On May 29th, the IRS covered a variety of issues on the Forms 990-N
and 990-EZ. Over the hour-long session, the two-person panel discussed topics such as the purpose of the 990 series, who needs to file, common errors found on the forms, the advantages of e-filing, what should go on the forms, suggestions to make the filing process a little less tedious, and how to achieve reinstatement if your organization’s tax-exempt status has been revoked. The overview was in-depth and very educational. Since it was moderated by two IRS officials, CE (Continuing Education) credit was offered for professionals. The presentation lasted approximately an hour, spanning from 2 PM to 3 PM EST, and consisted of a slideshow and voiceover analyses by the two moderators. And yes, we actually stayed awake for the whole thing.
The IRS maintains that the 990 series is not simply a “tax form,” but is also to provide information to the general public and interested contributors. Since it’s a public document, any organization may file the Form 990 and is required to do so if it is hoping to achieve tax-exempt status. Even those organizations that have applied for exempt status but have not been accepted are required to file. Be warned, everything you put on the Form 990 is available to the public and the IRS strongly discourages organizations from putting personal information on the document. Despite these warnings, some 20% of organizations still submit 990s containing Social Security numbers.
While it may seem long, compared to the Form 990, the Form 990-EZ is relatively short: just 4 pages compared to the 12-page document that is the Form 990. Even still, the task of completing the form can be daunting and the IRS recommends making it a group effort to ease the stress for everyone involved. Have those employees that best understand each section of the 990-EZ work on it individually and then combine the sections and complete any necessary schedules. For example, your events manager may know more about the fundraising dinner you had last week than the public relations manager. Alternatively, the public relations manager may be able to better describe the purpose of your organization better than your accounts payable manager. No matter the case, the filing process will become less and less of a headache when the burden of collecting information is shared. It’s the classic Scooby-Doo approach!
Speaking of filing, the IRS recommends that all organizations e-file, even if they are not required to. An astounding 24% of Forms 990 paper filed with the IRS contain errors, while only 1% of e-filed forms contain errors. This fact alone should be enough to convince any organization to switch but if it isn’t, consider this: the fines for filing incorrect or incomplete forms are equal to the fines for filing late, a hefty penalty to pay without a doubt. E-filing, and especially e-filing with Express990, can save you not only money, but time as well. Our software helps calculate certain expenses and revenues, so there’s no punching calculator buttons or worrying about human error.
The most important topic covered was the Revenue Procedure 2014-11 discussion. This IRS publication discloses valuable information on retroactive reinstatement, meaning that organizations that have had their exempt status revoked may be able to be get it back without owing any taxes. The webinar mentioned three particular situations covered by the Rev. Proc. 2014-11, but many more apply. They also discussed different factors for “reasonable cause”; reasons why the organization had not filed a Form 990 or had been delinquent in filing for several years. Keep in mind, though, that these options apply predominantly to those organizations that are “first-time offenders.” If your organization has previously lost its tax-exempt status, it may not be able to access this reinstatement process.
The webinar was helpful and informative. We enjoyed listening and watching it, and we hope this blog was useful for you. We covered the main areas of the panel discussion, but there’s a lot more out there. You can access the information for yourself on the IRS website or read up on some more interesting facts on our FAQs page. There are some big things coming to Form 990 filing and we’re excited about them! There will be a second webinar on June 19th for UBI (Unrelated Business Income). We will be attending and writing a summary for it as well. Stay tuned for more blogs and discussions!