Good day, ladies and gentlemen, and welcome to the IRS webcast on file error-free forms,
form 990 series return. At this time it is my pleasure to turn the floor over to your host.
Welcome to this presentation, file error-free forms 990. We have a few announcements
before we get started. The information contained in this presentation is current as of the day
it was presented and shouldn't be considered official guidance. No identification with actual
persons, living or deceased, places, buildings and products is intended or should be inferred.
This program is being recorded and will be maintained under federal recordkeeping laws. Now
let's get started. Every year, most tax-exempt organizations must file a return in the
Form 990-series to satisfy their IRS filing requirement. The return, open to public inspection,
also shows how the organization continues to qualify for tax-exempt status. But sometimes
organizations submit returns that aren't complete or not correct for their type of organization.
When that happens, the IRS rejects the return and sends it back to the organization for
correction and refiling. Until the IRS accepts the return, the organization's filing
requirement remains unmet. This could result in penalties or other consequences. In the next
few minutes, I'll provide tips on how to ensure your organization is filing a correct, complete
Form 990-series return. You may wonder, especially if you are a new organization, how to
know your annual filing requirement. It's simple. After reviewing and approving your
application for exemption, we sent a letter recognizing your organization as tax exempt. We
call this your determination letter, and it's the first place to look for information about your
filing requirement. The top right section of this sample letter to a new 501(c)(3)
organization shows several informational items. One is whether your organization is required to
file a Form 990, 990 EZ, or 990 N. If this box is marked yes, you have an annual filing
requirement. Not all organizations have an annual filing requirement. If your
organization doesn't, this section will be marked "no," but note, if the determination letter
has a date before 2007, information about the filing requirement might not reflect the current
law. If your organization has a filing requirement, you must figure out which of those
form 990 returns your organization is eligible to file. If you file one you're not eligible to
use, it won't meet your filing requirement. We'll send the form back and ask you to submit the
right one. First, let's consider private foundations. Every private foundation
satisfies its filing requirement with Form 990-PF. This is true regardless of whether it has
revenues and regardless of its activities. Second, all other exempt organizations with a
filing requirement can satisfy their filing requirement by submitting a complete Form 990. Form
990 is the longest and most complex of the three forms I mentioned earlier, so if you're eligible
to file one of the other two, you might consider doing so. You are eligible to file Form 990-EZ
if for the year you are filing your gross receipts are less than $2,000 and your total assets at
the end of the year are less than $500,000. Form 990-EZ is shorter and simpler than Form 990,
but if your organization exceeds either of those thresholds, you must file Form 990.
Form 990-N, which we also call the e-postcard is just an annual gross receipts test. Your
organization's annual gross receipts must normally be $50,000 or less to file Form 990-N. Form
990-N is formally known as a notice, rather than a return, but it still satisfies your filing
requirement if your organization is eligible to file it.
And note, a supporting organization can't file a Form 990-N. A supporting organization is a
type of a charity that carries out its exempt purposes by supporting other exempt organizations,
usually other public charities, and it must file a Form 990 or a 990-EZ. By the way,
gross receipts are defined as the total amounts an organization received from all resources
during its annual tax year, without subtracting any costs or expenses. And be careful not to
incorrectly deduct amounts when determining your gross receipts. For example, if you brought in
$50,000 from a special fundraiser but incurred $10,000 in expenses in putting the fundraiser on,
you would still count the entire $50,000 as part of your gross receipts, not just the $40,000
net revenue from the event. For details on how to figure your organization's gross receipts,
see appendix B of the instructions for Form 990. So you've taken a look at your
organization's determination letter and figured out which Form 990 series return you can file.
What are some other items you need to watch out for to help make sure you're filing a complete
return that the IRS will accept? If you're filing a paper return, make sure the return is
properly signed. It must be signed by the current president, vice president, treasurer,
assistant treasurer, chief accounting officer, or other corporate officer, such as a tax
officer, who is authorized to sign as of the date the return is filed. If you pay a tax
practitioner to prepare your return, the practitioner will sign it as well, but that doesn't
substitute for the signature of one of the officers I just listed. Another big reason
the IRS rejects and sends back returns is missing schedules. All 501(c)(3) organizations that
file either a Form 990 or 990-EZ must submit a schedule A, public charity status and public
support to report its public charity status and show its public support. If you're a small
501(c)(3) organization filing a Form 990-N, you don't have to file a schedule A.
Another common missing item is schedule B, schedule of contributors. The general rule for
schedule B states that an organization filing Form 990, 990-EZ, or 990-PF that received during
the year contributions totaling $5,000 or more in money or property from any one contributor
must file schedule B. However, three special rules augment the general rule, so take a look at
the instructions to determine whether your organization needs to file schedule B.
501(c)(3) organizations must provide the names and addresses of contributors on schedule
B. However, those names and addresses aren't required to be made available for public
inspection, except for private foundations. Section 527, political organizations, must also
make all schedule B information available for public inspection. Other organizations required
to file schedule B should omit the names and addresses of their contributors. However, other
information requested for schedule B should be provided. If you file Form 990, you'll
also need to file schedule O, supplemental information. All Form 990 filers must provide
additional information on schedule O for two Form 990 entries, part 6, lines 11A and 19. You
may use schedule O to explain other items as well, but you're required to use it for at least
these two entries. If you file Form 990 without a schedule O, your return is considered
incomplete. Form 990-EZ filers may use schedule O to provide additional information if they
wish, but it is not required. Form 990 part 5, statements regarding other IRS filings and tax
compliance can help you make sure you have completed all of the schedules needed for your
organization. If you answer a question in part 5 �yes�, also complete the schedule the question
refers to. Parts 5 and 6 of Form 990-EZ also have prompts to remind you to file certain
schedules. If you're filing a Form 990 or 990-EZ, make an entry, including zero when
appropriate, on all lines requiring an amount or other information to be reported. Don't leave
any applicable lines blank, unless expressly instructed to skip that line. If answering a line
is predicated on a "yes" answer to the preceding line, and if the organization's answer to the
preceding line was "no," then leave the "if yes" line blank. I have already mentioned
that if an organization's return is incomplete or the wrong return for the organization, the IRS
will send it back with a form letter. The filer must follow the instructions to provide the
missing or incomplete information, include a reasonable cause explanation of why the filer
didn't initially submit all of the required information with the return. We may charge a
penalty if we don't receive both the missing or incomplete information and a reasonable cause
explanation. Sign the return. Attach a copy of the letter we sent you. Send the corrected
return, the reasonable cause statement, and the copy of the letter within ten days of the date
of the letter to the address on the top right of the letter. The date we receive a complete and
accurate return is the date we consider the return filed. One last tip: Consider filing
your organization's return electronically, even if electronic filing isn't required. Paper Form
990 returns have an average error rate of more than 25%. Built-in accuracy checks in electronic
return preparation software catch most errors before the return is submitted. To learn more
about electronic filing options for your organization, review IRS.gov to see the list of
e-filing service providers. IRS.gov has a wealth of information about filing requirements for
exempt organizations, including due dates for returns based on the tax year of the filing
organization. Just go to IRS.gov and click the charities and nonprofits button near the top
right of the home page. From there, you'll be able to easily navigate to lots of helpful links.
The IRS also has a toll-free service, 877-829-5500, again, 877-829-5500 for exempt
organizations. Thanks for listening, and happy filing.