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IRS Forms 990: Accountability, Transparency, & Marketing. Gail T. Merridew, MPA, NMC MIECHV Grants Manager United Way of Greater Richmond & Petersburg gail_merridew@peoplepc.com 804.795.9009 (Home) 804.874.5334 (Cell). Purpose of Form.
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IRS Forms 990: Accountability, Transparency, & Marketing Gail T. Merridew, MPA, NMC MIECHV Grants Manager United Way of Greater Richmond & Petersburg gail_merridew@peoplepc.com 804.795.9009 (Home) 804.874.5334 (Cell)
Purpose of Form • Used by tax-exempt organizations, Section 527 political organizations, and nonexempt charitable trusts to provide information to the IRS (as required by Section 6033) • Available for public inspection (Section 6104) • Primary or sole source of information about specified organizations’ programs and accomplishments From IRS Instructions for Form 990 and Form 990-EZ
Three Guiding Principles • Enhancing transparency to provide the IRS and the public a realistic picture of the organization and a reasonable basis for comparison to other organizations. • Promoting compliance and accountability by accurately reflecting the organization’s operations so the IRS may efficiently assess the risk of noncompliance. • Minimizing the burden for filing multiple documents with multiple entities.
Filing Requirements All 501(c)(3) tax exempt organizations need to make an annual filing. Generally: • 990-N (e-postcard) for organizations with annual gross receipts less than $50,000 • Form 990-EZ for organizations with annual gross receipts less than $200,000 and total assets less than $500,000 at the end of the year • Form 990 for organizations with gross receipts greater than or equal to $200,000 or total assets greater than or equal to $500,000 at the end of the year
Filing Requirements • Failure to file for 3 consecutive years will result in the automatic revocation of your tax exempt status. • Tax penalties exist for failure to make timely filings. (A penalty of $20/day, not to exceed $10,000 or 5% of total revenue, may be charged. For organizations with $1 Million or more in total revenue, a penalty of $100/day, not to exceed $50,000, may be charged.)
Accounting Periods • Calendar Year – January 1 – December 31 • Fiscal Year – 365/366 day period beginning with the first day of one month and ending with the last day of the previous month (e.g. July 1 through June 30) - will often coincide with the organization’s natural operating or funding cycle, where one exists. • Short period – an accounting period less than 12 months (may be used to move from one reporting period to another).
When to File • The 15th day of the 5th month after the end of the organization’s accounting period: • For calendar year preparers – 5/15 • For fiscal years ending 6/30 – 11/15 • For fiscal years ending 9/30 – 2/15 • Automatic extensions of 3 months may be requested with Form 8868; however, reasonable cause for the additional time requested must be provided for this or additional extensions.
Who is looking at your Form 990? • IRS • Media • Job seekers • Other nonprofits • State regulators • Watch dog groups • Potential board members • Potential donors / funders*** *** Large foundations often have staff devoted to 990 analysis
GuideStar (www.guidestar.org) • Using GuideStar • How to Find What You’re Looking for in GuideStar • Search Results: • General Information ■ Analyst Report • Board of Directors ■ Financial Data • Mission and Programs (Premium Members or $$$) • Goals and Results • Form 990 and EDOCs
Documents Funders often request one or more of the following: • IRS tax determination letter • IRS Form(s) 990 • Annual Report(s) • Audited Financial Statement(s) • IRS Form 1023 • Other independent financial review or compilation (infrequent) Note: All of these can be uploaded to GuideStar!
Questions? • Tracking non-cash donations? • Tracking volunteer hours? • Performing “comparables” checks for salaries? • Guidelines for conflict of interest and other governance issues? • Separating program, management & general, and fundraising expenses? • Temporary versus permanently restricted funds?
About the Presenter: Having worked in the nonprofit and governmental sectors since 1997, Gail Merridew currently works as MIECHV Grants Manager for United Way of Greater Richmond & Petersburg. Gail has taught the Form 990 class for Nonprofit Learning Point since 2005. As a former management consultant working predominantly with early-stage or “growth-challenged” agencies, Gail believes a combination of education, facilitation and hands-on strategies work most effectively when: Guiding nonprofit organizations to the next level!