Form 990, formally the Return of Organization Exempt From Income Tax, is the annual information return that most tax-exempt organizations in the United States must file with the Internal Revenue Service. Although these organizations generally pay no federal income tax on income related to their mission, they must still report their revenue, expenses, assets, programs, governance practices and the compensation of officers, directors and key employees. The form is the main way the IRS, state regulators, donors and the public check that a charity or other exempt group is operating as it should.
Form 990 is called an information return because, for most filers, it calculates no tax. Organizations that do owe tax on unrelated business income must file a separate return, Form 990-T. The form covers groups exempt under Internal Revenue Code section 501(c), including charities, trade associations, social welfare organizations and social clubs, as well as some political organizations under section 527.
Which version to file
The IRS provides several versions, based mainly on the organization's size:
- Form 990-N, the electronic "e-Postcard," is for small organizations whose gross receipts are normally $50,000 or less, and asks for only basic identifying information.
- Form 990-EZ is a shorter return for organizations with gross receipts under $200,000 and total assets under $500,000 at year end.
- The full Form 990 is required for organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more.
- Form 990-PF is required for all private foundations, regardless of size.
Churches and certain related religious organizations, and most government units, are not required to file. Since the Taxpayer First Act of 2019, returns for most tax years must be filed electronically.
What the form covers
The core form summarizes the organization's mission, its largest programs and their cost, and a statement of revenue and a statement of functional expenses. Expenses are divided into program services, management and general, and fundraising, which lets readers see what share of spending goes directly to the mission. A balance sheet shows assets, liabilities and net assets. Governance questions ask about board independence, conflict-of-interest policies and whether the board reviewed the form before filing. Additional schedules cover public support tests (Schedule A), large contributions (Schedule B), political and lobbying activity, compensation over set thresholds (Schedule J) and transactions with insiders (Schedule L).
Form 990 figures are prepared on the organization's normal accounting basis, but they are not identical to its GAAP financial statements. For instance, a nonprofit may record a pledge as contribution revenue under GAAP but, depending on its method, treat it differently on the 990. Schedule D includes reconciliations so that readers can trace the differences, which often involve unrealized investment gains, donated services and the classification of donor-imposed restrictions.
Deadlines and penalties
The return is due on the 15th day of the fifth month after the end of the organization's accounting year, which is 15 May for a calendar-year organization. An automatic six-month extension is available by filing Form 8868. Late filing penalties apply per day, up to an annual cap that is higher for larger organizations. Most seriously, under the Pension Protection Act of 2006, an organization that fails to file a required return for three consecutive years automatically loses its tax-exempt status, and contributions to it stop being deductible until it reapplies.
Public disclosure and uses
Unlike most tax returns, Form 990 is public. Organizations must make their three most recent returns available on request, and the IRS publishes filed returns, although the names and addresses of individual donors on Schedule B are generally kept confidential. Watchdog groups, journalists, grant-makers and researchers use 990 data to compare charities, examine executive pay and assess financial health, such as how much of a group's budget is spent on programs and how large its reserves are compared with annual expenses. Regulators use it to spot private benefit, excessive compensation or other abuses that could threaten a group's eligibility to earn tax-exempt income. Many states accept a copy of the 990 to satisfy their own charity registration and tax filing requirements.