And yet, every year, you—along with millions of other non-profit organizations—will spend more time than you’d prefer filing the IRS Form 990.
As the organization’s treasurer, those are precious hours that would be better spent…
- Seeking new opportunities for donations
- Improving the cost-efficiency of your programming
- Developing your membership intake and retention practices
…but, like it or not, the IRS form 990 is a document most nonprofits must file if you want to retain your tax-exemption status—and as you’re likely aware, the IRS isn’t known for its simplicity or brevity.
Filing can be a taxing experience (pun intended), requiring the average individual to sift through a sizeable compendium of guidelines, if/then statements, and pages upon pages of financial bureaucracy just to figure out their next steps.
And if a significant mistake is made in the filing, you’ll get the 3 Rs:
Your application will be rejected and returned for resubmission.
That means if you want to file quickly, file correctly, and most importantly, file once, you’ll need a few good tips to get the ball rolling before May 15th.
5. Keep detailed and accurate records
When you’re filing the IRS Form 990, it helps to have clear and accurate records.
Because unlike traditional tax form submissions, the IRS Form 990 is meant for 501c3 non-profits, meaning that the tax-exempt filings are public and used as a resource for potential donors. These donors will use the IRS Form 990 to determine whether or not an organization is fit to receive a donation based on the details of the organization’s public filings.
For example, donors vetting non-profits are known to heavily scrutinize a non-profit organization based on their programming budgets and expenses, a complete list of your current board members, and their salaries—all information required on the IRS Form 990.
So, keep accurate records of both the structure of your organization as well as your finances, it’ll save you a serious headache when the time comes to file.
And on the subject of filing…
4. Determine which form you need to file
There are three versions of the IRS Form 990. These include the Form 990-N, Form 990-EZ, and Form 990, and determining which form to file depends entirely on the size and gross receipts of your organization.
Here’s how it breaks down:
- Filed by organizations with gross receipts less than or equal to $50,000
- Must be filed digitally.
- Filed by organizations with gross receipts less than $200,000 and total assets less than $500,000.
- Can be filed physically or digitally.
- Filed by organizations with gross receipts more than or equal to $200,000 or total assets more than or equal to $500,000.
- Can be filed physically or digitally.
So, take a moment to examine your financial records and learn what version of the IRS Form 990 you have to file. Doing this will allow you to prepare the exact—and only—documents you need when it’s time to file.
3. Get full and early cooperation from leadership
Even as the organization’s treasurer or finance officer, you’ll need to get full buy-in from your leadership.
This means founders, presidents, directors, or other executive positions may need to provide signatures or other information during the filing process.
In order to smooth this process and spare yourself from future delays, reach out to your executive leadership early and often.
We recommend setting a short meeting at the end of the fiscal year, giving advance notice on your organization’s impending filing preparation. Remember, from the end of your accounting period, you’ve got five months to file the IRS Form 990.
So, use the first of these five months to call your leadership to attention, gain their early cooperation, and start collecting your necessary filing materials.
2. Double check all necessary filing materials
Earlier, we mentioned that a failure to comply with the detailed instructions of the IRS Form 990 would result in a rejection of your application and a return-to-sender for resubmission.
We weren’t kidding.
The IRS requires a myriad of information and necessary filing materials, which must be thoroughly and accurately provided if you want to achieve or retain tax-exempt status for your organization.
And one missing or incomplete section and your application can be returned in Letter2695C Returning Form 990 due to Missing Information and require you to resubmit a corrected filing to avoid penalties and a loss of tax-exemption status.
So, what information do you need to give when filing?
There are more than 12 sections of the IRS Form 990 (the longest of three forms), and each section is thorough in its specificity of information.
For example, take a look at section IV on the topic of schedules.
Schedules are a series of “yes/no” qualifying questions that the IRS uses to determine the makeup of your organization and whether or not you’ll need to file additional supplemental forms to complete your application.
There are 38 of them.
And answering yes to any one of them can result in an all-new form to submit with your filing, so pay very special attention to every detail asked for on the IRS Form 990.
Leverage the accurate records you’ve been keeping to answer any question in the application as thoroughly as possible. Always err on the side of providing more information than necessary as opposed to withholding..
Remember, do not give identifying information in these documents. As the IRS Form 990 is a public document, any personal information will be visible, so leave out your social security number and home address to protect your privacy.
1. Consider working with a professional
Take a look at this form again, because it bears repeating:
The IRS 990 Form is complicated.
And when the stakes are as high as a rejection of your application that can result in a delayed application, penalty fees, or worse, an outright loss of your tax-exempt status, it’s best not to play around.
In the interest of saving time, you may want to consider outsourcing the responsibility of filing to an IRS-authorized third party.
At File990 we can do this all for you.
Although tax-exempt filing time only comes around once a year, it can be a painful experience for non-profit organizations with variable expenses, donation dollars, and a shifting organizational structure (i.e. every nonprofit in America).
If you want to save time, money, and gain the confidence that the most important annual filing for your organization is taken care of and done correctly, work with a professional.
Are you dreading your IRS Form 990 filing and want an easier solution?
Click here to contact us directly.