If you’re a small, tax-exempt organization with gross receipts averaging between $50,000 and $200,000, you are likely eligible to file IRS Form 990-EZ. This form is due on the 15th day of the 5th month after your financial year ends. So a group with a January 1 start date needs to file by May 15th. A group with a July 1 start date needs to file by November 15th, and so on.
What Happens if You Fail to File
If you fail to file IRS Form 990-EZ on time, your organization could face the following penalties. Now, it should be stated that the IRS does not always impose penalties, but they have the right to.
- Late Filing Penalty — The IRS has the right to impose a late fee of $20 for each day your return is late.
- Loss of Tax-Exempt Status for Consecutive Late Filings — an organization that fails to file a return for three consecutive years will automatically lose its tax exempt status.
- Difficulty Obtaining Grants and Donations — some grants require timely tax filings as a condition of funding. And if you lose your tax-exempt status due to consecutive late filings, it will be really difficult to obtain grants, donations and other sources of funding.
- Increased Scrutiny from the IRS — late filing could trigger additional scrutiny and potentially lead to an audit.
- Loss of Public Trust — IRS consequences aside, failing to keep your affairs in order puts your group’s reputation on the line.
What if You Can’t File on Time?
If you anticipate not being able to file form 990-EZ by your deadline, take proactive steps to avoid potential complications. You can do this by filing IRS Form 8868.
IRS Form 8868 will grant you an automatic six-month extension to file your 990-EZ. You will still have to file your 990-EZ after the six month period, but filing the extension is crucial to avoid penalties.
Reasons to Request an Extension Using IRS Form 8868
We see it all the time. The 990 and EZ are more complex than the 990-N e-Postcard, so there are many reasons a group like yours might want to file for a 990-EZ extension. Maybe you have complex finances or transactions that require significant documentation. Maybe you are short volunteers right now and you don’t have the time to gather what you need. Natural disasters, illnesses and other unforeseen circumstances can arise.
How Can You File IRS Form 8868
If you are a MoneyMinder customer, filing for an extension for your 990-EZ is, well, easy! Simply log in to your MoneyMinder account and use the dropdown at the top to navigate to the most recently completed financial year for which you want to file. Then, navigate to Tax Forms and select the 990-EZ section to begin filing your 8868 extension.
Federal Tax Requirements for Nonprofits
IRS tax requirements feeling clear as mud?
Download our nonprofit federal tax guide as a simple resource that condenses a wealth of information into a concise, easy-to-understand format so you can keep your group compliant with confidence. Grab your free copy today.
Looking for even more help with nonprofit tax compliance? Our partners at BryteBridge can assist with compliance and all forms of the 990.
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