Form 990 Rejection: Surviving Bumps in the Road
| March 22, 2016 | Form 1023, Form 1024, Form 990, Form 990 rejection, Form 990-N, Tax Exempt Status, Tax Exempt Status Revoked | No Comments
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 [email protected].
