Reporting Organization’s Program Service Accomplishments

Part III of IRS Form 990 and 990-EZ requires you to report your exempt organization’s program service accomplishments. A program service is typically the major ongoing objective or mission of your nonprofit or charity. The IRS lists many examples of exempt services including

• A hospital's provision of charity care under its charity care policy
• A college's provision of higher education to students in a degree program
• And much more

Here are a few instructions directly from the IRS about reporting program services on your 990 tax return:

Organization’s Mission
You begin Part III by describing your organization’s mission as articulated in your mission statement or as adopted by your organization’s governing body. With ExpressTaxExempt.com, you also have the option of indicating if your group hasn’t established a mission.

Service Changes from Prior Year
You need to answer whether your tax-exempt group offered any new, significant program services not listed on your prior Form 990/990-EZ, or ceased conducting, or made major changes in how it performs, any program services. You can describe any new services or changes on a Schedule O.

Description of Program Services
You are responsible for describing program service accomplishments for three of your organization’s largest program services - if you have less than three, then describe for the number of services you do have.

The services you list are typically measured by the total expenses incurred, but you should include the following with your descriptions:

• Accurate measurements such as clients served, days of care provided, number of sessions or events held, or publications issued
• The service's objective for both the current period and a long-term goal
• Reasonable estimates for any statistical information if exact figures are not readily available

You need to be clear, concise, and complete with your descriptions. The IRS doesn’t recommend attaching any brochures, newsletters, or articles about your organization. If you need more space for explanations, you can use Schedule O.

Other Information
For each program service you list, you must also provide total expenses included on Part IX, and total grants and allocations, if applicable, included with your total costs. You’re also responsible for reporting any revenue derived directly from the service.

With ExpressTaxExempt.com, you can quickly and easily enter this information in minutes. Our application automatically generates your additional descriptions onto Schedule O and also calculates revenue, expenses, and grant values with the entries provided in the respective section.

Call our U.S. - based support team for any questions or assistance with entering program service accomplishments on your 990 form. We’re available at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST - email us at any time with support@ExpressTaxExempt.com.

Read More »

Independent Audits for Financial Statements on Form 990

Within IRS Form 990, there is Part XII for financial statements and reporting. In this section, exempt organizations need to indicate whether their financial statements were compiled, reviewed, or audited by an independent accountant. And if so, whether the process was complete on a separate or consolidated basis, or both.

Independent Audits
An audit from an independent accountant is a thorough survey of a tax-exempt organization’s financial records, accounting practices, business transactions, internal controls, and accounts. The auditor or accountant cannot be a member or a regular employee of the organization but hired through a service contract.

Important: The auditor must also receive certification from either the American Institute of Certified Public Accountants (AICPA), the Public Company Accounting Oversight Board (PCAOB), or similar groups for accounting professions.

While conducting the independent audit, the accountant determines whether your organization’s financial statements follow “generally accepted accounting principles” (GAAP). These are established principles from the Financial Accounting Standards Board (FASB) - and if your exempt group doesn't follow these guidelines, the audit will report it.

Costs and Alternatives
The location and size of your tax-exempt group determine the expense of your independent audit. Fees are typically more than $20,000 for large organizations in metro areas and can even cost small nonprofits up towards $10,000.

Accountants can also provide a financial statement review or compilation instead of a routine audit. But if a third party, usually a donor, requires an examination, then a review or compilation may not suffice. Because most exempt organizations conduct audits every few years, it’s not entirely uncommon for a third party to accept just a review of financial statements.

Reporting to the IRS
As mentioned earlier, you simply need to indicate on your 990 form whether your organization had its statements reviewed, compiled, or audited during the tax year. With ExpressTaxExempt.com, it’s as easy as selecting either “Yes” or “No.” If yes, then choose the basis of the auditing process.

Our U.S. - based customer service team is available to answer any technical questions you have about e-filing with our cloud-based service - contact us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST, or send an email at your earliest convenience with support@ExpressTaxExempt.com.

Read More »

Requirements for a Properly Completed IRS 990 Form

Every tax-exempt organization required to file IRS Form 990 or Form 990-EZ must complete Parts I through XII along with a Schedule O and any other schedules applicable to your organization. The same rules apply to tax-exempt groups who aren’t required to file a tax return but choose to do so.

Submitting an incomplete 990 form is similar to filing late - it can cost you thousands of dollars in penalties and late fees or even a loss of exemption status. Here are a few guidelines from the IRS about completing a 990 return correctly.

Signature and Recordkeeping
A 990 form is never complete with a signature - a primary officer that’s filing the form usually signs the return. If you are filing on behalf of an organization, your signature is required along with the primary officer.

Your organization’s records need to be archived and accessible for the provisional administration of the Internal Revenue Code for a minimum of three years - this includes documents supporting an item of income, deduction, credit, or basis of property. It’s also helpful to keep copies of prior year tax returns for future reference or amended filings.

Rounding Off to Whole Dollars
When filing returns and schedules, exempt organizations must round off cents to whole dollars. Increase amounts with 50 cents or higher to the nearest dollar - you can also decrease to the nearest dollar for amounts with less than 50 cents. If you are adding numbers together, you should only round the total sum.

Complete All Lines
You must make an entry for each line that requires an amount or any other information, even if the value is zero. Applicable lines should not be blank unless the instructions expressly say to skip. All Form 990/990-EZ must include a Schedule O which is used to provide explanations or additional information.

Reporting Proper Amounts
Some sections require information you've reported on other IRS forms. If you realize that numbers reported are incorrect, you should enter the correct values on the 990 return and also submit an amended form with the proper information.

The IRS also asks that you not report negative numbers - you should use zero as the value unless the instructions explain otherwise. Report expenses and revenue separately and do not combine related items.

Inclusion of Activities and Items of Disregarded Entities and Joint Ventures
Organizations must report all revenues, expenses, assets, liabilities, and net assets or funds of a disregarded entity or shares of the same items from a joint venture, other investment, or arrangement treated as a partnership. You are also responsible for reporting activities of your disregarded entity or a joint venture on the appropriate parts or schedules of the 990 form.

Reporting Information from Third Parties
There are a few sections that request information you may need to obtain from a third party - this can include various things like compensation paid by related organizations; family and business relationships between officers, directors, trustees, key employees, and individual businesses they own or control, etc.

You are responsible for getting and reporting this information. If you cannot retrieve through reasonable efforts or tax extension, you can explain or give an estimate with your Schedule O.

With ExpressTaxExempt.com, our interview-style process seamlessly guides you through each section of the 990 form and automatically generates appropriate schedules based on your answers. You won’t have to worry about questions that don’t pertain to your organization, and at the end, we present your entire tax return with its proper requirements for you to transmit.

Our U.S. - based support team of e-file professionals is available for questions or assistance with accurately sending your 990 tax return to the IRS. Call us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST. And we’re also available via email with support@ExpressTaxExempt.com.

Read More »