Your nonprofit organization might be exempt from federal income taxes, but that does not mean you get a free pass from the IRS! Even if you don’t have to pay income taxes, most nonprofits are still required to file an annual informational return with the IRS.
Depending on your organization’s income and assets, you may need to file a Form 990, Form 990-EZ, or Form 990-N. Private foundations are required to file Form 990-PF, and organizations with unrelated business income must also file Form 990-T.
Form 990-EZ: Short Form Return of Organization Exempt from Income Tax
Form 990-N: Electronic Notice (e-Postcard) for Tax-Exempt Organizations
The Form 990 serves two main purposes. First, it demonstrates to the IRS that your organization continues to meet the qualifications for tax exemption. And second, it provides fiscal transparency to the public. Donors, grantors, the media, watchdog groups, and other members of the public can look up your Form 990 and other related documents through the IRS Tax Exempt Organization Search.
Some organizations, such as churches, do not typically have to file a Form 990. But for most nonprofits, it’s important to understand your filing obligations and IRS due dates.
The filing deadline for your Form 990 is the 15th day of the fifth month after your fiscal year ends. For example, if your fiscal year ends on December 31st, your Form 990 is due by May 15th.
What if you can’t meet that deadline? You can request a 6-month extension from the IRS by filing Form 8868: Application for Extension of Time to File an Exempt Organization Return. The extension request needs to be submitted before the original deadline for your Form 990. If your request is granted, you will have 6 more months to file your Form 990. For example, if your original due date was May 15th, your extended due date would be November 15th. (Note: If your nonprofit is filing Form 990-N – an electronic “postcard” form for very small organizations – you cannot request an extension, but there are no penalties for late filing.)
If you fail to file your Form 990 on time, your organization may be on the hook for significant late fees and penalties – up to $12,000 for smaller organizations or $60,000 for large organizations. In addition, if you fail to file your Form 990 for three consecutive years, you will automatically lose your tax-exempt status.
With so much at stake, it is critical to understand your 990 filing obligations, due dates, and the process for requesting an extension. If you need assistance with Form 990 preparation, complete this short questionnaire to receive a free quote from Altruic Advisors.