One Missed Form Leads to Problems

By Raul Rivera

For many organizations, ministries specifically, the goal for the first quarter and early second quarter is to make it through the biggest deadlines — Tax Day and Easter. 

These two days seem to come hand in hand when thinking about how personal and ministry work can be incredibly taxing on leaders. Even though we have already crossed these milestones this year, for ministries, there is one more important date to be aware of during the second quarter: the filing deadline for Form 990.

For nonprofits, missing the filing deadline for this form can result in severe consequences. Not only can late fees pile up, but failure to file this form after a certain amount of time can cause a nonprofit to lose its tax-exempt status. 

Here is what you need to know about Form 990

You may be wondering what Form 990 is exactly and if this filing applies to your organization.

Although tax-exempt organizations are exempt from paying income taxes, they are required to file an annual income tax return in order to maintain their tax-exempt status. That tax return document is known as Form 990. 

The IRS uses this form to help ensure tax-exempt organizations are continuously complying with the tax law to remain tax-exempt. 

Form 990 specifically requires financial information from your ministry to help the IRS determine whether you are continually meeting its financial support requirements, not operating for private benefits of individuals within the ministry, and remaining organized for charitable purposes that allow your ministry to maintain its tax-exempt status.

The requirement to file Form 990 comes to us from section 6033(a)(1) of the Internal Revenue Code, which states,

“Except as provided in paragraph (3), every organization exempt from taxation under section 501(a) shall file an annual return, stating specifically the items of gross income, receipts, and disbursements, and such other information for the purpose of carrying out the internal revenue laws...”

If you operate any kind of ministry or regular nonprofit organization, then you must file Form 990 on a yearly basis. This includes, but is not limited to, organizations such as:

• Outreach ministries, 
• Community development corporations, 
• Traveling evangelistic ministries,
• After-school youth centers, 
• Daycares, 
• Transitional housing programs, 
• Holdings corporations, 
• and many more. 

The only organizations that are exempt from filing this form are those classified as churches.

What happens if you miss the deadline?

Perhaps your ministry has been around for a year or two and you have not yet filed a Form 990. What should you do? Well, the good news is that it is not too late! You can still file by the May 15th deadline without any repercussions.

The issues of not filing your ministry’s 990 form arise when you fail to file it for three consecutive years.

According to section 6033, organizations that fail to file Form 990 for three consecutive years will receive an automatic revocation of their tax-exempt status. This is true even if your ministry has not yet applied for its 501(c)(3) tax-exempt status. 

In order to avoid additional steps and stress in the future, we encourage each and every ministry to begin making it a practice to file Form 990 as early in the life of the ministry as possible.

3 simple steps to keep your ministry on track

1. Determine if your organization is required to file Form 990. 

Remember, churches do NOT have to file 990 tax returns. However, all Christian, non-church ministries are required. Private foundations are always required to file a particular 990 that is tailored to private foundations no matter how much they receive in donations.

2. Determine what type of 990 you are responsible for filing. 

• 990-N (the e-Postcard): A 990N is an electronic notice. Organizations with gross receipts of normally $50,000 or less will file this electronic notice.
• Form 990-EZ: Form 990EZ is also referred to as the short form. Organizations with gross receipts of normally more than $50,000 but less than $200,000, and whose assets are valued at less than $500,000, are required to file this form.
• Form 990, also known as the long form: Organizations whose gross receipts are on average $200,000 or greater, and whose assets are valued at $500,000 or higher, are required to file Form 990.

3. Know your deadline for filing Form 990. 

All organizations required to file Form 990 must submit their returns by the 15th day of the 5th month of their organization’s fiscal year. For most organizations, their fiscal year coincides with the calendar year (January through December).

If your fiscal year ends on December 31st, then your Form 990 will be due in less than a month, on May 15th. If, however, your fiscal year ends June 30th, then you will be required to file your Form 990 by November 15th of the same year.

What you can do today

Understanding the world of nonprofit compliance, tax law, and all that is required of you is a difficult task in and of itself, especially so when you are managing and operating multiple organizations. But you do not have to do this alone.

Perhaps you are a pastor of a church and this article does not directly relate to you at this time. However, you may know someone who would benefit from this information. If that is the case, I encourage you to share this post with that person and even invite them to give our office a call at 877-494-4655. 

If, on the other hand, you do need assistance determining which Form 990 you should use, or assistance meeting the deadline by May 15th, or even if you need help in determining if you are even required to file a form 990, please give our office a call. We look forward to serving you in any way we can. 

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