Introduction
Nonprofit organizations play a crucial role in addressing various social, cultural, and humanitarian needs. While their primary focus is on their mission and impact, nonprofits must also navigate the complex realm of tax compliance to ensure their operations remain sustainable and transparent. One of the key aspects of nonprofit tax reporting is the IRS Form 990. This blog aims to shed light on the distinct requirements of three commonly used variants of Form 990: 990-N, 990-EZ, and 990 Long-Form, helping nonprofits better understand their obligations and choose the appropriate form.
IRS Form 990-N: The E-Postcard
The Form 990-N, also known as the “e-Postcard,” is the simplest of the three options. Designed for small nonprofits with gross receipts of $50,000 or less, this electronic submission serves as a streamlined method of reporting basic information to the IRS. Organizations eligible for 990-N are typically community foundations, local associations, and smaller charitable entities.
Requirements:
- Basic information about the organization, including its name, address, EIN (Employer Identification Number), and any changes in officers.
- A statement confirming that the organization’s annual gross receipts are $50,000 or less.
IRS Form 990-EZ: The “Short Form”
The Form 990-EZ is an intermediary option that offers a compromise between simplicity and comprehensiveness. Organizations with gross receipts below $200,000 and total assets below $500,000 can opt for this form, which requires more detailed financial information compared to the 990-N.
Requirements:
- Detailed financial statements, including income, expenses, assets, liabilities, and program service accomplishments.
- Reporting on the organization’s mission and activities, along with compensation of key employees.
- Information on lobbying activities and political campaign involvement.
- A list of officers, directors, trustees, and key employees.
IRS Form 990 Long-Form: The Comprehensive Report
For larger nonprofits with gross receipts exceeding $200,000 or total assets above $500,000, the Form 990 Long-Form provides the most comprehensive overview of an organization’s operations. This form demands a deeper level of detail, aiming to provide transparency to stakeholders, donors, and the public.
Requirements:
- Extensive financial reporting, including revenue sources, program expenses, governance, and executive compensation.
- Detailed breakdowns of various sources of income, such as donations, grants, investments, and fundraising events.
- Comprehensive information on program services, accomplishments, and beneficiaries.
- In-depth governance details, including conflict-of-interest policies and board composition.
- Reporting on international activities, lobbying expenditures, and political campaign involvement.
When evaluating which form is most appropriate for your organization, it is vital that the books are properly reconciled and all items are properly recorded before pulling the relevant totals. Electing the correct 990 form is critical to the compliance of a nonprofit in order to maintain their nonprofit status with the IRS. If you are not sure which form to select, get into contact with a CPA who is familiar with non-profits to receive guidance.
Disclaimer: The information provided above is not meant to be legal or tax advise. You should consult your CPA and attorney to determine the best course of action for your situation.
Mitzi E. Sullivan, CPA is a cloud based professional services provider
specializing in cloud accounting.