Did you know? For nonprofits that file their Form 990s via paper (as opposed to electronically) the IRS will consider any blank or incomplete responses to be the same as if the nonprofit had NOT filed the Form 990 at all; penalties for late filing may apply, even if the (incomplete) form was filed in a timely manner. Takeaway: When reviewing the form prior to filing, carefully check for ANY blank fields, and look for answers that are incomplete.
Should your organization file Form 990-EZ rather than the regular 990? Charitable nonprofits may use the 990-EZ when annual gross receipts are below $200,000 AND the fair market value of assets is below $500,000. Because typically more than one-third of all paper-filed Form 990-EZs contain errors, the IRS recently introduced an electronic version of the Form 990-EZ that includes pop-up boxes and links to IRS resources throughout the form, to help 990-EZ filers avoid common mistakes.
Grantmaking organizations take note: The IRS tells us that newly nonprofits formed using Form 1023-EZ to apply for tax-exemption will now receive a Determination Letter that is IDENTICAL to those that apply using the standard Form 1023. This means that from now on it won’t be possible to tell just by looking at the Determination Letter whether a nonprofit applied using the 1023-EZ, or the standard form. Private foundations concerned about making grants to start-ups that applied using the EZ process (and may not have been vetted as thoroughly as applicants using the standard-form process) may elect to do their own due diligence to vet potential grantees, rather than rely on the IRS determination process. The IRS now publishes all the basic organizational information submitted by organizations using the Form 1023-EZ to obtain recognition of tax-exemption in a searchable database.