Tax Support for Nonprofit Leaders
Form 990 is your most visible public relations document
James S. Hohn offers your organization more than three decades of knowledge and experience in financial management, specializing in nonprofit endowment and trust administration. A US Department of Treasury licensed Enrolled Agent, James has developed a national team of highly specialized tax experts to best meet client needs.
Mr. Hohn directed the regional and national Philanthropic Services divisions of financial institutions including Wachovia, PNC and Merrill Lynch. He managed the administration and tax reporting of thousands of charitable trusts, private foundations, endowments and planned giving vehicles.
Owner of Planned Giving Resources (www.pgresources.com) James has served on planned giving development staffs and directed planned giving programs for local, regional and national nonprofit organizations:-Major Colleges and Universities -Private/Family Foundations
A contributing member of the fundraising community, Mr. Hohn is a founding Trustee of the Partnership on Philanthropy, and has been a member of the Partnership for Philanthropic Planning since 1990. An active contributor to the development of AFP/NJ and AFP/NY, he served on the Board of Directors of both organizations for three terms, concurrently holding the post of President of the NJ Council of Grantmakers and supporting the NY Regional Association of Grantmakers. Mr. Hohn continues to train planned giving, development, and administrative staffs, as well as volunteers, to understand and successfully conduct effective and engaging planned giving programs.
Recognized for his accomplishments in both the nonprofit and for-profit support of philanthropic giving, Mr. Hohn served as Vice President of the Board of Trustees for a grant making Foundation and he has advised numerous grant seekers on program evaluation initiatives, and proposal structure. He often speaks at conferences and seminars to promote philanthropy and charitable giving and is an Adjunct Professor of Management at several Universities.
For additional information, send an email to firstname.lastname@example.org or call 732 927 1747.
Contact email@example.com to discuss the specific, evolving financial needs of your nonprofit organization. We will gladly share ideas and offer resources to enable you to maximize your income and continue to provide on-going vital community services.
From preparing your 990 to working with your staff, our experts are available to ensure that all paperwork is properly completed and filed in a timely manner. We will help you develop a workable schedule, identify the data that must be organized, and assist you to assess your current financial situation.
The following is a list of the primary services we currently offer to our diverse network of clients:
Non-Profit Tax Resources can prepare your organization’s Form 990, 990 EZ, or 990-T, including all relevant Attachments and Forms. If your nonprofit has any returns that may be delinquent these returns should always be filed first. Doing so makes a strong argument for the abatement of any penalties that may be assessed.
Form 990, 990 EZ, and 990-T are due on the 15th day of the 5th month after your organization’s tax year ends.
|If your fiscal year ends:||Form 990, 990EZ, 990 T is due:|
|December 31||May 15|
|June 30||November 15|
|September 30||February 15|
Your organization can apply for an automatic 3 month extension. If you need more time after that, you can request an additional 3 month extension. I have never known an extension request to be turned down, unless the extension request was not filed by the due date, or if there is a history of late filing abuses.
If your organization has income from business activities which are unrelated to its reason for being tax-exempt, such income may be subject to Federal and State income tax. However, there are MANY exceptions provided by the Internal Revenue Code. If your organization is paying tax on unrelated business income by filing Form 990-T every year, consider having Non-Profit Tax Resources review the nature of the activities generating the income. Many tax preparers only prepare a handful of Form 990s each year and are not familiar with the fine points of avoiding tax on unrelated business income. These rules are not related to typical corporate and individual tax rules.
Basic financial information we will need from your organization to prepare the Form 990:
Non-Profit Tax Resources will need a breakdown of your organization’s revenue classified by type, like this:
* Example: Your organization sells t-shirts at a fundraiser. You purchase the t-shirts for resale for $5 each. A patron buys a t-shirt with a price of $10, but pays you $30 and tells you to “keep the change.” Result: You have $10 gross revenue from the sale of the t-shirt, which gives you a $5 profit. And you have received a $20 cash contribution. And yes, you actually have to keep track of those details.
We require a list of your organization’s expenses, by category (officer’s salary, other salary, payroll taxes, rent, electric, supplies, travel, etc). If your organization’s books classify expenses based on whether they are program, management, or fundraising, I’ll need that information as well.
You will be asked to provide your organization’s beginning and ending cash balance according to your checkbook register. If you do not balance the checkbook, you need to let us know this.List of assets (if any) or depreciation schedule (furniture, building, computers, equipment, etc).
Non-Profit Tax Resources will contact you to schedule a teleconference with your key leaders. At that time we will compile a complete picture of your organization:
With precise, timely and in-depth information you can be confident that the competed return will accurately present your organization and it vital services.
Help with Form 990-N
If your organization needs help in meeting its Form 990-N requirement, Non-Profit Tax Resources is here to assist you. By having you answer a couple of questions, we can fill out and submit the Form 990-N for you. Our fee is $100. Send an email to firstname.lastname@example.org or call 732 927 1747 and we will be glad to assist you.
Additional state filing requirements may or may not apply to your organization.
What is Form 990-N?
Form 990-N is an electronic form that is to be used by nonprofits to meet the new notification requirement for nonprofit entities not required to file a Form 990 or Form 990-EZ. If your organization has not been required to file form 990 / 990-EZ because its gross receipts are not normally more than $50,000, your organization will be required to submit Form 990-N. The purpose of the form is to notify the IRS that your organization is not required to file a Form 990 or 990-EZ, and to verify its continued existence and qualification. Churches do not have to file Form 990-N.
If your nonprofit organization has not applied to the IRS for official recognition of its tax exempt status using Form 1023 or 1024, see additional information further down the page.
Information which your organization has to provide to the IRS on Form 990-N:
When do I have to submit Form 990-N?
Form 990-N has the same due date as form 990 and Form 990-EZ, which must be filed on or before the 15th day of the 5th month following the end of the tax year for which the notification is being submitted. If your organization’s tax year ends on December 31st, Form 990-N must be submitted on or before May 15th of the following year. If your organization has a June 30 year end, Form 990-N is due November 15th. There is no provision for an extension of time to submit Form 990-N (other than the one-time filing relief which expired 10/15/2010).
Form 990-N will have to be submitted using a computer.Visit the website designated by the IRS, which allows you to enter the information into the site for submission electronically to the IRS.
The IRS has designated the Urban Institute website as the place to file Form 990-N online. Urban Institute Form 990-N.
Be aware that you cannot submit a prior year Form 990-N using the Urban Institute’s website. The IRS does not require that prior year Form 990-N’s be “caught up.” However, any e-file provider can file a recent prior year Form 990-N’s using their professional efile tax software.
How does our organization show that it continues to be exempt from Form 990 / 990-EZ filing requirements?
IRC Section 6001 requires that all organizations maintain records. These records will provide evidence of the continuing basis for the organization’s exemption from Form 990 / 990-EZ filing requirements. In other words, your accounting records will prove that your organization’s gross receipts are below the $50,000 filing threshold. Form 990-N will require that you simply state that the organization’s annual receipts are normally $50,000 or less. It will ask for the organization’s web site URL (if any), and for the name and address of the principal officer of the organization. There is also a place to indicate if the organization is going out of business. You will need to know the organizations Employer Identification Number (EIN) in order to file Form 990-N.
What if I don’t have access to an internet connected computer? Is there a paper form 990-N that I can file?
No. There is no paper Form 990-N. The statute requires that the annual notification on Form 990-N be submitted electronically. There is no provision for any paper Form. You can file from a friend or relative’s computer, or use the computer at your local public library. If you absolutely cannot access a computer connected to the internet, you may file Form 990 or 990-EZ instead of Form 990-N. However, you must fill out the ENTIRE Form 990 / 990-EZ, not just the parts that correspond to Form 990-N. This means that if you are a 501(c)(3) you will also have to fill out Schedule A. Other schedules may also be required.
Our organization is small, but we have unrelated business income and we file a Form 990-T every year. Does this mean we don’t have to file Form 990-N?
Filing Form 990-T does not relieve the organization from the requirement to submit Form 990-N.
Filing Form 990-N does not relieve the organization from the requirement to file Form 990-T if there is unrelated business taxable income to report.
Is the information we provide about our organization on Form 990-N open to public inspection, just like Form 990?
Yes, the Form 990-N is subject to the public disclosure and inspection requirements of IRC section 6104. When you submit Form 990-N electronically, there should be a form to print to indicate to show that you filed.
What are the penalties for not submitting Form 990-N?
Section 6652(c)(1)(E) of the Pension Protection Act of 2006 provides that there is no monetary penalty for failure to submit Form 990-N. However, if your organization fails to submit Form 990-N for 3 years in a row, the penalty is automatic revocation of your tax exempt status. The revocation is effective beginning the date the IRS determines was the last day the organization could have timely filed the third required Form 990-N.
Any organization whose tax-exempt status is revoked for this reason must apply to the IRS using Form 1023 or Form 1024 (whichever is applicable) in order to obtain reinstatement regardless of whether such organization was originally required to make an application for tax-exempt status. If, upon application for reinstatement of tax-exempt status, an organization can show to the IRS that there was reasonable cause for the failure to submit Form 990-N as required, the IRS may, at its discretion, reinstate the organization’s tax exempt status RETROACTIVE to the date of revocation.
Before you can apply to the IRS for recognition of your organizations tax-exempt status, your organization must be incorporated. This is accomplished by preparing and filing your articles of incorporation (also referred to as “articles of organization” or “organizing documents”) with the state in which you are incorporating.
States generally have a “fill-in-the-blank” form that meets their requirements for incorporation. You can download your state’s nonprofit corporation “one-size-fits-all” incorporation document from your state’s “Division of Corporations” website. (Each state has a different name for the department that handles incorporation).
Be sure to download the “nonprofit” articles of incorporation, not the “for-profit” articles. You should read the instructions carefully. Florida, for instance, requires 3 directors to form a nonprofit. I also recommend that you read over the state statutes that govern formation, operation, and dissolution of a nonprofit corporation in your state.
Keep in mind that just because the articles you download may meet your state’s minimum requirements to form a nonprofit corporation, it doesn’t mean that the articles are of the best construction (from a legal perspective) to meet the particular needs of your corporation.
However, for most small nonprofits, your state’s generic articles should be just fine.
Meeting state requirements and meeting IRS requirements are two entirely different topics. The IRS requires additional language in your Articles of Incorporation or Bylaws in order to qualify for tax-exempt status.
In summary, to “do-it-yourself,” download your state’s nonprofit articles form, fill in the blanks, and add the necessary language required by the IRS (discussed below). You might consider retyping the whole thing in your word processor so it is neat and orderly and presented professionally. Read the State’s instructions carefully.
To be clear, if you are the founder/director/officer of a nonprofit, you can, without an attorney, create your own Articles of Incorporation and bylaws, or you can use your State’s generic Articles. It is perfectly legal to do so and many small organizations do it all the time.
Hiring Non-Profit Tax Resources
The very best way to incorporate your organization is to work with someone who is knowledgeable about incorporating nonprofit organizations. We have been helping nonprofit organizations large and small for over thirty years. We have helped incorporate organizations with a wide variety of purposes and our fees are extremely reasonable. We can also help you with your organizations bylaws. The bylaws are a document that spells out how the organizations is to be governed, how the trustees are chosen, etc. Further details are available in the section titled Form 1023 Preparation.
In order to qualify for tax-exempt status as a charitable organization [501(c)(3)], your organization’s Articles of Incorporation must limit the organization’s purposes to one or more of those described in that code section. Stating that the organization is permitted to carry on any and all activities legally permitted to be carried on in that state will not pass muster with the IRS.
Instead, the purpose clause must limit the activities to those described by the IRS as charitable. Example language:
“Do-Gooders, Inc is formed exclusively for charitable purposes within the meaning of section 501(c)(3) of the code.”
Additionally, the assets of a charitable organization must be permanently dedicated to an exempt purpose. This means that if an organization dissolves, its assets must be distributed for an exempt purpose, or to the government for public purposes. Your articles of incorporation must contain a “dissolution” clause requiring proper distribution and dedication of assets upon dissolution.