What To Do When You Miss The IRS Form 990 Deadline

We’ve talked about everything 990 related for the last week or so and just like that, the May 15th deadline has come and gone. If you filed your organization’s IRS Form 990 by the Form 990 due date 2017, I am sure you have gladly removed anything 990 related from your ever-growing to-do list. Unfortunately, this isn’t the reality for every organization.

We have received several concerned calls from organizations that failed to file their 990 tax form by the IRS Form 990 deadline. They are all asking what they should do since they missed the Form 990 due date 2017 for tax returns.

We will be honest with you, there aren’t many options for you at this point, but we do have some advice on what to do when you miss the IRS Form 990 deadline.

*Take immediate action before your tax-exempt status is revoked*

What To Do When You Miss The IRS Form 990 Deadline

Long story short, the longer you wait to file the worse off your organization will be. The best advice that we can give you is to file IRS Form 990 ASAP!  Your penalties will only grow the longer you wait to file your 990 tax form...seriously. 

Even though you have [technically] missed the deadline, you can avoid the following IRS penalties if you take action soon. 

Late Filing Penalties

Organizations with gross receipts less than $1,020,000 for its tax year will have a penalty of $20/day for each day that the return is late. The maximum penalty for these organizations is $10,000 or 5 percent of the organization's gross receipts, whichever is less.

Organizations with gross receipts more than $1,020,000 for its tax year will have a penalty of $100/day for up to a maximum of $51,000.

Penalties Against Responsible Person(s):

Were you aware that individuals can be fined on behalf of an organization if the organization does not file during the fixed amount of time it has been given to fulfill its filing requirements? 

Yep! 😳 Organizations that fail to file a completed return or provide proper information will be given a short grace period before penalties apply. Your organization will receive a letter from the IRS stating how long this period will be.

If no action is taken after this time expires, the person responsible for complying will be charged a penalty of $10/day, with a per capita of $5,000 for anyone return.

Filing Form 990 After the Deadline

Filing Form 990 is essential for your organization and should be completed in detail. TaxBandits offers a simplified process and provides all of our clients with informative resources to help you file your 990 nonprofit tax return correctly by following Form 990 instructions. 

Information You Must Have To File

General information needed to e-file IRS Form 990 include:

• EIN (Employer Identification Number)
• Tax Period
• GEN (Group Exemption Number)
• You will also need information to fill out any required schedules for your organization

File The Correct 990

If you spend precious time filing the wrong Form 990 for your organization, I will cry for you.

These are the 990 tax forms included in the Form 990 Series; select the Form 990 that meets the financial status of your organization:

Form 990-N
Organizations with gross receipts that are less than or equal to $50,000 file this form electronically.

Form 990
Filed by organizations with gross receipts more than or equal to $200,000 or total assets equal to or greater than $500,000.

Form 990-EZ
The Short Form Return of Organization Exempt From Income Tax filed by organizations with gross receipts less than $200,000 and $500,000 in total assets.

Form 990-PF
Filed by Exempt & Taxable Private Foundations as well as Non-Exempt Charitable Trusts which the IRS treat as private foundations. 

Automatic Revocation of Tax-Exempt Status

If your organization does not file a Form 990 for three consecutive years, it will be automatically revoked of its tax-exempt status. If the organization does not get reinstated as per the required procedure, it will be required to file with the IRS as a taxable organization.

Avoid Expensive Late Filing Penalties

IRS penalties are quickly accumulating and the longer you wait, the more expensive they will be. So if I were you, I would create a free account with our sister product, TaxBandits, and start filing today. Their filing process consists of a simplified, step-by-step interview-style process without the complex IRS terminology. At TaxBandits we take pride in providing tax-exempt organizations a safe, secure, and efficient e-filing process that will save you time and money.

If you have questions or concerns, please contact the experienced team of experts located in historic Rock Hill, SC. We are available by phone, live chat, and email in both English and Spanish for your convenience.

Avoid 990 Penalties Today!

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Reinstate Your Tax Exempt Status with These Tips

Most tax-exempt organizations are required to file either a Form 990, 990-EZ, 990-PF or 990-N (e-Postcard) each year with the IRS to maintain its tax-exempt status. Organizations that fail to file the appropriate form for three (3) consecutive years are considered automatically revoked and lose its tax-exempt status immediately. An automatic revocation is effective on the original filing due date of the third annual return or notice.

Each month, an “Automatic Revocation of Exemption List” will be updated and made available for public records on the IRS website. This list will include the name, EIN, organization type, last known address that the organization has provided, effective date of revocation and the date the organization was added to the list. Organizations that apply for and receive reinstatement to tax-exempt status are also listed on this list with the date of reinstatement provided also.

How To Reinstate Your Exempt Status

Well since we’ve hit the area of reinstatement...let’s talk about it!

Although the law prohibits the IRS from undoing a proper automatic revocation or an appeal process, an organization that has been revoked can be reinstated. There are four ways an organization can be reinstated:

Streamlined Retroactive Reinstatement

This type of reinstatement is for organizations that usually file Form 990-EZ or 990-N (e-Postcard). Tax-exempt status can be reinstated if they have not previously had their tax-exempt status automatically revoked. Also Form 1023, Form 1023-EZ or Form 1024 must be completed and submitted with the appropriate user fee include no later than 15 months after the date listed on the organization’s Revocation Letter or the date the organization appeared on the IRS Revocation List.  For more information on where to send this form, click here.

Additionally, if an organization is retroactively reinstated, they will not be charged the failure-to-file penalty if this procedure and necessary files are completed correctly.

Retroactive Reinstatement Process

This process is for organizations that are required to file Form 990 or Form 990-PF. Similar to the streamlined retroactive reinstatement process, in order to be reinstated you must do the following:

• -Complete and submit Form 1023 or Form 1024 with the appropriate user fee not later than 15 months after the date listed on the Revocation Letter or the date in which the organization appeared on the IRS Revocation List. 
• -Include a statement with the application that establishes that the organization had reasonable cause for its failure to file for at least one of the three consecutive years in which it failed to file. 
• -Include with the application a statement confirming that it has filed required returns for those three years and for any other applicable taxable years. 
• -Properly file completed and executed paper annual returns for the three consecutive years that caused the revocation. Organizations should write “Retroactive Reinstatement” on these returns and mail them here. 

The failure-to-file penalty will not be charged if this procedure and necessary files are completed correctly.

Retroactive Reinstatement (after 15 months)

Any organization that applies for reinstatement more than 15 months after the later of the date on the organization’s revocation letter or the date the organization appeared on the IRS Revocation List may have their tax-exempt status retroactively reinstated by satisfying all of the requirements described under the “Retroactive Reinstatement (within 15 months)” procedure EXCEPT that the reasonable cause statement that the organization includes with the application must establish reasonable cause for its failure to file a required annual return for all three consecutive years.

No failure-to-file penalty will be applied if the organization is retroactively reinstated under this procedure.

Postmark Date Reinstatement

Last but not least, the final way to be reinstated is for organizations that apply for reinstatement effective from the postmark date of their application if they complete and submit Form 1023, Form 1023-EZ or Form 1024 with the appropriate user fee.

When completing the application write on the top of the form “Revenue Procedure 2014-11, Reinstatement Post-Mark Date” and mail the application here.

Filing Form 990 Series Online

Operating your nonprofit organization without tax-exempt status can be extremely challenging and quite difficult. Eliminate the worry and concern of losing your tax status or even regain tax-exempt status by filing your Form 990 series returns with us at ExpressTaxExempt. With affordable pricing and a safe, secure and easy-to-use e-filing system, organizations can quickly and accurately file their forms directly to the IRS. Need help during the filing process? No worries. We’re always here to help! Feel free to contact our support team of e-file experts at 704.839.2321 for any questions or help with the e-filing experience. We’re here to assist you Monday through Friday from 9 a.m. to 6 p.m. EST or feel free to reach us 24/7 via email at support@ExpressTaxExempt.com.

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10 Do's and Don'ts to Maintain Your Tax Exempt Status

Organizations worldwide have applied and received 501(c)(3) tax exempt status from the IRS for years. Groups such as private foundations along with churches, hospitals, educational institutions and charities are exempt from federal income tax under the Internal Revenue Code. Maintaining this status can be just as easy as it is to lose it. 

Each year, over 100 501(c)(3) organizations have their tax-exempt status revoked. The most common cause of revocation is due to organizations that do not file their annual information return with the IRS for three consecutive years. These organizations find themselves in distress after being revoked and find out that it can be quite the hassle to bounce back from. 

An automatically revoked organization loses the eligibility to receive tax-deductible contributions as well being removed from a list of tax-exempt organizations that most donors reference prior to giving. Eliminate the worry and concern of ever having to be revoked or losing your tax-exempt status by following these “do’s and don’ts” to ensure you stay on the right track: 

"DO'S AND DON'TS"

DO’s: 

• 1. File annual information returns with the IRS (Form 990, 990-EZ, 990-N, 990-PF and Form 1120-POL). 
• 2. Withhold and Pay Payroll Taxes
• 3. Keep Records
• -Financial Records (Money coming in and out, employment tax records & asset records)
• -Permanent Records
• -Minutes from Board Meetings
• -Copy of previous returns and attachments sent to the IRS from the the last three previous years. 
• 4. Give donors that make a donation of $250 or more a written acknowledgement. If your group is soliciting contributions from individuals, you should provide a written receipt and register and file them in your annual reports with the states. 

• 5. Serve the public - services and activities of a 501(c)(3) organization should be directed toward an exempt purpose and the overall betterment of the public. 

DONT’S: 

• 1. Fail to file for 3 consecutive years
• 2. Engage in Substantial Lobbying
• 3. Participate in political campaign activity
• -This includes campaign contributions, endorsements and public statements regarding candidates. 
• 4.Serve private interests
• -501(c)(3) organization activities should be directed toward an exempt purpose. 
• 5. Unrelated Business Income
• -Too much income received from activities not related to the purpose of the organization can become a threat for tax-exempt status to be removed.

By following these “do’s and don’ts” your organization can remain intact and effective. Losing tax-exempt status as a non-profit can strongly affect your organization in a negative way. If your organization does in fact get revoked at some point, there is still the opportunity available for you to be reinstated by the IRS. Although the law prohibits the IRS from undoing a proper automatic revocation, organizations can apply to have their exempt status reinstated. Reinstatement can happen four ways: 10 Streamlined retroactive reinstatement 2) Retroactive reinstatement process (within 15 months), 3) Retroactive reinstatement (after 15 months) and 4) Post-mark date reinstatement. 

Be sure to file those annual returns and stay in good standing with the IRS by quickly and securely e-filing with ExpressTaxExempt. As the number one authorized IRS tax e-file provider, ExpressTaxExempt offers simplified and easy-to-use versions of Form 990, 990-EZ, 990-PF, 990-N, and its newest form specifically designed for political organization returns, Form 1120-POL. So take a few minutes and file today to keep those taxes away! 

As always, feel free to contact our support team of e-file experts at 704.839.2321 for any questions or help with your e-filing experience. We’re here to assist you Monday through Friday from 9 a.m. to 6 p.m. EST or feel free to reach us 24/7 via email at support@ExpressTaxExempt.com.

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REVOKED! Reinstating Your Tax Exempt Status

Last time we discussed what to do if you file your Form 990 series return late, and briefly touched upon what to do if you lose tax exempt status.

Now, we’re going to peel back the layers a bit more and get into the steps for reinstating revoked tax exempt status.

So You've Been Revoked

How do nonprofit organizations lose their tax exempt status? The easiest way is failing to file Form 990 for three consecutive years. That leads to you ending up on the Exempt Organization Select Check list published every month by the IRS.

The good news? You can search the EO Select Check list for your Employer Identification Number to find out if you’ve been revoked! The list is updated monthly, and features the name, EIN, organization type, last known address the organization provided to the IRS, effective date of revocation, and the date the organization was added to the list.

How to Get Reinstated

If an organization wants to get their tax exempt status reinstated, they must file a new application for exemption and pay the appropriate user fee.

The IRS then determines if the organization meets the requirements, and can issue a new determination letter.

The IRS will also include the reinstated organization in the next update of EO Select Check and indicate in other publications (like the Business Master File).

In most situations, the effective date of reinstated exemption is the date the current application was submitted, but organizations can request for a retroactive reinstatement.

Can You Get Retroactive Reinstatement?

But retroactive reinstatements have limited circumstances attached to them, and it is up to the organization to supply the IRS with the needed information.

To request reinstatement back to the date of automatic revocation, organizations need to attach a letter to the application for reinstatement explaining why they failed to file required returns for three consecutive years.

After that, the IRS will determine if your organization had a reasonable cause for not filing your return for three years.

Once you’re reinstated, you need to keep up to date on your tax exempt returns! When you e-file your Form 990 series return with ExpressTaxExempt, you can expect a secure, easy-to-use system designed to have you done in no time.

If you have any questions about e-filing, contact us by phone at 704.839.2321 or by email at Support@ExpressTaxExempt.com.

For more tax breakdowns, marketing tips, and nonprofit trends, follow us on Facebook and Twitter!

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Form 990 Rejection: Surviving Bumps in the Road

Everything is going great—your nonprofit is growing in the community, volunteers are showing up for events, and you see people are getting the help they need. But then it happens. A bump in the road.

Your Form 990 return is rejected by the IRS.

What do you do? Who do you turn to? Well, you trusted us with video production, social media, and email marketing, so trust us when we tell you this isn’t the end. Take a deep breath, exhale, and keep reading.

First up, let’s examine Form 990 rejection:

• This may sound obvious, but you need to obtain tax exempt status from the IRS before filing Form 990. If you try to file without tax exempt status, you will be rejected. You can get tax exempt status by filing Forms 1023 or 1024.
• If you’ve already applied for exempt status as a 501(c)(3), your return may be rejected by the IRS unless you check the applicable option.
• If you file your Form 990 return with the incorrect tax period for your organization, the IRS will reject it. This is a pretty common error! Many organizations believe they run on a calendar tax year, even though they don’t. Don’t know your operating period? You’ll have to contact the IRS to find it out.
• If your tax exempt organization hasn’t filed for three consecutive years, the IRS can cancel your status. Not only will your 990 be rejected in this case, but you’ll also need to re-file a Form 1023 or 1024.

So what do you do if your 990 is rejected? Well, if you filed with ExpressTaxExempt, we will notify you right away if your form was rejected, explaining the reason so you can quickly correct any needed information.

After the corrections are made, you can re-transmit your return at no extra cost!

So what do you do if you’ve lost your status as a nonprofit? Your tax exempt organization will need to apply to have their tax-exempt status reinstated, even if you were not originally required to file an application.

What Do You Do If You Lose Tax Exempt Status?

You need to get it back, come on! To do this, you simply need to apply for tax exemption recognition by filing Form 1023, Form 1024, or a letter if applying under a different Code section, regardless of whether the organization was originally required to apply for exemption. Finally, you need to pay the appropriate user fee.

Want to reduce the chance of 990 rejections? By e-filing with ExpressTaxExempt, you replace the confusing and frustrating tax forms with the streamlined e-filing process of ETE.

If you run into any questions while e-filing, give our awesome customer support team a call at 704.839.2321. They can also be reached by email at support@ExpressTaxExempt.com.

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Understanding Your CP259E Notice

There are a ton of reasons why a tax-exempt organization might not have filed their Form 990. Maybe you’re an entrepreneur and you’re just starting a movement to better your community. You’re not worried about taxes, you’re worried about helping people. Maybe you've just been employed as a manager for a non-profit and getting settled into the groove of things. There are donors to talk to, accounts to balance, fundraising events to plan, and not to mention just getting acclimated to the job. On top of all these things, you get this letter in the mail telling you that you haven’t filed your 990-N yet and it’s past due.

What is this piece of paper? What does it mean? 

The letter is called a CP259E Notice and it’s the IRS’s way of warning you that your organization is about to lose its tax-exempt status. Should you decide not to file for 3 consecutive years, the IRS will automatically revoke your tax-exempt status; no letter, no phone call, no parlay.

This notice is the only warning your organization will receive that it isn't compliant with the IRS tax code. It’s a little slip of paper with big consequences. Don’t get caught up in the hurry and worry of doing your organization’s taxes. Don’t risk losing your tax-exempt status. File with Express990.com today and get back to doing what you love.

And what if it’s too late?
What if you go to file and your form is rejected because you've lost your tax-exempt status? How do you get it back? Never fear, the process is a lot easier than you’d expect. If you need to be reinstated as tax-exempt, you must file an application for exemption and pay the appropriate user fee, even if it was not required to apply for exempt status originally. The list of user fees can be found on the IRS website. The application for tax-exempt status can be done on the same types of forms that your organization used originally, Forms 1023 and 1024. Once you've filed the applicable form and paid the necessary fee, you may begin to file as a tax-exempt status organization again. Make sure you check with the IRS so that you’re aware of any changes to the filing requirements!

Don’t get caught off-guard again and don’t lose sleep over tax-exempt revocation. Express990 is here to help you have the easiest and fastest filing process possible.

More On Revocation & Reinstatement of Tax Exempt Status:

• How To Reinstate Tax-Exempt Status

• What Can Cause Your Tax-Exempt Status To Be Revoked

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How To Reinstate Tax-Exempt Status

Greg McRay, CEO The Foundation Group, has shared the process to regaining your Tax Exempt status after it has been revoked.

Greg explains:
The Internal Revenue Service has issued new guidance (in the form of Revenue Procedure 2014-11) for small nonprofits looking to regain lost tax-exemption. The process outlined in the Rev.Proc. significantly changes the reinstatement process...mostly for the better.

Under the old procedure, nonprofits that had their 501(c)(3) status revoked due to failure to file Form 990 for three consecutive years had a difficult time establishing sufficient reasonable cause, i.e., a good reason why they missed filing their Form 990 three years in a row. Reasonable cause was necessary to have their reinstatement be retroactive to when they lost their status. If they could somehow manage to establish reasonable cause, they also had to prepare and file Form 990-EZs for each of the years missed, even if one or two of those years only required Form 990-N originally. This proved to be a very time-consuming and expensive process.

Nonprofits could choose to forgo retroactivity, but had to settle for a new 501(c)(3) effective date that matched the postmark date of the reinstatement application. The big problem with that scenario was the creation of a taxable "gap" period between the date the nonprofit first lost its tax exemption and when it got it restored.

• For Example: If a nonprofit lost its 501(c)(3) status effective May 15, 2012 and could not establish reasonable cause for retroactive reinstatement, and filed a new 501(c)(3) application on July 15, 2013, they would have a taxable gap of 14 months

Now, small nonprofits, defined as those whose From 990 requirement was either Form 990-N or Form 990-EZ, can apply for retroactive reinstatement by filing a new Form 1023, along with Form 990-EZs for those years in which it was required, but missed. If any or all of the missed years required From 990-N, they do not have to be filed arrears. Reasonable cause will now be assumed and not required to be articulated in writing. In addition, late filing penalties for the prior year From 990-EZs will be abated. This is no small change to the process and one that should benefit thousands of small organizations dealing with lost exemptions.

Please Note: This Revenue Procedure does not change the requirements for larger nonprofits seeking reinstatement of tax-exemption. They will still be required to provide definitive reasonable cause and will not have late filing penalties waived. 

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What Can Cause Your Tax-Exempt Status To Be Revoked?

Answer: IRS regulations prohibit 501(c)(3) public charities from engaging in specific types of activities and require a certain level of reporting and public disclosure. An organization that fails to abide by these rules may be placed under sanction or have its tax-exempt status revoked by the IRS. These regulations include:



Private benefit/inurement - An organization may not permit an insider (someone with a personal or private interest in the organization) to benefit substantially from the activities of the organization.

Lobbying - While 501(c)(3) organizations are permitted to engage in lobbying on some level, the amount of lobbying activities must be limited so as not to constitute a substantial portion of the organization's activities.

Political campaign activity/electioneering - 501(c)(3) organizations and their representatives (while acting in an official capacity) may not campaign for or against candidates for elected office.

Unrelated Business Income (UBI) - An organization may lose its exempt status if it generates excessive income from a regularly-carried-on trade or business that is not substantially related to the organization's exempt purpose.

Annual reporting obligation - With the exception of churches and subordinate organizations, all 501(c)(3) public charities are required to file some version of the Form 990 with the IRS on an annual basis. While smaller organizations with gross receipts under $25,000 were previously exempt from this requirement, these charities must now file the Form 990-N (e-Postcard) each year in order to stay compliant.

Operation in accord with stated exempt purpose - An exempt organization is expected to operate in accordance with the charitable purpose or purposes outlined in its application for recognition of tax-exempt status (Form 1023). An organization must notify the IRS of any substantial changes to its operating purpose.

The IRS publishes a list of organizations that have had their federal tax-exempt status automatically revoked for failing to file an annual information return or notice with the IRS for three consecutive years ( Auto-Revocation List.) The Auto-Revocation list may be viewed and searched on Exempt Organizations Select Check (EO Select Check) on IRS.gov. The Auto-Revocation List provides the organization's name, employer identification number (EIN), exemption type, last known address, effective date of revocation and the date the organization's name was posted on IRS.gov.

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