What Happens when a Non-Profit Fails to File the Yearly 990 Tax Return

The form 990 tax return is required to be filed every year.  It is an informational return the IRS uses to obtain the details of the activity incurred for the year.  The 990 return is a public document and is used by donors and funders so they can make informed decisions before sending money.

The below lists a few consequences when a non-profit does not file the 990 return:

💠Penalties & Fines – The IRS could charge penalties starting at $20 per day, up to a maximum of $10,500 (or 5% of gross receipts) whatever is less.  For larger organizations, the maximum fee is $52,000… ouch! 😖

💠Lose Tax-Exempt Status – Failure to file the 990 three years in a row could mean losing your tax-exempt status.  If lost, you would then need to reapply for the status all over again, which takes a lot of time and could be costly.

💠Credibility Issues – Some funders and donors want to or require viewing of your Form 990 before sending money.  Failure to provide this information creates trust issues and loss of funding opportunities.

To avoid the above, it is important for you to find a tax accountant, if you’ve not already done so, and file your tax returns.  If you are going to be late, have your tax accountant file an extension and file your taxes then.