ExpressTaxExempt Blog

Tips on Completing Balance Sheets for Exempt Groups

When filing Form 990 or 990-EZ, the IRS requires that all exempt organizations complete the balance sheet included. The balance sheet roughly shows how much money or assets your organization had at the start of the year, liabilities that you may owe, and the amount of money you have at the end of the year.

The IRS won’t accept any other balance sheet except for the one included with the 990 tax return. Here are a few tips about some of the relevant sections you’re required to complete with your balance sheet.

Land, Buildings, Equipment, and Leasehold Improvements
Organizations with any costs spent on land, buildings equipment, etc., must report it - this includes assets held for investments or property used for your organization’s programs or functions. If you indicate an amount, a Schedule D is also required.

You’ll need to enter the total amount of accumulated depreciation for the asset. Enter the cost of the land, building, or equipment as your beginning of year value - subtract the accumulated depreciation from that, and you’ll have your end of year value.

The balance sheet requires accurate information about any debts or financial obligations responsible by your organization. A few of these can include

  • Accounts Payable / Accrued Expenses - the total accounts paid to suppliers or service providers, and expenses such as salaries, payroll taxes, and interests
  • Grants Payable - unpaid portions of grants and awards your organization promised to pay others or individuals
  • Deferred Revenue - revenue your organization has received, but not yet earned due to method of accounting

The IRS has many other liabilities listed which you can view within its Form 990 Instruction Sheet. Not every liability may apply to your organization - consult with a tax professional for further review.

Financial Accounting Standards (SFAS 117)
Organizations that follow SFAS 117 (ASC 958) must classify and report net assets into three groups:

  • Unrestricted - no donor-imposed restrictions
  • Temporarily Restricted - assets may be used after a specific date or for a particular purpose or both
  • Permanently Restricted - assets utilized for a specified purpose, be preserved, and not be sold, or invested in sustaining a permanent source of income

The sum of these three categories is factored with your total liabilities amount to show “Total Liabilities and Net Assets.”

Financial Statement Details
Your financial statement details should show your total revenue and total expense amounts for the year. It should also list your amount of net assets and fund balances from the beginning of the year which should be the same as the end of year value from your previous 990 return.

Report any net unrealized gains or losses, the value of services or use of donated facilities, or net prior period adjustments - these amounts will factor into your net asset and fund balance for the end of the year.

With ExpressTaxExempt.com, our user-friendly interface allows you to enter these amounts quickly and easily - you can even make changes to your balance sheet instantly. Our internal audit check also ensures that you report evenly matched net assets and fund balances.

Contact our helpful U.S. - based support team for any further questions - we’re available at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or email us with support@ExpressTaxExempt.com.

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ExpressTaxExempt Wishes You All A Happy Thanksgiving!

We’re only a couple of days away from Turkey Day and the excitement of the upcoming holidays has us counting down with anticipation. In the spirit of goodwill, we like to say “Thank You” to each of our clients who e-filed using our services this past tax season.

Whether you tried us out for the very first time or have been e-filing with us for years, we are thankful and greatly appreciative of your continued support. Any tax-exempt groups that are looking for a more quick and secure way to file, ExpressTaxExempt is your premier, IRS-authorized e-file provider!

Form 990 Series
We support tax returns for exempt organizations based on your gross receipts:

  • IRS Form 990 - Required for organizations with gross receipts equal to or over $200,000 and total assets equal to or over $500,000.
  • IRS Form 990-EZ - Required for organizations with gross receipts less than $200,000 and total assets less than $50,000.
  • IRS Form 990-N (e-Postcard) - Required for organizations with gross receipts less than $50,000.

We also support Extension Form 8868 for tax-exempt groups applying for an automatic 3-month extension or an additional, not-automatic 3-month extension. Remember, you must e-file your extension before the original IRS deadline, and tax extensions can only extend your time to file - not to pay any owed taxes.

Why E-file With ExpressTaxExempt?
We work closely with the IRS to provide the most streamlined filing experience available. Our service boasts unique features that you won’t find anywhere else such as automatic email notifications of filing status, bulk upload of contributions, internal error checks, and free transmittal of any rejected forms.

Check out a few of our short, easy read blogs this holiday season for more information about ExpressTaxExempt.com and e-filing 990 forms with the IRS:

As with every year, we recognize major holidays so that our staff can be with family and friends. Our Rock Hill, South Carolina, headquarters will be open on Wednesday, November 23, during our regular hours of 9 a.m. to 6 p.m. EST; you can reach for any questions or e-filing assistance at 704.839.2321.

We will close our office for both Thanksgiving Day and Friday, November 25, with only limited email support available through support@ExpressTaxExempt.com. We wish all of you a safe and Happy Thanksgiving and thank you for choosing ExpressTaxExempt for your IRS 990 e-filings.

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Key Employees and Independent Contractors in Tax-Exempt Organizations

When filing IRS Form 990 or Form 990-EZ, tax-exempt groups usually have to report compensation of officers, directors, trustees, key employees, highest compensated employees, and independent contractors in Part VII of the tax return.

This section of the 990 form may come across as a bit tricky because each exempt organization can have different variables regarding members and employees such as no compensation, members with multiple roles, small payment thresholds, or even no significant key employees.

However, the IRS requires some information about the people working within your organization. Here are a few pointers to use:

Highest Paid Officers & Key Employees
Regardless of whether your current officers, directors, or trustees receive compensation or not, you’re going to need to list them. You’re also required to list any current key employees that made at least $150,000 during the year and the current top five highest paid employees making over $100,000.

Important: Your highest compensated employees are those within your organization who do not hold any officer or key employee titles like Treasurer, Secretary, or Director.

In some cases, you may have to list former members if they were active during the filing year, but left before the year was complete. List former officers, key employees, or highly paid employees who made at least $100,000. You can report former directors and trustees that were making over $10,000.

Independent Contractors
If your organization contracted any outside workers, the IRS requires that you report independent contractors that received at least $100,000 in compensation for services. The amounts must be the gross payments which can include expenses and fees - even if you don't separately report the spending costs to your organization.

IRS Information Forms: File W2 Online and 1099 Forms with streamlined features and simplicity from our sister site, ExpressIRSForms.com. You transmit information returns for your employees or contractors directly to the IRS quickly than paper filing. Select our Postal Mailing option to have copies automatically sent to your recipients.

With e-filing 990 forms, you only need to report the total number of volunteers - there’s no need for individual names or details. Under particular circumstances, you don’t have to report any compensation paid to volunteer officers, directors, or trustees - speak with a tax professional for more details.

List your organization’s employees quickly and easily with ExpressTaxExempt.com. If you have any questions about entering key members or contractors, call our U.S. - based support team at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or email us anytime with support@ExpressTaxExempt.com.

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Final IRS Deadline for Tax-Exempt Groups is TODAY!!

The day has finally arrived for exempt organizations - the last BIG day to e-file IRS Form 990 and Form 990-EZ.

If your nonprofit or charity runs on a calendar tax year, and you filed Extension Form 8868 Part II this past August, then you have until midnight local time to complete your tax return.

Apply for Extra Time!
There may still be a chance for your tax-exempt group to e-file an IRS Form 8868 extension; however, your organization must follow a fiscal tax year with specific end dates. If your tax period ends on June 30, you’re eligible to e-file Form 8868 Part I and get an automatic 3-month extension.

If your organization’s tax year ends on March 31, and you filed an extension for the August deadline, you can e-file Form 8868 Part II for an additional, not-automatic 3-month extension. You’ll need to include a reasonable explanation why you’re requesting extra time.

Important: You can now e-file a tax extension from anywhere with your favorite iOS or Android device - download our FREE ExpressTaxExempt - Form 8868 mobile app. Tax extensions are not available for IRS Form 990-N (e-Postcard).

Benefits of E-filing with ExpressTaxExempt.com
As an IRS-authorized, e-file provider, we work closely with the IRS to provide the most streamlined filing experience. Access your account from anywhere at anytime. Our interview-style questions guide you through the entire process. We automatically generate required schedules for Form 990 and 990-EZ, and our internal audit check ensures your return is error-free. Get a printable copy of your form - even submit amended returns for prior year filings.

IRS Penalties
You must transmit your tax return by 11:59 pm local time to avoid any late penalty fees. If you have no choice but to file late, the IRS charges $20 each day your return is not sent - $100 each day if your organization’s gross receipts are greater than $1 million. Maximum penalties can go up to $50,000 or 5% of total revenues, whichever is the smallest amount.

For any questions or technical assistance with e-filing your 990 form, call our U.S. - based customer support at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or reach us 24/7 with support@ExpressTaxExempt.com.

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Simple Ways to Prevent Hefty IRS Penalties

No matter how much we all loathe it, there’s just no way to recover late filing fees and penalties paid to the IRS. In most instances, the IRS evaluates penalties on a case-by-case basis if you can provide valid reasons.

The best way to prevent any late fees with the IRS is to file your exempt organization’s annual tax return on time. But not everything goes that smooth in life, and that’s understandable - so here are a couple of ways you can still avoid late filing penalties.

Automatic & Not-Automatic Extensions
Without a doubt, the most simple method of preventing substantial fees from the IRS is e-filing an Extension Form 8868. You can get up to six months of extra filing time by submitting both parts of the form:

  • Part I - Automatic 3-Month Extension
  • Part II - Additional, Not-Automatic 3-Month Extension

The IRS Form 8868 tax extension only extends your time to file - not the time to pay any owed taxes. You must remember to file your tax return by the extended due date, and you are still responsible for paying any estimated taxes by the original deadline.

Important: Form 8868 cannot extend the deadline for small tax-exempt groups filing IRS Form 990-N (e-Postcard).

Facts & Circumstances
If you missed the chance to e-file a tax extension, your only option is to submit IRS Form 990 or Form 990-EZ as soon as you possibly can. You’ll still get penalized each day your return is late; however, you can use a Schedule O to try to reduce or eliminate fees.

The IRS looks for what they call “facts and circumstances,” which are reasonable explanations about why your organization filed late. They specifically want valid answers to the following:

  • What caused the organization from requesting an extension of time
  • How the organization utilize conventional business care and prudence, and is not neglectful or careless
  • What steps the organization is taking to avert the same situation from happening again

Even though the process may take some time, providing these explanations could put you in a better position of leverage. In some cases, the IRS can completely waive penalties if delinquency was due to uncontrollable events - check with your local tax professional for more details.

While facts and circumstance can potentially save you, it’s still not as easy as filing an extension. With ExpressTaxExempt.com, you can complete and transmit your extension form, and get approved within minutes. And with our FREE downloadable ExpressTaxExempt - Form 8868 mobile app, you quickly and securely submit an extension on the go from your favorite iOS or Android device.

Our U.S. - based support team is available for any questions or assistance with e-filing - give us a call at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or send a message with support@ExpressTaxExempt.com.

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Principal Officer’s Role with Filing Form 990

When an exempt organization files its annual tax return, it’s typically the responsibility of the principal or primary officer to complete the filing. The officer can either finish and submit the 990 form on their own or outsource the work to a tax professional or CPA.

Whatever the principal officer decides to do, it’s important for that person to provide their signature to the tax return before it gets sent to the IRS. Here is some general information about principal officers and their role in filing the form 990 series.

Who is a Principal Officer?
A principal or primary officer can have many different titles within tax-exempt groups. It can be your organization’s current President, Vice-President, Director, Treasurer, Secretary, Chief Accounting Officer, or other corporate officers - for instance, a tax or financial administrator. People who are not officers are your regular employees or volunteers.

Does a Principal Officer have Authority to Transmit 990 Form?
With a small tax-exempt organization, the principal officer is usually the President or a Director, so that person does have supreme authority to submit to the IRS once finishing the return. For larger organizations, the officer may need approval from the President or other board members before completing the filing.

With ExpressTaxExempt.com, you can use our unique “Manage Approvers and Reviewers” feature which allows you to invite prominent members to a secure web portal via email. While there, they can review your 990 form, add comments or corrections, and e-verify with their signature. Have your entire board approve without managing multiple copies or wasting precious paper.

What Filing Details are Required About the Principal Officer?
IRS Form 990 and Form 990-EZ only ask for the officer’s name, title within the organization, and a daytime phone number. The IRS Form 990-N (e-Postcard) and Extension Form 8868 requests the same information with the addition of a mailing address.

If the primary officer is using a tax professional or a paid preparer to file the 990 series electronically, the officer is required to sign IRS Form 8453-EO. The form states that you are indeed an officer from a tax-exempt group and that you approve the return, and you give authorization for the preparer to file the form. It only requires the officer’s signature, date, and title within the organization.

Can an Officer File for Multiple Organizations?
If an officer is a primary member of each organization getting filed, then there shouldn’t be any issues. But if a principal officer of one group is filing on behalf of a different group without membership, then a signed Form 8453-EO is required from a primary officer of the different group.

ExpressTaxExempt.com lets you e-file for as many organizations as you need from just one account. We even generate your 8453-EO so you can print it, get the signature needed, and then upload the form into your account.

Call our U.S. - based, customer support team for any assistance needed with e-filing the form 990 series. You can reach us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST. We also over email support with support@ExpressTaxExempt.com.

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Reporting Sales of Assets for Tax-Exempt Groups

For many tax-exempt organizations with significant gross receipts, some of that revenue may have come from the selling of assets.

An asset is usually an owned item or resource with monetary value or worth. The seller of an asset typically receives some form of cash or an equivalent, while the buyer becomes the new owner of the sold asset.

Types of Asset Sales
With IRS Form 990 and 990-EZ, the federal government requires exempt organizations to report any sale of assets occurring within the filing year. The amounts receive count as revenue; however, there are assets that the IRS specifically asks for on the form:

  • Sale of Securities - Usually stocks, bonds, or options
  • Sale of Other Types of Investments - Includes real estate, royalty interests, or partnership interests 
  • Sale of Non-Inventory Assets - Contains program-related investments and an organization’s fixed assets in its related and unrelated activities
  • Sale of Capital Gains Dividends and Distribution - Involves your organization’s share of capital gains and losses from a joint venture, limited liability company, trusts or other entities treated as a partnership

Reporting Sales of Assets
On the Form 990/990-EZ, tax-exempt organizations can use the average cost basis method to calculate its gain or loss. When selling an asset, you typically subtract your sales price from the average value of the property. If the outcome is negative, then you took a loss in that sale.

Recorded Information of Assets
Your tax-exempt group must maintain strong records of sold assets in which market quotations are not published or readily available. The information should report the following:

  • Description of Asset
  • Date Asset was Acquired
  • Whether Asset was a Donation or Purchase
  • Date Asset was Sold and to Whom
  • Gross Sales Price of Asset
  • Cost or Value When Asset was Acquired
  • Expense of Sale and Improvements After Purchase, if applicable
  • Depreciation Since Purchase, if applicable

With ExpressTaxExempt.com, you can report your organization’s sales of assets quickly and easily with our streamlined, interview-style questions. Our internal audit check will also ensure you enter all the required information before transmitting to the IRS.

Feel free to contact our U.S. - based customer support team - 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or email us at support@ExpressTaxExempt.com - for questions or assistance e-filing your IRS Form 990/990-EZ.

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Form 990 Instructions for Exempt Organizations

Tax-exempt organizations are required to file an annual tax return with the IRS - this form is known as the 990 series, and it reports an organization’s total revenue, expenses, and activities.

Submitting an IRS 990 form every year is essential for tax-exempt groups to maintain their exemption status.

Failing to do so can lead to severe IRS penalties including automatic revocation of exemption status. Filing with incomplete or incorrect information also yields the same consequences. Here are a few guidelines to remember when filing a 990 form.

Accounting Period
Tax-exempt groups typically need to file their tax return by the 15th day of the 5th month after their accounting period ends. An accounting period, or tax year period, is a consecutive 12-month period which an organization operates. There are two types of tax years - calendar and fiscal. You can contact the IRS tax-exempt hotline (877.829.5500) and ask for your organization’s specific tax year begin and end dates.

Gross Receipts
The type of 990 form the IRS requires depends on your organization’s gross receipts or total revenues. For tax-exempt groups making over $200,000 a year, IRS Form 990 is mandatory to file. Organizations with gross receipts between $50,000 and $200,000 can file IRS Form 990-EZ. And small nonprofits or charities with less than $50,000 are responsible for filing IRS Form 990-N (e-Postcard).

Requirements for a Complete Form 990
Preparing an accurate Form 990 or 990-EZ for your organization takes a considerable amount of time and paperwork. Both forms are several pages long depending on how many schedules you need to attach.

Along with your basic organization details, be ready to present information about program services, revenue, expenses, supplemental financial statements, net assets, balance sheets, a list of employees, other IRS filings, and tax compliance along with governance, management, and disclosures.

E-filing with ExpressTaxExempt
The best way to file a 990 form is through an IRS-authorized, e-file provider. ExpressTaxExempt.com is such a service offering cloud-based solutions to exempt organizations looking for a quicker and more accurate method of filing with the IRS.

The process is entirely simplified with interview-style questions, internal error checks, bulk upload of multiple contributions or donors, automatic schedule inclusion, real-time email notifications of filing status, and storage of transmitted returns.

You can invite board members to e-verify your completed form, and even gain access to a PDF copy after submitting to the IRS. If your return gets rejected, ExpressTaxExempt can point out the errors for you to correct and retransmit. You can even file amended returns for accepted filings if applicable.

It’s necessary for exempt organizations to remain current with their annual tax returns. ExpressTaxExempt.com makes it easy to e-file, but feel free to contact us at 704.839.2321, or through email with support@ExpressTaxExempt.com, for any questions about e-filing with the IRS.

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Frequently Asked Questions

Find answers related to e-filing IRS Form 990, 990-EZ, 990-PF, 990-N (e-Postcard), Form 1120-POL and Extension Form 8868 with our Frequently Asked Questions.

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