All About the 990 Unlocking Its Mysteries and Its Power.pdf

All About the 990:
Unlocking Its Mysteries
and Its Power
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Agenda
 Who must file
 Which form to file
 Reading the 990
 What the IRS is looking for
 What funders look for
 Penalties for not timely filing
 Reinstating your Tax-Exempt Status
 Where to go for more info….

Which
NonProfits
must file
with the IRS

Who Must File …….
EXEMPT
UNDER IRC
CODE
501(a)
NOT AN
EXCLUDED
ENTITY
MUST FILE
WITH IRS
ANNUALLY!

WHAT IS 501(a)?
EXEMPT
UNDER IRC
CODE
501(a)
• Section of the Internal Revenue
Code(IRC) that exempts certain
org.’s from tax
• These Org’s are listed in IRC subsections -
• 501(c)(3): Charities, religious, educational, scientific, and
literary organizations
• 501(c)(4): Social welfare organizations
• 501(c)(6): Business Leagues, chambers of commerce
• 501(c)(7): Social and recreational clubs
• Others…….

How do you know which one you
are?
• Look at your original Tax-Exempt Determination
Letter
• Pull it from your records
–or-
• Search on this website:
https://apps.irs.gov/app/eos/

Example of Determination Letter

Excluded Entities…..
• Certain Religious Organizations
• Church (Mosque, Synagogue, etc…)
• Interchurch Org of local units
• Integrated Auxiliary of a church (1.6033-2(h))
• Church affiliated org maintaining retirement funds
• Church affiliated school/religious order
(1.6033.2(g)(1)(vii)
• School affiliated (k-12)
• Church affiliated mission society
• Certain Governmental Organizations
• Certain Political Organizations
THESE ORGANIZATIONS DO NOT HAVE TO FILE

What to File
with the IRS

3 possible IRS forms
• Gross Receipts < $50,000
• Also called “e-postcard”
990-N
• Gross Receipts $50,001 - $199,999
-and-
• Total Assets < 500,000
990-EZ
• Gross Receipts > $200,000
-or-
• Total Assets > $500,000
990
Gross Receipts = Average of last 3 years
Simple:
Just a few
questions
on-line
990EZ –
Summary
(Includes
back
schedules)
990 – More
Detailed
(Includes
back
schedules)

Which one would I file…
Gregg’s Advice…….
• File the 990-N if you can
• After you reach the over $50,000
threshold….
• Just file a 990 (Skip over the 990EZ)
• It’s not that much more prep
• Same back schedules included
• Looks MUCH better to funders

To file the 990n (e-postcard)
To complete Form 990-N, you'll need to provide the following details:
• Organization's Legal Name: As it appears in your organizing documents.
• Any Other Names Used: Such as "Doing Business As" (DBA) names.
• Mailing Address: The organization's current mailing address.
• Employer Identification Number (EIN): A unique 9-digit number assigned by the IRS.
• Website Address: If your organization has one.
• Name and Address of a Principal Officer: Typically, the president, vice president,
secretary, or treasurer.
• Tax Year: The organization's annual accounting period (calendar or fiscal year).
• Confirmation of Gross Receipts: Affirmation that your gross receipts are normally
$50,000 or less.
• Operational Status: Indicate whether the organization is still active or has terminated
To file Form 990-N, visit the IRS's e-Postcard filing system
https://sa.www4.irs.gov/sso/ial1?resumePath=%2Fas%2FcQVyawnM8D%2Fresume%2Fas%2Fauthorization.ping&allowInteraction=true&reauth=fal
se&connectionId=SADIPACLIENT&REF=BB07A139502B94D3882B376410941E49B12B2A64CAF085F40EFF0000007A&vnd_pi_requested_resource=http
s%3A%2F%2Fsa.www4.irs.gov%2Fepostcard%2F&vnd_pi_application_name=EPOSTCARD

Reading the
990 ….

Summary of the 990/990EZ &
Schedules
• 990/990EZ
• Schedule A – Public Support Test
• Schedule O – Supporting Verbeage
ALWAYS
REQUIRED
• Schedule B – Large Donors
• Schedule D – Extra info for Endow./Fixed Assets/DAF/Investments
• Schedule G – Special Events
USUALLY
INCLUDED
• Schedule C – lobbying/political activity
• Schedule J - >$150K paid to EE or Officer
• Schedule L – transactions w/insiders
• Schedule M – In-Kind Contributions
OTHER
COMMON
SCHEDULES
14/21
Pages
11-16
addl.
Pages
3-10
addl.
Pages
Average 990 is between 25 – 45 pages or more with worksheets

Let’s look

Who is Looking at your 990
• THE IRS
• FUNDERS

What is the IRS looking for
➢ Complying with Tax-Exempt Status
➢ Operating for Tax-Exempt Purpose (pg.1,line 1)(pg.2,line 4a,4b…)
➢ Not just distributing profits to private individuals (pg.7, section A.)
➢ Not engaging in prohibited activities
➢ EXCESSIVE lobbying (pg.3,line 4)(Schedule C)
➢ Political Campaigning (pg.3,line 3)(Schedule C)
➢ Monitor Financial Activity
➢ Improper Personal Benefit (pg.3,line 25a)(pg.6,line 5 & 15)(Schedule L)
➢ Unrelated business income (that is taxable) (pg.9,column c)
➢ General abuse
➢ Public Disclosure and Transparency
➢ 990’s are Public Records (IRS.gov and Guidestar.org)
➢ Promotes Trust and Accountability
➢ Entire Financials included (pg., 9,10 & 11)
➢ Revenue from lots of people/entities (Schedule A)

What does the Funder look at
• # Board members (pg.1 line 3)
• # Of volunteers (pg.1 line 6)
• Revenue less Expenses (pg.1 line 19)
• Positive Net Assets (pg.1 line 22)
• Program descriptions (pg.2 line 4a,b,c)
• Good policies (pg.6 lines 11-15)

What does the Funder look at
• Whose making $ (pg.7 section A)
• Diversified revenue (pg.9 Part VIII)
• Most Expenses for program (pg.10 Part IX)
• Lower Debt to Equity ratio (pg.11 lines X)
• Outside Accountant (pg.12 part XII Line 2)
• Public Support % (Schedule A pg.2 line 14/or pg.3,line 15)
• Major Contributors (Schedule B)

Penalties for
not filing
timely

When are the 990’s Due?
4 MONTHS & 15 DAYS AFTER YEAR END
DUE DATE 5-15
YEAR END
12-31
DUE DATE 8-15
YEAR END
3-31
DUE DATE 11-15
YEAR END
6-30
DUE DATE 2-15
the next year
YEAR END
9-30
YOU MAY EXTEND (FORM 4868) 6 MONTHS MORE
Extended
date
11-15
Extended
date
2-15 next yr
Extended
date
5-15 next yr
Extended
date
8-15 next yr

What are the penalties for
late filing….
$25 per
Day
Max = lesser
of $12,500 or
5% gross
receipts
Gross
Receipts
up to
$1,274,000
$125 per
Day
Max =
$63,500
Above
$1,274,000
The penalty can be
assessed on
incomplete returns as
well.

You can write a letter to get
the penalties waived …
Identify Penalty
Formally ask for Penalty Abatement
Why you did not file/extend
Explain the cause of error (assign blame)
Steps taken to ensure won’t happen again
“Paying will cause undue hardship”
Please and thank you!

Sample Penalty Abatement Letter

Reinstating
your Tax
Exempt
Status

If you don’t file for 3 consecutive
years…..
You Automatically lose your tax exempt status
There’s a process to reinstate….

years…..
4 actually…………

years…..
…………….choose one of these 4

years…..
……………….choose one of these 4
Months Revoked Form Process

years…..
1-15 months 990-N/990EZ Retroactive Reinstatement (Streamlined)

years…..
1-15 months 990 Retroactive Reinstatement (within 15 Months)

years…..
After 15 months All forms Retroactive Reinstatement (after 15 Months)

years…..
After 15 months All forms Retroactive Reinstatement (after 15 Months)
Doesn’t matter All forms Post-Mark Date Reinstatement

All 4 of the Reinstatement
Processes require
• Submit a new form 1023/1024 – Application for tax
exempt status
• Statement of reasonable cause –
• If retroactive and not streamlined
• File past due returns
• Pay a User Fee

More Info…

Links…..
• QuickBooks Training Webinar Series
https://quickbooksmadeeasy.com/event/fundamentals-3-day-series-may-2025-online-version/
• IRS Website to Look Up your Determination Letter
https://apps.irs.gov/app/eos/
• Reinstating your Tax-Exempt Status
https://www.irs.gov/charities-nonprofits/charitable-organizations/automatic-revocation-how-to
have-your-tax-exempt-status-reinstated
• (NEW) To get Discounted 990-N/990-EZ/990 filing
completed via TechSoup https://www.techsoup.org/

THANK YOU!!!!
Presenter: Gregg S. Bossen, CPA
@GreggBossen
Please Leave a Google Review!!
(we appreciate it):
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