Search Results for: 990N

How to get added to the IRS database and file the Form 990N

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Carol,
We’re a newly organized homeschool support group. Is there anything we need to do with the IRS to establish ourselves as a 501c7 social club, or do we just need to get our EIN and start filing the 990N?

Thanks again! I really appreciate your help. 🙂

Melissa

 

After you get your EIN (Employer Identification Number), you won’t be able to file the 990-Ns just yet.

Self declare tax exempt status

Since you have not applied on paper for 501(c)(7) status  (you can “self declare” 501c7 status and don’t have to file the paperwork), you are not in the IRS database (yet), so you need to call the IRS Customer Account Services at 1-877-829-5500 and be added to their database so you can begin filing the Form 990Ns.

It typically takes 6 weeks after you call to be added to the IRS database.

Tips when calling the IRS

Say something like this,

“We’re a brand new 501c7 Social Club and my CPA said I needed to get added to the IRS exempt organization database, so we could start filing the 990-Ns.”


If you’re a homeschool educational program (co-op, etc)

Or if your homeschool group has an educational purpose, you’re most likely a 501c3 tax exempt organization. Read about the difference between 501c7 Social clubs and 501c3 organizations. In that case, you’ll say:

“We’re a brand new 501c3 educational organization and my CPA said I needed to get added to the IRS exempt organization database so we could start filing our 990-Ns.”

**Note that only 501c3 organizations with less than $5,000 annual gross revenues can “self-declare” their tax exempt status. 501c3s with more than $5,000/year in revenues must apply for 501c3 status using Form 1023 or the new, shorter Form 1023-EZ.


They will ask for your EIN and organization’s name, address, and probably a contact name.

They may also ask what date your fiscal year ends. Many support groups operate on a calendar year, but some operate on a school year with a year end of June 30 or July 31. Look at the form you filed when you applied for your EIN to see what you chose as your fiscal year end.

They may ask if you have “organizing documents.” They mean bylaws or Articles of Association (or Articles of Incorporation). So tell them if you have bylaws or Articles of Association/Articles of Incorporation. Samples can be found here.

Finally, if they tell you you must file a Form 1024 to obtain 501(c)(7) tax exempt status, tell them (with confidence) your CPA informed you that you can “self declare” tax exempt status as a social club and do not have to file the Form 1024.

Call the IRS early in the morning. They open at 8 am ET and you can usually get through pretty quickly of you call then, Record the date you call, the IRS employee name and their identification number.

Don’t forget to the the 990-N every year!

Be sure you go online to file the Form 990-N anytime after your fiscal year ends and before its due date which is 4 1/2 months after the end of your fiscal year. So if you operate on a calendar year, the 990-N is due May 15.

Have more questions about your homeschool organization’s tax exempt status? My book, The IRS and Your Homeschool Organization would be a big help.

Carol Topp, CPA

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Can’t we just call the IRS and get on the list to file Form 990Ns?

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My leadership team is freaking out. We are one of those groups in the 990N discussion. We got our EIN in June 2010 and opened a checking account in December 2010. We always have under $5,000 pass through our books every year.

We have never called the IRS to be added to the 990N list because of lack of knowledge. You mentioned at the homeschool convention in Cincinnati fixing this problem by filing 20-some odd-pages to be reinstated.

Since we have never called to be on the list in the first place could it be, I pray, as simple for us to just call and get on the list and start filing the 990N form?

Sorry this has upset your leadership team.

Wouldn’t have been nice if the IRS had made it easier to comply when you learn about the 990N?

But unfortunately, they revoked your status automatically after 3 years of failing to file the Form 990N, even though you never officially applied.

Then to make things worse, the IRS requires you to file the 26 page Form 1023 to get reinstated, even though you never had to file that  application form in the first place (because your gross income is under $5,000/year).

Here’s my flowchart of the process to get tax exempt status reinstated.

This has made a lot of work for the IRS and they were back logged to begin with!

Fortunately, the IRS is considering a Form 1023EZ which is only 2-3 pages and a lot simpler to fill out than the longer 26-page Form 1023. They hope to have the Form 1023EZ ready by the summer of 2014.

But I wouldn’t hold my breath. The IRS has received some negative feedback  about their proposed Form 1023EZ, saying it is too simple! I agree that it does not go far enough in helping the IRS separate legitimate nonprofits from scammers. I doubt the Form 1023EZ will be ready by this summer.

But maybe you can wait until the fall and the IRS might have a Form 1023EZ by then.

I find that each homeschool group is unique. Some have to go though the IRS process, some are within the time frame and can get tax exemption reinstated easily. I do provide a phone consultation to help organizations figure out what is best for them.

Contact me to arrange a phone call and give your leadership team some peace of mind.

Carol Topp, CPA

All nonprofits need to file a 990N every year (or else!)

2009 Form 990

I’ve read your books and really appreciate the information.

When you say you have 27 months from when you file with your state for incorporation as non-profit to file with the IRS, is that only if you want the IRS to grant 501c3 status retroactively to your date of incorporation?

My concern is that I would like to file as a nonprofit with my state so I can get the protection afforded by incorporation but I don’t anticipate seeking 501c3 within the next 27 months and I just need to be sure that is not a deadline to file after becoming a non-profit with the state.

Your clarification is much appreciated.

Tiffany

 

Tiffany,
If you do not file for tax exempt status with in 27 months of the date of your formation (nonprofit incorporation), then the IRS will only date your tax exemption to the date they receive your application, not back to when you were formed.

If you do not have tax exempt status, then you need to be filing a corporate income tax return (Form 1120) and pay corporate income tax on any surplus you have.

If you plan to file for tax exempt status then you should file an annual 990N (the IRS electronic postcard) every year until you tax exempt status is granted.

Lately I have helped several nonprofit clients that formed years ago and were not filing the 990N each year. Now the IRS is making them go back and file corporate income tax returns, even though they have always been nonprofits.

I am now telling ALL nonprofits (even one like yours that is delaying filing for tax exempt status), to PLEASE file the 990N EACH year or it will be unpleasant when you do apply for tax exempt status.

You can call the IRS Customer Account Services at 1-877-829-5500 and be added to their database so you can begin filing the Form 990Ns. It typically takes 6 weeks to be added to the IRS database.

Carol Topp, CPA

Are homeschool groups supposed to file the IRS Form 990N?

IRS
I recently visited your HomeschoolCPA.com site and was a little confused by the chart comparison of a 501c3 and a 501c7. In my research with CPA’s in my area and with talking to the IRS, it appears that the filing requirements have changed. It appears that as of 2006, all organizations must file a 990N postcard including a 501c7. From talking to the IRS a 990N will not be accepted from any organization that has not filled out a 1024 or 1023. Let me know your thoughts on this. Thank you!
Nathalia B

 

Nathalia,

Yes, the IRS does want all nonprofit organizations to file a 990N, but many organizations do not have to file the Form 1023/1024 if they have gross annual revenues under $5,000 (for a 501c3) or are a 501c7 Social Club who can “self declare” tax exempt status without filing a Form 1024.

To further confuse things, the IRS will not have an organization in their system until they file a Form 1023/1024.

An organization that is exempt from filing the Form 1023/1024 (for the two reasons listed above) can call the IRS and be added to the IRS database so they can file the 990N.

You can call the IRS Customer Account Services at 1-877-829-5500 and be added to their database so you can begin filing the Form 990Ns. It typically takes 6 weeks to be added to the IRS database.

Lately, I have helped several homeschool organizations that did not file their 990Ns and are now applying for tax exempt status. They now have to file corporate income tax returns for the years they were not filing the Form 990Ns! It is more paperwork and holding up their tax exempt status.

I hope that helps clarify things a bit!

Carol Topp,CPA

Does the IRS Form 990N apply to my group?

This question was originally posted in April 2009, but the information is still pertinent today.
Hi Carol,
Thanks so much for all your help in getting our Christian Homeschool Network up and running.  Things are going well so far. My husband brought a card he saw at the post office and handed it to me thinking it might apply to our group. The same basic info is on this web site:
https://www.irs.gov/charities/article/0,,id=169250,00.html
It is about a new filing requirement for small tax exempt organizations.Does this apply to us? I was unsure if this was just for 501 C 3 organizations.
Thanks, Carol
Sharon W

Sharon,
The new IRS ePostcard (Form 990N) notification is for all 501(c) organizations. The IRS is trying to clean up its database by using this short electronic postcard. They hope to find any “dead” nonprofits that are no longer in operation. They are also looking for small nonprofits that have “grown up” to the $25,000 (now $50,000) gross revenues per year and should be filing a 990EZ or 990 Form annually.  The ePostcard is a way for small nonprofits to acknowledge that they are still under the $25,000 (now $50,000) annual revenue threshold for filing the 990.

I recommend that you consider 501(c)(3) status ASAP.  The IRS expects educational nonprofits to file for their 501(c)(3) tax exempt status with in 27 months of formation (incorporation as a nonprofit).  Your nonprofit incorporation date was May 27, 2008, so you have until August 2010 to apply.  Otherwise, the IRS requests an explanation of why tax exempt status was not filed earlier and tax exemption is granted to the date of filing, not back to the date of formation.  This could mean that a nonprofit might owe back income tax for the period that they were not tax exempt.

If your gross revenues stay under $5,000 a year, you are granted an exception from filing the paperwork for 501(c)(3) status. If gross revenues get to be over $5,000 a year, your group should file for 501(c)(3) tax exempt status or pay corporate income tax on any surplus (i.e. profit).

In a nutshell, a small nonprofit has four choices:
1. Stay under $5,000 gross revenues per year
2. File for 501(c)(3) tax exempt status
3. Pay corporate income tax on any annual surplus.
4. Find a church or another 501c nonprofit to take you on as one of their ministries.

I hope that helps,

Carol Topp, CPA


Update as of August 2010:

The IRS is now asking all nonprofit organizations to begin filing the Form 990N , even if they have not yet applied for tax exempt status. Here is what the IRS states on their website https://www.irs.gov/charities/article/0,,id=156389,00.html

Tax Law Compliance Before Exempt Status Is Recognized

An organization that claims tax-exempt status under section 501(a), but has not yet received an IRS letter recognizing exempt status, is generally required to file an annual exempt organization return.

The annual return is either Form 990, 990EZ or the new electronic postcard Form 990N.

The difficulty in filing the Form 990N if you have not yet received 501(c)(3) tax exempt status is that your organization is not in the IRS system. You’ll have to call the IRS and get entered into their system before you can file your 990N online.

Carol Topp, CPA

More nonprofits can file the easy Form 990N

2009 Form 990

Many homeschool organizations that have tax exempt status are small enough they do not have to file any tax forms with the IRS. And now new IRS guidelines mean even more groups are free from IRS filing requirements!

Small exempt organizations can file the simple Form 990-N, the electronic postcard, instead of the longer Form 990-EZ or  Form 990.

For tax years beginning on or after January 1, 2010, exempt organizations may file the e-Postcard if their annual gross receipts were not more than $50,000.  The previous filing threshold was annual gross receipts of no more than $25,000. Gross receipts include every dollar your organization brings in, even if it goes out immediately too.

The e-Postcard is an electronic notice filed at https://epostcard.form990.org.

Need help determining your gross receipts? Send me an email and we can arrange a private consultation over the phone. Email me here.

If your tax exempt homeschool organization needs help filing their Form 990EZ or Form 990, I can help. Read more here.

Would your homeschool group benefit from being tax exempt? Find out by reading my articles on the pros and cons of tax exempt status.

Carol Topp, CPA

Speech and Debate Club – Unsure of Its Setup?

Carol Topp, the Homeschool CPA, is frequently asked by small homeschool groups if they are setup up correctly.

Do they owe taxes?

Do they need to be a nonprofit corporation?

Henry  writes, “Can a small homeschool education club focused on speech and debate be categorized as an “unincorporated association” and therefore not apply for recognition by the IRS and not file taxes?

Less than $2,000 pass through the club to pay for insurance and facilities…

This club formed in 2015 and I joined last year and become the director this year. I am wondering if we are structured correctly…”

Listen to Carol’s reply to Henry’s questions on today’s episode of the Homeschool Leader podcast.

  • Can the Speech and Debate Club be a 501c3?
  • Do they need to be a formalized entity?
  • Should they get an EIN?
  • What should they do to be structured correctly?
  • Do they owe taxes?

In the podcast, Carol mentioned how a small nonprofit like Henry’s club can self-declare 501c3 tax exempt status. Carol has a few blog posts on self-declaring 501c3 tax exempt status and the filing the IRS annual notice, Form 990-N:

https://homeschoolcpa.com/how-to-get-added-to-the-irs-database-and-file-the-form-990n/

https://homeschoolcpa.com/irs-form-990n-faq/

In the podcast I mentioned my book The IRS and Your Homeschool Organization

Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?

I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

The webinar Create a Nonprofit for Your Homeschool Community is also helpful.

The webinar is 90 minutes and covers:

  • The difference between a business and a nonprofit
  • What are the advantages and disadvantages of being a nonprofit
  • Forming a board: who can be one it, what do they do, etc.
  • Creating bylaws
  • Drafting a budget
  • Setting up a bank account
  • Forming a nonprofit corporation in your state
  • The timeline to get this all done
  • The expense to accomplish this

Thank you- 3 webinar set

Thank you for purchasing the 3  webinar set

You’ll want to start with the checklist.

You have unlimited access to watch these webinars, so BOOKMARK this WEBPAGE

First webinar: Create a Nonprofit

Password: CREATE (all capitals)

The password is: CREATE (all capitals)

Here is a handout of the slides:

Create Nonprofit Slides color (large pdf file)

Create Nonprofit Slides Grayscale (smaller pdf file)

Second webinar: 501c3 Application

Password: 501C3APP (all capitals)

The password is: 501C3APP (all capitals)

Resources: (Save these now on your computer)

Handout of the slides

Sample Form 1023-EZ for a homeschool group

Blank IRS Form 1023-EZ

Instructions to IRS Form 1023-EZ

Ebook The IRS and Your Homeschool Organization by Carol Topp, CPA.

BONUS: $25 off phone consultation. If you would like a one-hour phone consultation with Carol Topp, CPA about applying for 501c3 tax exempt status, she will discount her fee from $85 to $60. This is limited to one time, one hour consultation and for the topic of 501c3 tax exempt application only.

Please contact Carol here and mention this bonus and that you purchased the 501c3 Application webinar.

Third webinar: IRS and State Filings

Password: FILINGS (all capitals)

The password is: FILINGS (all capitals)

Resources: (Save these now on your computer)

Slide handout

IRS Users Guide for Form 990-N

IRS Form 990-EZ

IRS Instructions to Form 990-EZ

Template to summarize your state and IRS filing requirements

Note: In the webinar I mention a site I recommended for doing your research on what filings your state requires from nonprofits, Harbor Compliance. Since the webinar recording Harbor Compliance no longer offers this information for free. You must pay for it. Bummer.

So instead, I recommend you use these two services to do your research:

HurwitAssociates.com/states-reporting-requirements

NonprofitLegalCenter.com/non-profit-resources/non-profit-initial-compliance-annual-filing-requirements/


Please do not post or share this webpage on social media or email. It is for paid users only. Thank you!

If you have friends that could be helped by the webinars, they may purchase the webinar set. Send them here.

If your nonprofit board members would like to view this webinar, please email Carol@HomeschoolCPA.com to request permission.


Carol Topp, CPA
Helping Homeschool Leaders
Carol@HomeschoolCPA.com

New homeschool co-op wants simplicity. Any taxes due?

Hi Carol.
I started up a group of a few families last year as a homeschool co-op in our community. As we have grown a little more this year, I would like to start up a checking account.

My question is, after I get an EIN and open the checking account for the co-op, what is required at tax time, if anything, for having that account?

I don’t want to be recognized yet with the IRS as a 501c3, just for sake of simplicity at this time. Am I going to be required to do anything because of having this checking account?

We do not pay teachers, the account is strictly for fees and supply costs.

This semester we will only be taking in about $2,500 at max. and that is stretching it.

Thank you for your advice.
Callie


Callie,

I have answered your questions in some blog posts that you may find helpful:

Will getting an EIN put us on the IRS radar?

Best of: Checking accounts for homeschool organizations

We’re not 501c3 and don’t want to be!

The last blog post explains you have a few choices if you collect money and provide a service:

  1. Stay small and self declare 501c3 tax exempt status. This is the simplest option and the one I recommend for Callie’s organization.

    She will have to call the IRS once to self-declare her 501c3 status and get added to the IRS Exempt Organization database so the group can file their annual IRS Form 990-N.

  2. Consider another tax exempt status such as 501c7 social club. This is applicable to support groups or clubs, but not for Callie’s homeschool co-op.

  3. Apply for 501c3 status, especially if annual revenues exceed $5,000/year. I can help with that.

  4. Pay taxes as a for-profit business. That’s the least simple way to go! I don’t recommend it!


If you are starting or running a tiny homeschool program (usually less than $5,000 in income in a year), then you’ll benefit from my resources and podcast series for Tiny Homeschool Groups.

Tips for Starting a Tiny Homeschool Group


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Top 10 Tips for Homeschool Leaders: Bylaws

“Are bylaws and a board really necessary or is that only for homeschool groups that are 501c3 nonprofits?” was a great question asked by a homeschool leader at a workshop given to homeschool leaders in Wichita, Kansas.

In this second part of a 5-part series on Top 10 Tips for Running a Homeschool Group, Carol Topp, CPA, will answer that question and discuss bylaws and boards. She even explains IRS 501c3 tax exempt status too!

 

Each episode can be found at HomeschoolCPA.com/Podcast. In the 5 part podcast series Carol will cover:

Episode # 180 Board duties

Episode # 181 Bylaws

Episode # 182 Preventing fraud

Episode # 183 Paying Workers

I Episode # 184 Insurance and Record keeping

 

In the podcast Carol mentions how a tiny homeschool group should maintain its tax exempt status by filing and annual IRS Form 990-N. Here’s how to do that:

How to get added to the IRS database and file the Form 990N

 

You might find Carol’s podcast series for Tiny Homeschool groups helpful

Tiny Homeschool Groups: Are We a Nonprofit?

 

Featured Resource:

 

Start a Nonprofit and Get Tax Exempt 3-webinar set

Webinars are a great way to learn!

This 3-webinar set will help your homeschool group get established as a nonprofit, apply for IRS 501c3 tax exempt status and maintain it with IRS and state annual reports!

Everything you need to know in an easy-to-understand video format. This set includes the 3 videos (90 minutes each), an ebook The IRS and Your Homeschool Organization by Carol Topp, CPA, the slide handouts, IRS forms, and templates to help you apply for 501c3 status on your own!

Learn more.

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