Getting an error code from the IRS can be alarming for anyone in charge of tax-exempt filing. If your Form 990-PF return got rejected by the IRS, it could be because your organization claimed an exemption it doesn’t qualify for.
Error Code F990PF-902-01 is a common IRS rejection for Form 990-PF. If that series of numbers doesn’t make everything crystal clear for you, we’re here to help. Here are some common things to check on to resolve and avoid rejections.
Form 990-PF Error Code F990PF-902-01
If your organization received a Form 990-PF F990PF-902 error code, you probably saw this description:
Basically, the IRS is saying your organization doesn’t qualify for an exemption from paying excise taxes on investment income. Here are the top three things your organization needs to have to qualify for this tax exemption:
1- Exempt Private Operating Foundations and Public Support
Since accidentally claiming an exemption you don’t qualify for is a super common way to get rejected, it’s important to understand whether your organization meets the criteria. To qualify as tax-exempt, your organization needs to be a private operating foundation that has been publicly supported for the last ten years.
If you’re not sure that your organization falls into this category, visit this blog to find out if another 990 series form sounds right for you.
2- Qualifying Individuals and Tax-Exempt Private Foundations
Your private foundation’s governing body needs to be primarily qualifying individuals (less than 25% disqualified individuals). Disqualified individuals can be people who made significant contributions to the foundation, government officials, family members, and other managers, partners, or owners. None of your officers can be disqualified individuals at any point in the tax year.
3- IRS Determination Letters For Tax-Exempt Private Foundations
Your private foundation should have received a determination letter from the IRS, confirming your tax-exempt status. If you don’t have this letter but think your organization qualifies, you can apply for tax-exempt status using Form 8940.
What to Do If Your Form 990-PF is Rejected
If your Form 990-PF is rejected for an Error Code F990PF-902-01, there are several things you can do. It’s important to check with the IRS on the status of your Determination Letter before you claim this kind of exemption.
You can call the IRS’s e-help desk at 1-866-255-0654 and explain that you opted for an exemption by mistake. Additionally, you should correct your Form 990-PF.
How to Correct Your Form 990-PF
To correct your Form 990-PF after an Error Code F990PF-902-01 rejection if you accidentally opted for an exemption you didn’t qualify for, change your Form 990-PF, Part VI, Line 1 checkbox to “NO” on Form 990-PF.
If your e-filed Form 990-PF with ExpressTaxExempt, it’s super easy to fix the issue. Just log in and select “Fix Me” next to your rejected return. You’ll go right to the Type of organization page. Select “NO” for “Domestic Exempt Operating Foundation Described in Section 4940(d)(2).
Retransmit Your Form 990-PF for Free with ExpressTaxExempt
When you e-file with ExpressTaxExempt, you can always retransmit your Form 990-PF for free, regardless of why it was rejected. It’s easy to access your return, correct any inaccuracies, and retransmit to the IRS.
Our software helps minimize rejections by checking your information for mistakes and discrepancies. Click here for more on Form 990 filing errors and how to avoid them.
At ExpressTaxExempt, we’re here to keep you up to date on the latest news and IRS requirements. Visit this blog to find out about how the second round of PPP could benefit your private foundation.