General Information on Form 990

An excerpt from an article by the New York Nonprofit Coordinating Committee

The Form 990, entitled “Return of Organization Exempt From Income Tax,” is a report that must be filed each year with the Internal Revenue Service (IRS) by organizations exempt from Federal income taxes under section 501 of the Internal Revenue Code, and whose annual receipts are "normally" more than $25,000 a year.  It is an information return and not an income tax return since the organizations that file it do not pay income taxes (except, as explained below, in certain cases an organization may have to pay an “unrelated business income tax”).

There are many different kinds of nonprofit organizations that are exempt under section 501 of the Code.  Charitable organizations are the principal focus of this guide.  They are exempt from income taxation under section 501(c)(3) of the Code and, in addition to being required to file the Form 990 itself, must also file Schedule A to Form 990.  (Schedule A need not be filed by most other organizations exempt under section 501, such as trade associations, social clubs and the like.)  Generally, organizations are exempt under section 501(c)(3) if they pursue charitable, educational or religious purposes.

An organization "normally" receives more than $25,000 a year if its gross receipts for the immediately preceding three tax years average $25,000 per year or more.  Organizations with gross receipts of less than $100,000 and total assets less than $25,000 at the end of the year may file a short-form Form 990 called Form 990-EZ.  Organizations that are classified as private foundations (generally organizations that receive funding from a very few sources) are required to file a Form 990-PF.  Generally churches are not required to file a Form 990 (although some churches file voluntarily).

Today the Form 990, in addition to being the main IRS reporting form for nonprofits, is the basic component of the annual report that must be filed with a large number of state offices that regulate charitable solicitation.  Many states require supplemental reports as well as the Form 990. 

The Form 990 serves two essential purposes.  First, it provides information that helps government agencies (the IRS and state charity regulators) enforce the laws that govern nonprofits.  For example, it helps government regulators learn whether groups have been spending their funds in a way that might cause them to lose their charitable and tax-exempt status.  Second, the Form 990 provides a great deal of financial information about the filing organization’s financial condition, about its financial strength or weakness and about such things as the sources of its income. 

The Form 990 is a very public document and it is becoming more public.  Today an organization’s Forms 990 for the past three years must be shown to anyone who wants to see them.  In addition, copies of these forms must be given to anyone who requests them (either in person or in writing) and who pays a reasonable fee -- $1 for the first page and 15 cents for every page thereafter and postage, if applicable.    Furthermore, most Forms 990 beginning with the year 1997 are being posted on the Internet by the National Center for Charitable Statistics and Guidestar, two nonprofit groups in the Washington D.C., area. 




Last Updated: May 19, 2004