While tax season is over for many taxpayers (except those of us still on extension), tax-exempt organizations still have to file. The filing deadline for many tax-exempt organizations is May 15, 2024.
Deadline
Information returns for tax-exempt organizations are ordinarily due on the 15th day of the fifth month after the close of the tax year. If the due date falls on a Saturday, Sunday, or legal holiday, it is the next business day—that’s not the case in 2024, so 2023 returns for calendar-year tax-exempt organizations are due on May 15, 2024.
The filing requirements for a tax-exempt organization generally start with the tax year in which it was legally formed. When an organization applies for an EIN, the IRS considers it legally formed, and a filing requirement is established.
Filing Requirements
A filing requirement used to apply only to organizations that brought in a lot of donations or held significant assets. However, that changed with the Pension Protection Act of 2006, which made it mandatory for most tax-exempt organizations—including small ones—to file an annual information return with the IRS.
If your organization is exempt from filing, you will typically receive a ruling or determination letter from the IRS stating that there is no annual filing requirement. For a list of organizations—typically churches or church-affiliated organizations—that are not required to file a return or notice, click here.
E-Postcard
Small tax-exempt organizations with average annual receipts of $50,000 or less can file a Form 990-N, e-Postcard. If you want to skip the e-Postcard, you can submit a longer form 990 or 990-EZ, but you must complete the entire form.
The e-Postcard only takes a few moments to fill out and requires just a few pieces of information:
- Name of the organization, including any alternative names;
- The mailing address for the organization;
- The organization’s Employer Identification Number (EIN);
- Tax year;
- Name and address of a principal officer;
- The website address for the organization, if any;
- Confirmation that the organization’s annual gross receipts are $50,000 or less; and
- Confirmation that the organization has terminated or is going out of business, if applicable.
Filing the e-Postcard is free, but you can only access the Form 990-N Electronic Filing system by signing in or creating an account with Login.gov or ID.me (there is no paper version). If you haven’t completed an e-Postcard before, you’ll need to register online before you can proceed. If you registered last year, just log into the site using your existing user ID. If you’re still not sure how to proceed, the IRS created a reference guide.
Other Tax-Exempt Organizations
For all other tax-exempt organizations, the filing requirements are as follows:
- For tax-exempt organizations with annual gross receipts of less than $200,000 and total assets of less than $500,000, file form 990-EZ.
- For tax-exempt organizations with annual gross receipts of $200,000 or more or total assets of $500,000 or more, file form 990.
- Organizations classed as private foundations must file a form 990-PF regardless of assets or receipts.
Beginning in 2020, the Taxpayer First Act, tax-exempt organizations were required to file Form 990, Return of Organization Exempt from Income Tax, Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation, Form 8872, Political Organization Report of Contributions and Expenditures and Form 1065, U.S. Return of Partnership Income (if filed by a Section 501(d) apostolic organization) electronically, unless they meet an exception.
Extensions & Other Info
If you need more time to file Form 990, you can request a six-month extension. Simply file Form 8868, Application for Extension of Time to File an Exempt Organization Return, on or before the due date. There is no extension available for Form 990-N (e-Postcard), but there is also no penalty for filing it late.
It’s also important to note that parts of forms in the 990 series will be available for public inspection. Some information on Form 990-N is also available to the public via the Tax Exempt Organization Search (TEOS) tool on the IRS website. Some Forms 990, 990-EZ, and 990-PF are also available online using TEOS, and more will be added as they are filed. That means you should not include Social Security Numbers (SSNs) of officers, donors, clients, or other individuals on the series 990 forms for privacy reasons.
Finally, even though there’s no tax due for most tax-exempt organizations, be sure to file a complete or accurate return. If the return is incomplete or you use the wrong form for the organization, the IRS will send it back. According to the IRS, the most common errors on Form 990 series returns are missing or incomplete schedules.
While no tax is generally due, penalties for failure to file may apply. Under section 6652(c)(1)(A), a penalty of $20 per day, not to exceed the lesser of $12,000 or 5% of the organization’s gross receipts for the year, can be charged when a return is filed late unless the organization can show that the late filing was due to reasonable cause. Organizations with annual gross receipts exceeding $1,208,500 are subject to a penalty of $120 for each day failure continues, with a maximum penalty for any one return of $60,000. The penalty applies on each day after the due date that the return isn’t filed. (Responsible parties may also be on the hook for penalties.)
Worse, failure to file for three consecutive years will result in an automatic loss of tax-exempt status. If that happens, the organization will not be eligible to receive tax-deductible contributions. There is no appeal process: The organization will have to file for reinstatement, even if it was not initially required to apply for an exemption. In other words, be sure to file since reinstatement can be time-consuming and expensive.
(However, it’s worth noting that an organization possessing documentation like an IRS receipt for a filed return that shows it has not failed to file for three consecutive years should contact IRS. You can send the documentation directly to the Exempt Organizations Account Unit (by mail: Internal Revenue Service 1973 North Rulon White Blvd. M/S 6552 Ogden, UT 84404, or by fax: 855-247-6123).
Read the full article here
