IRS Forms 990: Accountability, Transparency, & Marketing

Gail T. Merridew, MPA, NMC Community Impact Grants Manager United Way of Greater Richmond & Petersburg [email protected]

804.771.5846 (Work) 804.874.5334 (Cell)

Purpose of Form

 Used by tax-exempt organizations, Section 527 political organizations, and nonexempt charitable trusts to provide information to the IRS (

as required by Section 6033

)  Available for public inspection (

Section 6104

)  Primary or sole source of information about specified organizations’ programs and accomplishments From IRS Instructions for Form 990 and Form 990-EZ

Three Guiding Principles

   Enhancing

transparency

to provide the IRS and the public a realistic picture of the organization and a reasonable basis for comparison to other organizations.

Promoting

compliance

and

accountability

by accurately reflecting the organization’s operations so the IRS may efficiently assess the risk of noncompliance.

Minimizing the burden

for filing multiple documents with multiple entities.

Filing Requirements

All 501(c)(3) tax exempt organizations need to make an annual filing. Generally: 

990-N (e-postcard)

for organizations with annual gross receipts less than $50,000 

Form 990-EZ

for organizations with annual gross receipts less than $200,000 and total assets less than $500,000 at the end of the year 

Form 990

for organizations with gross receipts greater than or equal to $200,000 or total assets greater than or equal to $500,000 at the end of the year

Filing Requirements

 Failure to file for 3 consecutive years will result in the automatic revocation of your tax exempt status.

 Tax penalties exist for failure to make timely filings.

(A penalty of $20/day, not to exceed $10,000 or 5% of total revenue, may be charged. For organizations with $1 Million or more in total revenue, a penalty of $100/day, not to exceed $50,000, may be charged.)

Accounting Periods

 Calendar Year – January 1 – December 31  Fiscal Year – 365/366 day period beginning with the first day of one month and ending with the last day of the previous month (e.g. July 1 through June 30) - will often coincide with the organization’s natural operating or funding cycle, where one exists.

 Short period – an accounting period less than 12 months (may be used to move from one reporting period to another).

When to File

 The 15 th day of the 5 th month after the end of the organization’s accounting period: 

For calendar year preparers – 5/15



For fiscal years ending 6/30 – 11/15



For fiscal years ending 9/30 – 2/15

 Automatic extensions of 3 months may be requested with Form 8868; however, reasonable cause for the additional time requested must be provided for this or additional extensions.

Who is looking at your Form 990?

 IRS  Media  Job seekers  Other nonprofits  State regulators  Watch dog groups  Potential board members  Potential donors / funders*** *** Large foundations often have staff devoted to 990 analysis

GuideStar ( www.guidestar.org)

 Using GuideStar  How to Find What You’re Looking for in GuideStar  Search Results:  General Information  Board of Directors ■ Analyst Report ■ Financial Data  Mission and Programs ( Premium Members or $$$)  Goals and Results  Form 990 and EDOCs

Documents

Funders often request one or more of the following: 1. IRS tax determination letter 2. IRS Form(s) 990 3. Annual Report(s) 4. Audited Financial Statement(s) 5. IRS Form 1023 6. Other independent financial review or compilation (smaller agencies) Note: All of these can be uploaded to GuideStar!

Common questions:

 Tracking non-cash donations?

 Tracking volunteer hours?

 Performing “comparables” checks for salaries?

 Guidelines for conflict of interest and other governance issues?

 Separating program, management & general, and fundraising expenses?

 Temporary versus permanently restricted funds?

About the Presenter:

Having worked in the nonprofit and governmental sectors since 1997, Gail Merridew currently works as Community Impact Grants Manager for United Way of Greater Richmond & Petersburg. Gail has taught the Form 990 class for Nonprofit Learning Point since 2005. As a staff member who is called upon to review grant applications, audited financial statements and related Forms 990 for potential partner agencies, Gail is very aware of the impact that these documents can have when funders make grant award decisions.