Annual Reporting Requirements for Exempt Organizations

If an organization whose gross receipts are less than $1,000,000 for its tax year files its Form 990 after the due date (including any extensions), and the organization doesn't provide reasonable cause for filing late, the Internal Revenue Service will impose a penalty of $20 per day for each day the return is late. The maximum penalty is $10,000, or 5 percent of the organization's gross receipts, whichever is less. The penalty increases to $100 per day, up to a maximum of $50,000, for an organization whose gross receipts exceed $1,000,000.

An organization that fails to file the required information return (Form 990, Form 990-EZ, or Form 990-PF) or e-Postcard (Form 990-N) for three consecutive tax years will automatically lose its tax-exempt status. The revocation of an organization’s tax-exempt status will not take place until the filing due date of the third year. For example, if your Form 990 is due on May 15, 2009 (for tax year 2008) and you do not file in 2009, 2010, or by May 15, 2011, you will lose your tax-exempt status on May 15, 2011. The IRS will not send additional notices once your tax-exempt status is automatically revoked.

The IRS treats an incomplete return the same as a return filed late - the penalties are the same. For example, if an organization fails to attach a required schedule to its annual return - one of the most common errors in filing Forms 990, 990-EZ, and 990-PF - its return is considered incomplete and filing penalties may apply.

Can penalties for filing Form 990 late be abated?

Failure to timely file the information return, absent reasonable cause, can give rise to a penalty under section 6652 of the Code. Whether an organization qualifies for the reasonable cause exception to the penalty will be determined on a case-by-case basis taking into account all relevant facts and circumstances.

The regulations provide that a request for abatement of penalties based on reasonable cause must be made in the form of a written statement, containing a declaration by the appropriate person that the statement is made under penalties of perjury, setting forth all the facts alleged as reasonable cause. This statement should be made as an attachment to the Form 990; please disregard the Schedule O instructions that ask for this statement to be included in Schedule O. When requesting abatement of penalties for reasonable cause, your statement should include supporting documentation and address the following items:

The reason the penalty was charged. The daily delinquency penalty may be charged for either a late filed return, an incomplete return, or both.
Explain what prevented the organization from complying with the law, including:
- what prevented the organization from requesting an extension of time to file its return, if the organization did not request such an extension;
- how the organization was not neglectful or careless, but exercised ordinary business care and prudence; and
- what steps have been taken to prevent the same situation from occurring in the future.

Where do I file my annual return?

Mail your return to the Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0027. If your organization's principal business, office, or agency is located in a foreign country or a U.S. possession, send the return to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.

Annual returns may also be filed electronically - a quick, secure, and more accurate method than filing paper returns. For more information, see e-file for Charities and Non-Profits

Is personal identifying information provided on an exempt organization return subject to public disclosure?

Yes. To protect personal information, do not include any personal identifying information not required by the IRS on your forms.