As easy as it is to submit a 990 form to the IRS electronically, there are instances when your form can get rejected. At that point, it’s up to you to figure out why the IRS rejected your return and how to correct it before incurring any penalties.
The IRS can deny your 990 form
for a wide variety of reasons – each tax-exempt organization can have different financial situations. But here are five of the most common reasons your 990 tax return can get rejected.
1. Organization Hasn’t Received Exemption Status
Before filing any 990 form with the IRS, your organization must have exemption status. To apply for tax exemption, you should file either IRS Form 1023 or Form 1024. Exempt organizations usually wait a full year after receiving exemption status before filing a 990 form.
2. Tax Exempt Application is Still Pending
Even if you’ve submitted a 1023 or 1024 form, your exemption status isn’t official until you get a Determination Letter from the IRS – this will confirm your tax-exempt certification along with other pertinent information.
If the IRS requests you to file a 990 form before receiving a Determination Letter, there is an option to select a pending application. Failing to indicate this option when applicable will cause a rejection.
3. Incorrect Tax Year Periods
Your tax year period, or accounting period, must match the IRS database unless the organization terminates within the reporting tax year. Some mistake their group as operating on a calendar tax year when it’s a fiscal tax year – others think they can change their tax period simply by putting the dates they desire on the tax return.
You can find your correct tax year period dates from previous 990 forms, your exemption application form, or you can call the IRS tax-exempt hotline at 877.829.5500. If you wish to change your tax year period, you must follow the procedures mandated by the IRS.
4. Exemption Status is Automatically Revoked
Failing to file for three consecutive years results in an automatic loss of tax-exempt status. Before filing a Form 990, you must reapply for exemption status with Form 1023 or 1024 and get a Determination Letter from the IRS. You can contact the IRS directly to inquire about your status before filing.
5. Duplicate Tax Return
In some cases, the IRS may already have approved a 990 return for the tax year you’re attempting to file. You might have a CPA, tax professional, or parent company that already filed on your behalf – you’ll need to clarify that information within your organization. At the very least, you can reach the IRS and ask for the date they received the filing.
With ExpressTaxExempt.com, we automatically identify the reason for a rejected return and allow you to make corrections so you can re-transmit with no extra charges – you can also re-transmit however many times is necessary.
Our U.S. – based support team in Rock Hill, South Carolina can assist you with a rejected e-file – call us at 704.839.2321, Monday through Friday from 9 a.m to 6 p.m. EST or send a message with [email protected].