What Happens if you Submit an Incomplete 990 Return?

How to proceed if this happens, and more importantly how to avoid it!

form 990

If you prepare 990 returns for a tax-exempt organization, you probably know the anxiety of submitting this return to the IRS. You probably asked yourself, “Did I fill out everything correctly?”, or “Did I forget any attachments?”. 

We’re willing to bet you also asked yourself, “What happens if I DID forget something?”. This is the question we’re tackling here! What does the IRS do with forms that are incomplete or just missing? 

Keep reading to learn more about the process! 

All the ways your 990 Reporting can go wrong…

We know this heading is daunting, but there are some crucial mistakes that can be made when filing with the IRS. Here are the most common errors when it comes to the 990 series: 

  • If your return is missing required information in the 990 return itself or you have forgotten to attach schedules that are required, the IRS is unable to accept your IRS Form 990
  • Some organizations may file the correct information, but they used the wrong 990 Series form, one that doesn’t apply to an organization of their size or income level. In this case, the IRS still cannot accept this return. 

We’re not talking about including incorrect information here. Providing incorrect information will result in the IRS rejecting the 990 form until you update it and resubmit it. 

How will you know that Form 990 is Incomplete?

When it comes to incomplete forms with missing information, the IRS will let you know. They will send you a letter by mail. There are three different letters depending on the situation:

  • Letter 2694C: Returning Form 990 due to Missing Information 
  • Letter 2695C: Returning Form 990-EZ due to Missing Information 
  • Letter 2696C: Missing Information Request to Process EO Return 

If you receive one of these letters, you will need to respond in a timely manner.

What if my organization receives an IRS Letter?

If your organization receives a letter this is the process for addressing it. 

  • First, the letter will have instructions for your organization to follow to resolve the Form 990 issues. 
  • Update the Form 990 with the needed information and attach a copy of the IRS letter, make sure the return is signed by the appropriate individual. If you have reasonable cause for the mistake, you should attach a statement explaining your situation. 

It is very important that you send the updated IRS 990 Form to the IRS within 10 days of receiving their letter. Once the IRS receives the accurate version of the return, they will consider the date of acceptance. If you wait longer than 10 days to respond, you run the risk of IRS penalties.

E-file Accurate Returns with ExpressTaxExempt

Now that the IRS has mandated e-filing of these forms, many organizations have had to adjust and leave paper forms in the past. With ExpressTaxExempt, the process of filing Forms 990 electronically, has never been easier or more efficient. 

That sense of dread you may have felt in the past when mailing your (hopefully accurate) return to the IRS can be forgotten! We audit your Form 990 before you transmit it to the IRS using the IRS Business Rules.

This audit ensures the form is completed per IRS instructions. If they answer something on a form that requires a schedule, the audit will capture that and the schedule will generate for the client to complete.

Are you ready to get started with ExpressTaxExempt? Create your free account today!

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