There seems to be an assumption out there that because nonprofit organizations do not incur traditional taxes like LLCs or corporations do, their owners are not responsible for any filings with the IRS whatsoever. This is a false assumption – and don’t get caught in a trap thinking it’s true.
If you own a tax-exempt nonprofit organization like a 501(c)3, there is an important filing deadline coming up at the end of this week on May 15, 2015.
Even though tax-exempt nonprofit organizations are not responsible for traditional tax payments, most are required to file an annual information return or a notice with the IRS. The most common nonprofit tax return is known as Form 990: Return of Organization Exempt from Income Tax. But there are other returns like Form 990-EZ, Form 990-PF, and Form 990-N. The specific form that must be sent to the IRS is based on the type of nonprofit. No matter which form you’re required to submit as a nonprofit owner, it should include general financial data about an organization, information about the organization’s board of directors and members, and other relevant information. The primary reason that the IRS requires some type of regular communication from nonprofits is to ensure that their owners are utilizing their organizations for legitimate reasons – and that they’re not simply looking for a way to avoid paying taxes on taxable income.
When a Nonprofit Tax Return is Due
Nonprofit information returns and notices must be filed with the IRS by the 15th day of the fifth month after a tax-exempt organization completes a fiscal year. With this rule in place, the filing deadline for many nonprofits to provide information about their 2014 activities falls on Friday, May 15, 2015.
A good number of nonprofit organizations open their fiscal calendar years at the beginning of each regular calendar year, which starts on January 1st. Because of this, the May 15th date is viewed as a traditional IRS deadline for nonprofit owners. But it’s important to remember that this filing date can differ from one nonprofit to another depending on when it is officially registered. Tax extensions are also available for nonprofit filings.
Importance of Filing a Nonprofit Tax Return
The IRS has the authority to revoke tax-exempt status from a nonprofit organization for a variety of reasons. A big reason for this revocation is if the nonprofit’s owner fails to file an appropriate information return with the IRS for 3 consecutive years. In these cases, the tax-exempt status of an organization would be removed as of the date on which the third annual filing is due.
What Information Should You Include on Form 990? And What Should You Avoid Including?
The various incarnations of Form 990 for nonprofits require their owners to provide specific information in order for the forms to be processed. However, the IRS has warned taxpayers to only divulge the requested information on each return. With so much identity theft out there, it is recommended that you avoid including your Social Security Number on a nonprofit tax return. Refrain from putting any unnecessary identifying information about your organization’s members on these documents. It’s critical to take proper precautions to reduce your chances of becoming the victim of a tax scam or identity theft.
Turn to the accounting professionals at 1-800Accountant for assistance with filing your nonprofit tax return. Call 1-800-222-6868 or visit www.1-800Accountant.