Nonprofit Accounting Basics

990N

For years, filing Form 990 was not required of organizations normally having less than $25,000 in gross receipts. That has changed. With the exception of churches and certain related organizations, small organizations are now required to begin filing the brand new 990-N for years ending December 31, 2007 and later. This so called "electronic postcard" is filed electronically with the IRS. Information about the filing and a link to the form itself can be found in the nonprofit section of the IRS website, www.irs.gov. This filing requires basic information about the organization such as:

  • EIN
  • legal name
  • dba name(s) 
  • mailing address
  • confirmation that gross receipts are normally under the 990 filing threshold

It is important that small organizations comply with this new requirement because exempt status will be revoked if the form is not filed for 3 years.

Important note for supporting organizations: supporting organizations (i.e. 509(a)(3) entities), even if under the $25,000 threshold, are now required to file Form 990 or 990-EZ. The electronic postcard will not suffice for these highly-scrutinized organizations.

Also note: the 990-N filing is not applicable for private foundations. As has always been the case, there is no gross receipts minimum for filing Form 990-PF.

For the 2010 tax year, more organizations will be able to take advantage of filing Form 990-N instead of the 990 or 990-EZ. The IRS has recently announced the $25,000 threshold, which had never been indexed for inflation, will be raised to $50,000 beginning with the calendar year ending December 31, 2010.

Lastly, about the threshold: Note that the rules say "normally" under $25,000. "Normally" is defined as the average gross receipts of the year in question and the prior two years. So it is possible to have an income bubble in one year and not have to file as long as the average stays at $25,000 or less. For organizations less than 3 years old, special rules apply to define "normally".

If you are on the board or are a member of such a small organization, it would be prudent to be sure the organization is aware of this new requirement. Unfortunately, many of these small organizations have a yearly rotation of officers and consistent procedures are difficult to maintain from year to year. This filing is one procedure that has to be maintained.