With tax season upon us, what better time than now to review annual filing requirements for tax-exempt organizations, as well as to avoid penalties and revocation of their tax-exempt status.
Federal filings
Most tax-exempt organizations must file one of the Form 990–series annual returns with the IRS by the 15th day of the 5th month after the end of the organization’s accounting period. So, if an organization’s fiscal year ends on December 31, its annual filing is due on or before May 15. Absent reasonable cause, the IRS will impose penalties for failure to timely, completely, or accurately file its annual returns. Failure to file a Form 990 return for three (3) consecutive years will result in the automatic revocation of an organization's tax-exempt status.
Which 990-series return an organization must file generally depends on its private foundation/public charity status as well as its financial activity. All private foundations must file a Form 990-PF, regardless of assets or revenues. Public charities file as follows:
- Form 990-N: Gross receipts less than or equal to $50,000
- Form 990-EZ: Gross receipts less than $200,000 and with total assets that are less than $500,000
- Form 990: Gross receipts greater than or equal to $200,000 or total assets greater than or equal to $500,000
Specific organizations are exempt from filing a Form 990–series annual return. Some exemptions are automatic; the IRS must confirm others. For example, organizations tax-exempt under Code Section 501(c)(1)—U.S. governmental instrumentalities and 501(c)(20) group legal services plans—are automatically exempt from filing. In addition, certain types of public charities are also exempt from filing. For example, churches classified as public charities under Code Section 170(b)(1)(A)(i) are exempt from filing, while certain integrated auxiliaries of churches and church-affiliated organizations are exempt upon confirmation from the IRS.
Regardless of the size of an organization, it is important to keep in mind that annual 990 filings must be made readily available to the general public upon request and at the IRS Tax Exempt Organization Search, as well as other websites, such as Candid/Guidestar. Therefore, it is important that these filings are complete and accurate in the case of an eventual audit by the IRS, but also to ensure they are not reporting misinformation to the public.
State filings
Many states have their own statutory requirements for charitable/nonprofit organizations. These filings are separate and distinct from the organization’s filing with the IRS or a state’s corporate filings upon formation or periodically thereafter. For instance, in New York, organizations that have charitable assets in New York or solicit charitable contributions in New York State need to register with the New York State Attorney General Charities Bureau and file an annual CHAR500. A copy of the organization's IRS Form 990–series return is generally also included with this filing; accountant-reviewed or audited financials may also be required.
There are several exemptions from registration as well as annual filings. In New York, exemptions include religious organizations and affiliates, educational institutions that file annual reports with the New York Department of Education, government agencies, and hospitals. We recommend conferring with a trusted attorney or accountant to ensure you comply with individual state charitable registration and reporting requirements.