRS. This scenario can degrade public trust and harm donor relationships, ultimately affecting the organization’s purpose and mission.
Fill out IRS 990 online
Get the latest version of the form and complete it in minutes.
Frequently Asked Questions About the IRS 990
What is the IRS 990 form and who needs to file it?
The IRS 990 form is a crucial document that tax-exempt organizations must file annually with the IRS. It provides transparency regarding the organization's financial status, including revenue, expenses, and activities. Organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more, typically need to file the IRS 990.
What are the consequences of not filing the IRS 990?
Failing to file the IRS 990 can lead to significant penalties, including fines and potential loss of tax-exempt status. The IRS may impose an automatic penalty of $20 per day, up to a maximum of $10,000, depending on the organization's size. Ensuring timely and accurate filing of the IRS 990 is essential to maintain compliance and avoid these repercussions.
How do I access my previous IRS 990 forms?
Accessing previous IRS 990 forms can be done through the IRS website or directly from your organization’s records. Many organizations keep digital copies of their filings for easy retrieval. If needed, third-party services or platforms specializing in nonprofit compliance can often provide access to past IRS 990 submissions.
What information is required to complete the IRS 990?
To complete the IRS 990, organizations need to provide detailed financial information, including revenue, expenses, and assets. Additionally, you must include information about governance, program service accomplishments, and any changes in organizational structure or policy. Gathering complete and accurate data is crucial when preparing the IRS 990.
Is there a simplified version of the IRS 990 form?
Yes, there is a simplified version known as IRS 990-EZ, which can be filed by smaller organizations with less than $200,000 in gross receipts and total assets under $500,000. This version requires less detailed financial information compared to the full IRS 990. Organizations qualifying for IRS 990-EZ should ensure they follow the guidelines to remain compliant.
Can I amend a previously filed IRS 990?
Yes, if there are errors or omissions on a previously filed IRS 990, your organization can amend it by completing Form 990-X. This form allows for the correction of significant mistakes that may affect the accuracy of the submitted information. Amending the IRS 990 is essential to ensure compliance and maintain your nonprofit's credibility.
What is the deadline for filing the IRS 990?
The deadline for filing the IRS 990 typically falls on the 15th day of the 5th month after the close of your organization's fiscal year. For most organizations adhering to a calendar year, this means a due date of May 15. It’s crucial to manage your timelines effectively in order to meet the IRS deadline for the IRS 990.
How can organizations benefit from filing the IRS 990?
Filing the IRS 990 provides organizations with a chance to demonstrate transparency and accountability, which helps build trust with donors and the public. This form also serves as a comprehensive resource that outlines the nonprofit's financial health and activities. Leveraging the information from the IRS 990 can enhance funding opportunities and promote credibility.
What resources can assist in preparing the IRS 990?
Various resources can assist in preparing the IRS 990, including accounting software tailored for nonprofits and professional accountants familiar with nonprofit regulations. The IRS offers comprehensive instructions and guidelines on their website, which can be very helpful. Additionally, platforms like pdfFiller provide tools for document management that streamline IRS 990 preparation.
What changes were made to the IRS 990 in recent years?
Recent changes to the IRS 990 include a focus on improving transparency and compliance with enhanced reporting requirements. For instance, the form now emphasizes questions related to governance practices and diversity on boards. Organizations should stay informed on these updates to accurately reflect their practices and ensure they are meeting all IRS standards for the IRS 990.
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