What Is IRS Form 990-N? And Who Should File It?
Many small, informal nonprofits that have become 501(c)(3) organizations do not realize that they must report to the IRS each year.
Just as individuals must file a tax return every year a nonprofit must fill out a special form and submit it to keep their nonprofit's exempt status.
Fortunately, this is quite easy to do. Small nonprofits can file the Form 990-N, better known as an e-postcard.
This easy-to-use form should take only a few minutes to fill out. Plus, you don't have to mail it. Just submit it electronically.
What Is Form 990-N?
Before 2007, small nonprofits with gross receipts of under $25,000 did not have to file a tax document with the IRS.
That all changed in 2008 when the IRS created a new form just for small nonprofits. It is Form 990-N. Its long name is “Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ.
Why a New Form?
There were concerns that small nonprofits were operating under the radar. Since they did not have to file anything if their income was below the threshold, the government did not know if they had changed their address, their purpose, or even if they were still in business.
Who Has to File 990-N
Today, all nonprofits with gross receipts under $50,000 must submit 990-N. If a nonprofit has fluctuating income from year to year, it should file the e-postcard if average revenues were $50,000 or less for the prior three consecutive years. Nonprofits with more than $50,000 in gross receipts should file Form 990 or 990-EZ.
How to You File 990-N
It is very simple to file the 990-N, but it must be submitted electronically.
You can find the form by going to the IRS.gov website. You can read the instruction and click the link to the form (under "Ready to file?". You will need to create an account using your employer identification number (EIN). Do you remember where that is? If you have trouble finding it, make a note to properly organize all of your IRS paperwork so that you can access it easily.
When to File the Form
The IRS requires that the 990-N be filed annually by the 15th day of the 5th month after the close of your tax year.
After filing the e-postcard, the IRS will send a notification either accepting the form or rejecting it. If denied, there will be instructions on what to do next.
What Happens if You Don’t File 990-N
Every small nonprofit must take this filing seriously.
You can lose your tax exemption if you do not file. Thousands of small nonprofits have lost tax exemption because they failed to file this form.
If you miss a single year, the IRS will send a reminder. However, if your organization fails to file for three consecutive tax years, you will lose tax-exempt status on the due date of the third year. This revocation occurs automatically, and the IRS will not send any more notices.
Revocation means that your organization is no longer eligible for federal tax exemption and that you cannot promise your donors that their donations will be tax deductible. Remember the trouble you went through just to get your tax exemption? Well, you'll likely have to do that all over again should you lose it by not filing your 990.
If you find that your tax-exemption has been revoked, the IRS has instructions for how to get reinstated.
Don't mess this up! You can be revoked, have to apply for exemption all over again, and your reputation could be severely damaged. No one wants to donate to, volunteer for, or support a nonprofit that can't even file a simple form. Failing to file your 990 makes you look disorganized at best and fraudulent at worst.
- Every Nonprofit's Tax Guide: How to Keep Your Tax-Exempt Status and Avoid IRS Problems by Stephen Fishman (Nolo).
- Federal Filing Requirements for Nonprofits
- What the IRS’ Automatic Revocations Mean For You, GuideStar, 2011