There is another tax return filing deadline coming up in a couple of weeks. It doesn’t directly affect most taxpayers but they might belong to an organization required to file a return. May 15th is the deadline to file one of the 990 series of returns for tax exempt organizations. These are special organizations (generally corporations) that are not a business set up to make a profit. They can include charitable, religious and community organizations.
As taxpayers, we are most familiar with those organizations we can donate to and then deduct our contributions on our tax return. For the most part, these are 501(c)(3) organizations; groups like a church, The United Way and Humane Society. But the tax code recognizes other types of organizations as tax exempt (but not tax deductible). These could include labor, civic, recreational and fraternal organizations. There is a long list under IRC sub-section 501. Organizations that qualify are required to file a return but they won’t owe any tax on money they earn from their stated purpose. But...they can be taxed on income from side activities. (A gardening club won’t be taxed on income from dues. But if they regularly operate a food booth at a community event, that income could be taxable.)
The return any tax exempt organization files will depend on their total receipts. If they bring in less than $50,000 they should be able to use the e-postcard to tell the IRS that they are still in operation. If they earn more than $50,000 or have side income, they’ll have to file a 990 or 990-EZ. Actually, the revenue and expense info is just a part of a 990 return. Much of these returns are also informational to make sure that the organization continues to qualify as tax exempt.
A couple of notes about these returns. First 990s are public record. The organization is required to have a copy that can be view by anyone. Also, if the group misses filing a return for 3 consecutive years, they lose their tax exempt status and have to file special paperwork to be reinstated. For an organization that is also tax deductible, this means they can’t accept deductions until they are back in good standing. This happened to a lot of organization recently.
You won’t hear much about the due date for 990 forms because they don’t affect too many taxpayers. But if you’re a member of a tax exempt organization, please check and make sure your group is filing at least the e-postcard. It’s easier to file the return then to get re-instated.