Written by Tana Fye
Nonprofit organizations play a critical role in society by addressing social, economic, and environmental challenges. To ensure transparency and accountability, nonprofit organizations are required to comply with reporting requirements set by the Internal Revenue Service (IRS). These requirements are necessary to maintain tax-exempt status and to demonstrate that nonprofits are fulfilling their mission and operating in the public interest. In this blog post, we will explore the IRS reporting requirements for nonprofit organizations.
What is a Nonprofit Organization?
A nonprofit organization is an entity that operates for a charitable, educational, religious, or scientific purpose. These organizations are formed to benefit the public and not to earn a profit for the benefit of individuals. The specific nonprofit organizations that we are talking about in this post are those classified under Section 501(c) of the Internal Revenue Code and are eligible for tax-exempt status. There are other classifications of nonprofit organizations, but reporting requirements for those are not being discussed in this post.
IRS Reporting Requirements for Nonprofit Organizations
Nonprofit organizations are required to file an annual return with the IRS. The type of return that a nonprofit organization must file depends on its annual gross receipts and total assets.
Form 990-N (e-Postcard)
Nonprofit organizations with gross receipts of $50,000 or less can file an electronic notice, Form 990-N (e-Postcard). This form requires the organization to provide basic information such as its legal name, mailing address, and website. The form is due every year by the 15th day of the 5th month after the close of the organization’s tax year.
Form 990-EZ
Nonprofit organizations with gross receipts between $50,001 and $200,000 or total assets less than $500,000 can file Form 990-EZ. This form requires the organization to provide more detailed information such as its mission statement, program accomplishments, and financial information. The form is due every year by the 15th day of the 5th month after the close of the organization’s tax year.
Form 990
Nonprofit organizations with gross receipts of $200,000 or more or total assets of $500,000 or more must file Form 990. This form requires the organization to provide detailed information about its governance, management, programs, and finances. The form is due every year by the 15th day of the 5th month after the close of the organization’s tax year.
Form 990-PF
Private foundations are required to file Form 990-PF. This form requires the foundation to provide information about its grant-making activities, investment portfolio, and finances. The form is due every year by the 15th day of the 5th month after the close of the foundation’s tax year.
Penalties for Noncompliance
Nonprofit organizations that fail to file the required IRS forms are subject to penalties. The penalties range from $20 per day for organizations with gross receipts of $50,000 or less to $100 per day for organizations with gross receipts of $1 million or more. The maximum penalty is $50,000 or 5% of the organization’s gross receipts, whichever is less.
IRS reporting requirements for nonprofit organizations are an essential part of maintaining transparency and accountability. Nonprofit organizations must comply with these requirements to maintain their tax-exempt status and to demonstrate their commitment to their mission and the public interest. By filing the appropriate forms and providing accurate information, nonprofit organizations can ensure that they are meeting their legal and ethical obligations.
Our office works with nonprofit organizations in Nebraska. We help to set them up correctly, ensure that they have the appropriate tax status, and provide ongoing advice and representation as needed. If you work on behalf of a nonprofit organization and need assistance, we can help. Give us a call to set up a consultation.