How to change your nonprofit’s fiscal year

desk_calendar_month_400_clr_3892

Carol,

I help run a homeschool co-op that has 501(c)(3) status.

The IRS has our fiscal year end as December 31 because that’s what our original officers put on our SS-4 application to get our employer ID number.  But we’d like to change it to a school year with our year end being June 30.

How can we change our fiscal year?

Tracy in Michigan

 

Tracy,

Changing your fiscal year is pretty easy.

Large nonprofits

If your homeschool organization is large enough that you file a Form 990 or 990-EZ (more than $50,000 in annual gross revenues), then you file a Form 990/990-EZ for the short period resulting from the change.

In Tracy’s case, the short period would be from January 1 until June 30.

Write “Change of Accounting Period” at the top of this short-period return.

 Small nonprofit organizations

But chances are your homeschool organization is small and files the annual information epostcard, Form 990-N. There is no way to write “Change Accounting Period” on the electronic Form 990-N.

In that case you can file the longer Form 990-EZ or file a Form 1128, Application to Adopt, Change, or Retain a Tax Year, to change its accounting period. Form 1128 instructions explain how to complete and submit the form.

User Fee

The Form 1128 may involve a $250 user fee. Ouch!

But, a user fee is not required if requesting an automatic approval (under any of the sections of Part II of the Form 1128). This probably applies to Tracy’s organization because it has not changed its fiscal year in the past 10 years.

Write a letter

Or the IRS says you can write a letter requesting a change in accounting period. Send the letter to:

Internal Revenue Service
1973 N. Rulon White Blvd.
Ogden, Utah 84404

 

Sources: http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Annual-Reporting-Requirements-Filing-Procedures:-Change-in-Accounting-Period
http://www.irs.gov/instructions/i990/ch01.html#d0e814

I hope that helps,

 

Carol Topp, CPA

Comments

  1. Good overview of the process of changing a fiscal year. It’s good to have a resource like this for beginners or as a reminder to those needing it. Thanks so much for sharing!

Speak Your Mind