Form 990

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Form 990, 2015

Form 990 (officially, the "Return of Organization Exempt From Income Tax"[1]) is a United States Internal Revenue Service form that provides the public with financial information about a nonprofit organization. It is often the only source of such information. It is also used by government agencies to prevent organizations from abusing their tax-exempt status. Certain nonprofits have more comprehensive reporting requirements, such as hospitals and other health care organizations (Schedule H).

Variants[edit]

Form 990-EZ[edit]

There is a variant of Form 990 called Form 990-EZ ("Short Form Return of Organization Exempt From Income Tax"). This form can be used instead of Form 990 for organizations with gross receipts less than $200,000 and total assets less than $500,000 (there are some exceptions).[2]

Form 990-N[edit]

Small organizations whose annual gross receipts are "normally $50,000 or less" must file the electronic Form 990-N (officially, "Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990EZ"). There is no paper form for 990-N, but it is possible to file instead Form 990 or Form 990-EZ.[3]

Form 990-PF[edit]

Form 990-PF is filed by private foundations in the US. It includes fiscal information and a complete list of grants, among other information. The form is due to the IRS 4.5 months after the end of the foundation's fiscal year.[4]

Schedules[edit]

In addition to Form 990, tax-exempt organizations are also subject to a variety of disclosure and compliance requirements through various schedules which are attached to Form 990 (and, in some cases, 990-EZ or 990-PF). Filing of schedules by organizations supplements, enhances, and further clarifies disclosures and compliance reporting made in Form 990. Often, filing of schedules is mandatory, but there are situations where organizations not otherwise subject to filing requirements may consider completing certain schedules despite not being technically obligated to.

Type Name Number of pages[5] Can be filed with Form 990-EZ?[5]
Schedule A Public Charity Status and Public Support 4 Yes
Schedule B Schedule of Contributors 8 Yes
Schedule C Political Campaign and Lobbying Activities 4 Yes
Schedule D Supplemental Financial Statements 5 No
Schedule E Schools 1 Yes
Schedule F Statement of Activities Outside the United States 4 No
Schedule G Supplemental Information Regarding Fundraising or Gaming Activities 3 Yes
Schedule H Hospitals 4 No
Schedule I Grants and Other Assistance to Organizations, Governments, and Individuals in the United States 2 No
Schedule J Compensation Information 3 No
Schedule K Supplemental Information on Tax-Exempt Bonds 2 No
Schedule L Transactions With Interested Persons 1 Yes
Schedule M Noncash Contributions 2 No
Schedule N Liquidation, Termination, Dissolution, or Significant Disposition of Assets 3 Yes
Schedule O Supplemental Information to Form 990 2 No
Schedule R Related Organizations and Unrelated Partnerships 4 No

Filing requirements[edit]

Form 990 is due on the 15th of the 5th month after the fiscal year, with up to 6 months of extensions.[6]

The Form 990 disclosures do not require but strongly encourage nonprofit boards to adopt a variety of board policies regarding governance practices. These suggestions go beyond Sarbanes-Oxley requirements for nonprofits to adopt whistleblower and document retention policies. The IRS has indicated they will use the Form 990 as an enforcement tool, particularly regarding executive compensation. For example, nonprofits that adopt specific procedures regarding executive compensation are offered safe harbor from excessive compensation rules under section 4958 of the Internal Revenue Code and Treasury Regulation section 53.4958-6.[7]

Fiduciary reporting[edit]

According to section 1223(b) of the Pension Protection Act of 2006, a nonprofit organization that does not file annual returns or notices for three consecutive years will have its tax-exempt status revoked as of the due date of the third return or notice.[8] An organization's tax-exempt status may be reinstated if it can show reasonable cause for the years of nonfiling.[9]

Who must file?[edit]

Form 990 is to be filed by tax-exempt organizations under section 501(a). This includes organizations in section 501(c)(3) (excluding private foundations) and most organizations in other subsections of 501(c).[10] Tax-exempt organizations with annual gross receipts of $200,000 or more or assets of $500,000 or more must file Form 990.[5] Churches (including houses of worship such as synagogues and mosques) and their integrated auxiliaries, associations of churches, and any religious order that engages exclusively in religious activity are not required to file.[11]

Filing modalities[edit]

The Form 990 may be filed with the IRS by mail or electronically with an Authorized IRS e-file Provider.

Penalties[edit]

There is a penalty of $20 per day until the form is filed (capped at the minimum of $1000 and 5% of the gross receipts of the organization for that year). If the gross receipts are more than $1 million, the penalty is increased to $100 per day (capped at $50,000). The penalty for failure to provide to the public is $20 per day.[12] There are other penalties for e.g. omitting information.[13]:229

In 1998, over $10 million was collected by the IRS for penalties on over 9000 forms.[13]:229

Public inspection regulations[edit]

Public Inspection IRC 6104(d) regulations state that an organization must provide copies of its three most recent Forms 990 to anyone who requests them, whether in person, by mail, fax, or e-mail. Additionally, requests may be made via the IRS using Form 4506-A, and PDF copies can often be found online as noted below.

  • Citizen Audit[14] provides PDF copies of annual returns, signatures not blacked out.
  • Economic Research Institute[15] provides PDF copies of annual returns, signatures not blacked out.
  • Foundation Center[16] IRS Form 990 lookup tool; provides PDF copies of annual returns, signatures blacked out.
  • Guidestar[17] IRS Form 990's and other information for selection of nonprofits, free and fee based
  • NCCS[18] IRS Form 990 search tool and nonprofit organization profiles, signatures blacked out.
  • BoardSource Governance requirements[19] in 990.

History[edit]

Form 990 was first used for the tax year ending in 1941. It was as a two-page form.[13] Organizations were also required to include a schedule with the names and addresses of payees who had given the organization at least $4,000 during the year.[20]

The form reached four pages (including instructions) in 1947. In 1976 this was increased to 5.5 pages (including instructions), with 8 pages for Schedule A. By 2000 this was 6 pages for Form 990, 42 pages for instructions, 6 pages for Schedule A, and at least 2 pages for Schedule B. This increase is due to use of a larger font and inclusion of sections that are only required for some organizations.[13]

Starting in 2000, political organizations were required to file Form 990.[13]

In June 2007, the IRS released a new Form 990 that requires significant disclosures on corporate governance and boards of directors. These new disclosures are required for all nonprofit filers for the 2009 tax year, with more significant reporting requirements for nonprofits with over $1 million in revenues or $2.5 million in assets.

In 2010, the minimum threshold of when an organization is required to file Form 990 was increased: the minimum annual gross receipts was increased from $100,000 to $200,000 and the minimum assets was increased from $250,000 to $500,000.[5]

With the availability of the internet, access to the Form 990 of an organization has also become easier. Originally Form 990 had to be requested through the IRS. This was changed to allow access to the form directly through the organization, although in some cases organizations refused to provide access.[13]

Use by charity evaluation organizations[edit]

Charity Navigator uses IRS Forms 990[21] to rate charities.

Meanwhile Holden Karnofsky of the nonprofit charity evaluator GiveWell has criticized Form 990 for not providing sufficient information about what a charity does or where it operates.[22] However GiveWell does still use Form 990 to answer some questions when investigating charities.[23]

There was a website called Quality 990 that advocated for higher quality Form 990s.[24]

See also[edit]

References[edit]

  1. ^ "Return of Organization Exempt From Income Tax" (PDF). Internal Revenue Service. Retrieved January 28, 2016. 
  2. ^ "Instructions for Form 990-EZ" (PDF). Internal Revenue Service. 2015. Retrieved February 3, 2016. 
  3. ^ "Annual Electronic Filing Requirement for Small Exempt Organizations — Form 990-N (e-Postcard)". Internal Revenue Service. Retrieved February 2, 2016. 
  4. ^ "Demystifying the 990-PF". Foundation Center. Retrieved February 3, 2016. 
  5. ^ a b c d Grace Allison. "The New Form 990 for Tax-Exempt Organizations: Revolution in Progress". 2010. Estate planning. Vol. 37. Issue 3. pg 14–20.
  6. ^ "Annual exempt organization return: Due date". IRS. Retrieved 2014-05-17. 
  7. ^ IRS (2008-02-04). "Governance and Related Topics - 501(c)(3) Organizations" (PDF). Online.irs.gov. Retrieved 2009-06-05. 
  8. ^ "Pension Protection Act of 2006, Section 1223(b)". Government Printing Office. August 17, 2006. 
  9. ^ "Notice 2011-43: Transitional Relief Under Internal Revenue Code § 6033(j) for Small Organizations". Internal Revenue Bulletin: 2011-25. Internal Revenue Service. June 20, 2011. 
  10. ^ "Instructions for Form 990 Return of Organization Exempt From Income Tax" (PDF). Internal Revenue Service. 2015. Retrieved February 3, 2016. 
  11. ^ 26 U.S. Code § 6033 - Returns by exempt organizations, Section (3)
  12. ^ "Penalties for Failing to Make Forms 990 Publicly Available". IRS. Retrieved 2014-05-17. 
  13. ^ a b c d e f Cheryl Chasin, Debra Kawecki and David Jones (2002). "G. Form 990" (PDF). Internal Revenue Service. Archived from the original (PDF) on July 2, 2015. Retrieved January 29, 2016. 
  14. ^ "Nonprofit Form 990 Search". Citizen Audit. Retrieved 2014-05-18. 
  15. ^ "Nonprofit Organization Information". Economic Research Institute. Retrieved 2014-05-17. 
  16. ^ http://tfcny.fdncenter.org/990s/990search/esearch.php
  17. ^ "guidestar.org". guidestar.org. 2014-03-06. Retrieved 2014-04-23. 
  18. ^ "nccs.urban.org". nccs.urban.org. 2008-07-15. Retrieved 2014-04-23. 
  19. ^ "Learning Center and Store". BoardSource. Retrieved 2014-03-17. 
  20. ^ "More Income Tax Data: Most Exempt Concerns Must File Information Return". The New York Times. March 24, 1942. p. 34.
  21. ^ "FAQ for Donors". Charity Navigator. Retrieved 2014-04-23. 
  22. ^ Karnofsky, Holden (May 23, 2007). "Don't talk to me about the Form 990". The GiveWell Blog. Retrieved January 28, 2016. 
  23. ^ "Guide to GiveWell's financial metrics". GiveWell. Retrieved January 28, 2016. 
  24. ^ "Background for Quality 990 Efforts". Archived from the original on May 15, 2008. Retrieved January 29, 2016.