A Brighter Way
A Brighter Way
Volunteers run many small not-for-profit organizations. They get involved because they believe in the cause or they want to contribute something back to the community. Unfortunately, since the Internal Revenue Code is complex, many of these volunteers are not aware of the filing requirements for Form 990, an informational return for organizations exempt from income tax. Even if an organization has filed returns in the past, it’s easy to “drop the baton” in the transition from one volunteer treasurer to another.
In general, a tax-exempt organization whose annual gross receipts are normally more than $25,000 must file Form 990. There are some types of organizations (such as churches, church-affiliated organizations, state institutions and government units) that are specifically excluded from the filing requirements. You can find a complete list of organizations not required to file in General Instruction B for the Form 990.
Gross receipts are the total amount received from all sources during the year without subtracting any expenses. An organization’s gross receipts are considered normally to be $25,000 or less if the organization is:
Form 990 is due by the 15th day of the fifth month after the organization’s accounting period ends. Use Form 8868 to request an automatic 3 month extension of time to file. If you need additional time to file, an additional 3 months may be requested; however, you must show reasonable cause for the additional time requested. Form 990 is sent to:
Internal Revenue Service Center
Ogden, Utah 84201-0027
There can be penalties both against the organization and against the responsible person for failure to file or filing late returns!
The penalty against the organization is $20 per day up to the smaller of $10,000 or 5 percent of the year’s gross receipts.
The IRS will give the organization a fixed time to fulfill filing requirements. After that period expires, the person failing to comply will be charged a penalty of $10 per day up to $5,000.
Contact your Rea associate if you want to make sure an organization that you are serving is in compliance with the filing requirements.
This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, Aug. 2, 2006 issue.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.
