“Tax season” is a term that most of us are familiar with and things are certainly getting into full swing at tax firms across the country. Typically, people think of Forms 1040, 1120 and 1065 at this time of year. There is however, another very important form that non-profit organizations (NPO) need to file, which is IRS Form 990 – Return of Organization Exempt from Income Tax. Unlike individuals, NPO’s have varying year ends which keep CPA firms busy year-round.
Form 990 presents the organization’s financial picture for the year. In addition, it provides information on governance, compliance with other tax filings, specific information on programs and overall general operations. In short, it is a one-stop shop for users to learn about an organization. Consequently, it’s important for the NPO to complete the return accurately and of course timely.
There are 16 schedules to the 990 that a nonprofit organization needs to be aware of. Management, along with assistance from the auditor/accountant, should go through the “Checklists of Required Schedules” on pages 3 and 4 of the 990 to determine which schedules pertain to them and that will in fact need to be filed. The following are some of the more common schedules required: Schedule A – Public Charity Status and Public Support, Schedule B – Schedule of Contributors, Schedule D – Supplemental Financial Statements, Schedule G – Supplemental Information Regarding Fundraising or Gaming Activities, Schedule J – Compensation Information, Schedule L – Transactions with Interested Persons and Schedule O – Supplemental Information to Form 990.
For nonprofits with gross receipts of less than $200,000 and total assets at the end of the year of less than $500,000, the Form 990-EZ should be filed. Smaller tax-exempt organizations who’s annual gross receipts are normally $50,000 or less can comply with their annual reporting requirement by electronically submitting Form 990-N (e-Postcard). The due date for the Form 990 series is the 15th day of the 5th month following the year-end. For NPOs with a December 2016 year-end, the initial due date is May 15th.
Form 990 is not only an IRS compliance requirement, but more importantly it is a way for the NPO to educate potential donors and board members, tell their story, explain their mission and market their organization and programs. It can be a key tool in an organization’s fundraising and marketing efforts.
About the Author: Danielle D. Martin, CPA is a Senior Audit Manager at PFBF CPAs with 24 years of experience in the accounting world. She can be reached at firstname.lastname@example.org or 873-1603.