Revoked for One Missed Form

By Raul Rivera

Pastor Howell’s administrative staff was in a frenzy. His church had created a nonprofit daycare in 2014. The daycare was serving 30 children; it was flourishing and made $170,000 in income that year. The income was enough to provide a few raises and to upgrade the educational materials.

Though the daycare was prospering, the staff was somber on a sunny afternoon in August. They had received a letter from the IRS explaining that the daycare’s Form 990 filing was due and that a penalty would be assessed for the late filing.

Pastor Howell and his staff were not even aware that a Form 990 filing was required for the daycare. They had worked hard to file the Form 990 by the end of September, but when it was all said and done, they paid a hefty fee of $2,120 . . . a steep tuition for the hard lesson learned. 

The importance of Form 990 for every ministry

Every year thousands of nonprofit organizations are required to file a Form 990. The IRS uses this form to ensure that tax-exempt organizations are remaining compliant with the tax code and nonprofit laws in order to remain a tax-exempt entity. 

Form 990 requires detailed financial information from ministries and nonprofit organizations. So, why is the IRS interested in your ministry’s finances?

Requesting financial information on Form 990 allows the IRS to determine if your ministry is doing the following: 

• continually meeting financial support requirements, 
• operating for the private benefit of individuals within your ministry, and 
• remaining organized for charitable purposes that allows your ministry to maintain its tax-exempt status.

Many pastors ask if their churches are required to file Form 990 tax returns and the answer to that question is: “No.” 

Section 6033(a)(3)(A)(i) exempts churches, their integrated auxiliaries, and conventions of churches from filing Form 990. So, while all other nonprofit organizations must file an annual Form 990, churches do NOT have to file an annual Form 990 with the IRS.

If your church has filed Form 990s in the past, then there could be some negative implications to your tax-exempt status as a church. If this is your situation, call us today at 877-494-4655 so we can provide you some guidance on how to correct it. 

Steps your ministry can take to file its Form 990 on time

You do not have to be taken by surprise when it comes to filing Form 990s like the daycare in our story. If filing a Form 990 is new to your organization, or if you have done it for years, there are some fundamental steps that you can implement in order to ensure a timely filing of your organization’s Form 990. 

Let us take a look at those steps below: 

Step 1: Determine if your organization is required to file Form 990

Remember that churches do NOT have to file Form 990 tax returns. However, all other 501(c)(3) organizations, and virtually any other tax-exempt entity (whether religious or not), are required to file. 

Private foundations are always required to file a certain Form 990 for private foundations no matter how much they receive in donations. 

Step 2: Create a calendar reminder

Create an annual calendar reminder to notify your staff of the Form 990 filing due date. Be certain to add this to your ministry’s corporate business calendar to ensure that it is not overlooked in the midst of other corporate activities.

Our KeepRIGHT Program will ensure your ministry never misses its Form 990 filing. 

Step 3: Determine what type of Form 990 you are responsible for filing

There are several variations of the Form 990 annual informational return. They are listed below.

• 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 990-EZ 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: Form 990 is 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 greater, are required to file Form 990. 
• Form 990-PF: All private foundations are required to file Form 990-PF. 
• Form 990-T: All nonprofits, including churches, must file a Form 990-T if they have unrelated business income (which is income from conducting an activity unrelated to their tax-exempt purpose). This also applies to churches that provide health insurance to their employees and qualify for the small business health care tax credit. The majority of churches providing health insurance for their employees will most likely qualify for this tax credit and can receive up to a 50% refund on all health insurance premiums that they pay.

Step 4: File your Form 990 by the appropriate deadline

All organizations required to file Form 990 must submit the return by the 15th day of the 5th month of their fiscal year. For instance, if your ministry’s fiscal year ends on December 31st, you are required to file your ministry’s Form 990 by May 15th of the next year. If your fiscal year ends June 30th, you are required to file Form 990 by November 15th of the same year. 

You do not have to do this alone . . . we can help!

The administrative tasks of operating your ministry’s nonprofit may, at times, feel overwhelming. It does not have to be that way because we can help. 

With the assistance of our highly trained staff and CPAs, we can help ensure that you are filing the correct Form 990 for your ministry in a timely manner. Our Form 990 Service can help you stay in compliance with your ministry's annual Form 990 filing requirement.

For more information, please give our office a call at 877-494-4655 or click on the link below.

Recommended articles for you: 

• “Do You Know How to Classify Your Ministry?”
• “Billy Graham Evangelistic Association Changes Its Tax Status”
• “No Offerings, No Problem”

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