Definition & Meaning
IRS Form 990 is an informational tax form used by tax-exempt organizations, non-exempt charitable trusts, and certain political organizations to provide the Internal Revenue Service (IRS) with annual financial information. This form is crucial for ensuring transparency and accountability within these organizations, as it details their income, expenditures, and overall financial health. By mandating the completion of Form 990, the IRS encourages compliance with applicable tax laws and promotes public transparency, which is essential for maintaining public trust in non-profit organizations.
How to Obtain the IRS Form 990
Organizations can obtain IRS Form 990 through several methods, ensuring accessibility and ease of use:
- IRS Website: The IRS website is the most direct source, offering downloadable PDF versions of Form 990 for various years.
- Tax Software: Many tax preparation software, including TurboTax and QuickBooks, provide access to IRS Form 990, simplifying the filing process by integrating it within their platforms.
- Professional Tax Consultants: Nonprofit organizations often work with tax professionals or accountants who can provide the form and offer guidance on its completion.
- Mail Request: Organizations can request a physical copy of the form by contacting the IRS directly, though this method may incur longer wait times due to postal delays.
Steps to Complete the IRS Form 990
Completing IRS Form 990 requires precision and accuracy to ensure compliance and transparency:
- Identification Information: Begin with the organization's name, Employer Identification Number (EIN), and mailing address.
- Financial Data: Include detailed income and expense reports, balance sheets, and statements of revenue.
- Program Services: Describe the organization's mission and significant activities undertaken during the year.
- Compliance Checks: Answer questions regarding organizational compliance with tax-exemption, governance, and fundraising activities.
- Schedules and Attachments: Complete any supplementary schedules or attachments that apply to your organization’s operations and activities.
- Review and Sign: After entering all necessary data, review for completeness and accuracy, then have an authorized representative sign the form.
Who Typically Uses the IRS Form 990
IRS Form 990 is typically used by:
- Nonprofit Organizations: Includes public charities and private foundations.
- Non-Exempt Charitable Trusts: Trusts not exempt from filing but dedicated to charitable activities.
- Political Organizations: Groups involved in influencing legislation or political campaigns. Certain small organizations with gross receipts normally at or below $50,000 have exceptions and may file Form 990-N (e-Postcard) instead.
Key Elements of the IRS Form 990
Understanding the key elements of Form 990 can aid in accurate and effective filing:
- Part I: Summary: Provides a snapshot of the organization’s financial and operational data.
- Part II: Signature Block: Confirms the declaration and accuracy of the information provided.
- Part III: Statement of Program Service Accomplishments: Details the major programs carried out and their outcomes.
- Part IV: Checklist of Required Schedules: Determines which supporting schedules must accompany the form.
- Part V: Statements Regarding Other IRS Filings and Tax Compliance: Ensures compliance with various IRS regulations.
Filing Deadlines / Important Dates
Timely submission of IRS Form 990 is crucial to avoid penalties:
- Regular Due Date: The form is due on the 15th day of the 5th month after the organization's accounting period ends. For example, organizations using a calendar year must file by May 15.
- Extension: Organizations can apply for a 6-month extension using IRS Form 8868, providing additional time to file without incurring late penalties.
Penalties for Non-Compliance
Non-compliance with IRS Form 990 filing requirements can result in substantial penalties:
- Monetary Fines: Failure to file can incur a daily penalty, escalating with the length of delay.
- Loss of Tax-Exempt Status: Persistently failing to file for three consecutive years results in automatic revocation of tax-exempt status.
- Public Disclosure: Non-compliance can damage an organization's reputation, as stakeholders may interpret missed filings as a lack of transparency.
Software Compatibility (TurboTax, QuickBooks, etc.)
Using the right software can streamline the filing process for IRS Form 990:
- TurboTax: Offers comprehensive support and guidance tailored to nonprofit filings.
- QuickBooks: Facilitates accurate financial tracking and reporting, essential for compiling necessary data for the form.
- Other Tax Software: Numerous platforms provide filing support specifically for Form 990, ensuring compliance through built-in checks and balances.
Disclosure Requirements
Form 990 requires comprehensive disclosures to enhance transparency:
- Compensation of Officers: Disclosure of compensation packages for key officers, directors, and trustees ensures accountability.
- Financial Transactions: Details of significant financial transactions with trustees or related parties.
- Contributions: Reporting of substantial contributions and grants received by the organization during the tax year.
Each of these blocks provides a comprehensive view of IRS Form 990, detailing the purpose, process, and importance of ensuring accurate and timely submission for eligible organizations.
