Nonprofits, Private Foundations Face a Looming Tax-Filing Deadline by Adam Cohen, CPA
Posted on March 05, 2024
by
Adam Cohen
The clock is ticking for nonprofit entities, including private foundations, to file annual returns on Form 990 before the May 15 deadline for calendar-year filers. Failure to file or request an automatic six-month extension can jeopardize an organization’s tax-exempt status and result in significant penalties.
IRS series Forms 990 are informational documents that most non-profits and charitable organizations must use to report their mission, annual activities, governance and financial performance for purposes of maintaining tax-exempt status. They are also made public by the IRS and used regularly by potential donors as a basis for their charitable giving.
Some of the details organizations must disclose on these forms include fundraising and grantmaking activities, program expenses, executive compensation, revenue, assets and liabilities. Depending on an entity’s activities, additional information that may be required are lists of all cash and non-cash contributions received in a year (Schedule B and Schedule M), lobbying activities (Schedule C) and activities conducted outside the U.S. (Schedule F).
There are four versions of series Forms 990 that entities must file based on their reportable income, and a fifth version specifically for private foundations.
- Form 990, Return of Organization Exempt from Income Tax, is the most comprehensive. It applies to nonprofits with gross receipts of $200,000 or more or total assets greater than or equal to $500,000.
- For 990 E-Z, Short Form Return of Organization Exempt from Income Tax, applies to organizations with gross receipts totaling less than $200,000 and total assets less than $500,000.
- Form 990-N, also referred to as the e-postcard, is the shortest version of Form 990, reserved for organizations with gross receipts of $50,000 or less. It is the only form that does not allow for a filing extension.
- Form 990-T, Exempt Organization Business Income Tax Return, applies to nonprofits with $1,000 or more in income from unrelated business activities.
- Form 990-PF, Return of Private Foundation, applies to taxable and tax-exempt private foundations and nonexempt charitable trusts treated as private foundations.
Failure to file Form 990 by the due date, including extensions, will result in a penalty of $20 per day up to a maximum of $11,000 or 5 percent of the organization’s gross receipts for the year, whichever is less. For larger organizations with gross receipts above $1,129,000 million, the penalty increases to $110 per day up to a maximum of $56,500 per unfiled return. While there are circumstances when a nonprofit with reasonable cause for a failure to file may request penalty abatement, doing so requires the assistance of professional CPAs and advisors with experience working with the IRS.
About the Author: Adam Cohen, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency while complying with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or info@bpbcpa.com.
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