IR 2018-117, May 2018
IRS has issued a Fact Sheet and a News Release reminding tax-exempt organizations to file their annual information returns (Form 990, Return of Organization Exempt From Income Tax) by May 15, 2018, or risk having their federal tax-exempt status revoked. IRS also cautioned tax-exempts not to include Social Security numbers (SSNs) or other unneeded personal information on their Form 990 and to file electronically when possible.
What to File
Which annual return a tax-exempt organization needs to file generally depends on its gross receipts, total assets, or the type of organization it is. For example:
- An organization with annual gross receipts of $200,000 or more, or total assets of $500,000 or more at the end of the tax year, must file Form 990, Return of Organization Exempt from Income Tax.
- An organization with annual gross receipts of less than $200,000 and total assets of less than $500,000 at the end of the tax year may file Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, instead of Form 990.
- Organizations that normally have $50,000 or less in annual gross receipts must file either Form 990-N (e-Postcard), or can choose to file Form 990 or Form 990-EZ instead. Organizations must file Form 990-N electronically. Supporting organizations can’t file Form 990-N.
- All private foundations file Form 990-PF.
Some organizations have other filing requirements (e.g., employee benefits trusts use Form 5500, and religious and apostolic organizations use Form 1065), and certain church-affiliated, governmental and political organizations don’t have an annual filing requirement.
How to File
All organizations may file electronically, but those that file at least 250 returns of any type (including information returns, such as Forms W-2 and 1099, and income, employment and excise tax returns) during the year and have total assets of $10 million or more at the end of the tax year must file electronically. Unless reporting a name change, an organization with an electronic filing requirement that files a paper return won’t satisfy its filing requirement. Organizations can use Form 8868 to request an automatic six-month extension of time to file any Form 990-series return, except Form 990-N.
Failure-to-file Penalties and Revocation Risk
IRS cautions that unless the organization shows reasonable cause for filing late, IRS can charge a penalty of $20 a day, up to the lesser of $10,000 or 5% of the organization’s gross receipts for the year. The penalty increases to $100 per day, up to $51,000, for an organization whose gross receipts exceed $1,028,500. Additionally, an organization that doesn’t file a required annual return or notice for three consecutive years will automatically lose its tax-exempt status. Automatically revoked organizations may need to file income tax returns and pay income tax. Organizations can apply for reinstatement of their tax-exempt status and pay the proper user fee.
Other Filing Pointers
IRS warns that it generally doesn’t ask organizations for SSNs, and the Form Instructions caution filers not to provide them on the form. By law, both IRS and most tax-exempt organizations are required to publicly disclose most parts of form filings, including schedules and attachments. IRS also urges tax-exempt organizations to file forms electronically to reduce the risk of inadvertently including SSNs or other unnecessary personal information.
IRS notes that it publishes the names of organizations identified as having automatically lost their tax-exempt status for failing to file annual reports for three consecutive years. Organizations that have had their exemptions automatically revoked and wish to have that status reinstated must file an application for exemption and pay the appropriate user fee.
IRS also offers an online search tool, called Exempt Organizations Select Check, to help users more easily find key information about the federal tax status and filings of certain tax-exempt organizations, including whether organizations have had their federal tax exemptions automatically revoked.
References: For tax-exempt organization’s annual return Form 990, see FTC 2d/FIN ¶ S-2801; United States Tax Reporter ¶ 60,334.