Form 990 is the IRS form that nonprofits are required to fill out every year in order to file their tax returns. Formally known as IRS Form 990-T, the state of Illinois also has form IL-99-T for filing state income tax returns. Even if a Chicago nonprofit organization is exempt from taxes, it still has to file a tax return every year (with the exception of state institutions and churches.)
Staying On Good Terms With The IRS
Acquiring an IRS tax-exempt status is a difficult process. In order to keep it, the nonprofit must demonstrate to the IRS that it does exactly what it says in the bylaws, and operates according to the information given to the agency about the nonprofit.
Form 990 is called “Return of Organizations Exempt from Income Tax,” and isn’t the same as a personal tax return. It’s a statement from the nonprofit that they are not abusing their tax-exempt status, and it’s used by the IRS to gather information on the nonprofits finances and operations. The nonprofit submits the 990 to prove that it’s only performing tax-exempt work. These forms are made available to the public.
Recent revisions mean that Form 990 gathers additional information, such as potential conflicts of interest, compensation for board members and staff, and other information related to avoiding fraud and financial accountability.
Who Has To File?
Tax-exempt organizations with gross receipts over $200,000, or on-hand assets worth over $500,000, must file a Form 990 every year. These amounts are before the payment of any costs or expenses, so the nonprofit will need an accountant to keep track of everything.
Chicago Nonprofit Organizations required to file include:
- Private foundations
- Public foundation centers
- Various non-profit companies
- Section 527 political organizations
The Form 990 must be filed by the 15th day of the fifth month following the closure of the nonprofit’s end of fiscal year. If the nonprofit’s fiscal year ends on December 31st, it has until May 15th of the following year. It’s important to file the 990 on time. Although there isn’t a “late penalty,” failing to file for three consecutive years will automatically revoke the nonprofit’s tax-exempt status.
Many smaller nonprofits have had their status revoked for not filing. With assets under $50,000, they assumed that filing wasn’t necessary. Unfortunately, all nonprofits are required to file, although it’s simpler for a smaller one.
Where To Find Help With The 990
The Internal Revenue Service has an entire section of their website dedicated to nonprofits and charities. Here you’ll find frequently asked questions, some educational tools to help nonprofits keep their exempt status, and an e-newsletter for exempt organizations that features updates nonprofits need to know about.
Form 990 Online is an authorized IRS e-file provider solely for Form 990 filing. A product of the Civic Leadership Project, it’s free to file for organizations with less than $100,000 in gross receipts. However, they only offer state filings for Hawaii, Michigan and New York.
File990.org is another authorized IRS e-file provider for 990 filing. Forms are populated directly from the IRS’s database with just the nonprofit’s tax EIN. The data is saved in their system, making subsequent year filings easy and faster. Reminders can help prevent late returns.
While these providers can help with technical issues, they can’t answer your tax questions. For that kind of help and immediate answers to your questions, find an Chicago, IL lawyer who works specifically with nonprofits and understands Form 990. He or she can ensure that the nonprofit’s 990 is correct before file it’s filed, and will help keep the exempt status in place.
Helping Chicago’s Nonprofit Agencies For Over 25 Years
James C. Provenza is a leading Illinois nonprofit attorney with experience navigating the complex legal landscape surrounding nonprofit organizations and the issues they face. Call our firm today at (847) 729-3939, or use our online contact form. We can help you start your nonprofit and run it well for many years to come.