Definition and Meaning of the Form
The Form 990, specifically for the year 2017, is a tax document that must be filed by organizations exempt from income tax under several sections, including 501(c), 527, or 4947(a)(1) of the Internal Revenue Code. It serves to provide detailed information on the organization's mission, governance, and financial activities. The form ensures transparency by making the organization's records available to the public, thereby fostering accountability among tax-exempt entities.
How to Use the Form
To use the Form effectively, organizations must first gather comprehensive financial data. This involves collecting details of their revenue sources, expenditures, and any changes in their organizational structure or operations since their last filing. Once all necessary data is prepared, the form must be completed with accuracy to reflect the organization's activities correctly. It is essential to consult the IRS guidelines to ensure compliance with all reporting standards and to include any required disclosures specific to the organization’s operations and financial transactions.
Steps to Complete the Form
- Gather Financial Documents: Collect income statements, balance sheets, and records of expenses.
- Complete Part I: Summary: Provide a snapshot of the organization's financial and operational activities.
- Fill out Part II: Signature Block: Authorized personnel must sign, attesting to the accuracy of the information.
- Provide Detailed Financials in Part VIII: Include sources of revenue such as donations, investments, and other income.
- List Functional Expenses in Part IX: Detail expenditures related to programs, management, and fundraising.
- Disclose Compensation in Part VII: List compensation of officers, directors, and key employees.
- Review and Submit: Ensure all parts are complete, review for accuracy, and submit to the IRS by the specified deadline.
Key Elements of the Form
- Mission Statement: Explanation of the organization's purpose and goals.
- Governance and Management Policies: Information on governing practices and ethical guidelines.
- Financial Statements: Comprehensive details on revenues, expenses, assets, and liabilities.
- Compensation Information: Details of workers' wages, benefits, and any compensations to key individuals.
- Transaction Disclosures: Documentation of any substantial transactions or arrangements with external parties.
Important Terms Related to the Form
- 501(c)(3): A section of the Internal Revenue Code under which non-profit organizations are tax-exempt.
- Unrelated Business Income (UBI): Income from activities not related to an organization's exempt purpose, which may be taxable.
- Schedule A: Supplementary form providing additional information required for public charities.
- Functional Expenses: Expenses categorized by function, such as program services, management, and fundraising.
Filing Deadlines and Important Dates
The Form is generally due on the 15th day of the 5th month after the close of the organization's fiscal year. For a calendar year filer, this typically falls on May 15th. Extensions can be sought using Form 8868, granting an additional six months to file if approved.
IRS Guidelines and Requirements
The IRS provides specific guidelines that organizations must follow when preparing the 990 form. These regulations include maintaining accurate and complete financial records, adhering to public disclosure rules, and ensuring timely submission. It's crucial to review these guidelines annually as updates or changes may occur, impacting compliance requirements.
Penalties for Non-Compliance
Failing to file a complete and accurate 990 form by the designated deadline can result in penalties. Organizations may incur monetary fines, and persistent non-compliance could lead to the revocation of tax-exempt status. If inaccuracies are found, the IRS may require corrective measures or impose additional scrutiny on the organization’s future filings.
Software Compatibility for Preparing the Form
Software programs like TurboTax and QuickBooks can assist in preparing the form by streamlining data collection and ensuring compliance with IRS guidelines. These programs often offer step-by-step instructions and automatic error checks, making it easier to complete the form accurately. Compatibility with commonly used accounting software enhances efficiency and reduces the likelihood of errors in reporting.
