The Form 990: Not-for-profits, you can run, but you can’t hide
When it comes time to file the Internal Revenue Service’s Form 990, Return of Organization Exempt From Income Tax, do you think of it as just another task to cross off your to-do list? If so, you should know that there’s more to it than meets the eye.
Form 990: A refresher course
So, what is the IRS Form 990 anyway? It is an information return required annually for most tax-exempt organizations. It showcases an organization’s mission, programs, governance structure and operations, in addition to financial data.
Check out this blog post to learn five things you may not know about the IRS Form 990.
Can’t I just fill it out and be done with it?
Well, you could, but because the IRS Form 990 is accessible by anyone out there (think potential donors, clients, media and members of the community), you want to fill out the form thoroughly. As we wrote in an earlier blog post, the IRS Form 990 is an opportunity for not-for-profits to shine. Don’t only think about satisfying the IRS’s requirement. Take the time to illustrate all the great work your organization does to achieve its mission. You never know who might read it and what might happen as a result.
What should I watch out for?
Before filing your IRS Form 990, consider potential red flags like:
- A “no” response to a question about whether certain governance practices have been established
- A deficit in unrestricted net assets (“net assets, without donor restrictions” on your financial statements upon implementation of FASB ASU 2016-14)
- An indication of engagement in political campaign and lobbying activities
For a complete list of potential red flags, check out this article from the AICPA Not-for-Profit Section. (Temporarily available to nonmembers.)
We’ve got resources to help
Those who work with and for not-for-profits can find valuable tax compliance and financial management resources from the AICPA Not-for-Profit Section by visiting www.aicpa.org/nfp. Tax compliance resources available to section members include an overview of IRS Form 990 series of returns, errors commonly made, schedule-specific information, and checklists for completion of each type of return. For a limited time, nonmembers can access Form 990 Red Flags for 501(c)(3) Charitable Organizations.
Join the AICPA Not-for-Profit Section today!
Lana Richards, Manager- Not-for-Profit Content Development, Association of International Certified Professional Accountants