Specialized Returns and Taxpayers · Exempt organizations

Filing requirements (e.g., Form 990 series)

Two questions decide almost every exempt organisation filing problem, and they are not the same question. Which return the organisation files turns on gross receipts and total assets. What a late return costs turns on gross receipts alone, and the scale steps up sharply at a single threshold.

The rule

Everyone files, with narrow exceptions. every organisation exempt under IRC § 501(a) must file an annual return stating its items of gross income, receipts and disbursements and such other information as the Secretary prescribes, and must keep records — subject to the mandatory exceptions for churches, their integrated auxiliaries and conventions or associations of churches, the exclusively religious activities of a religious order, and certain listed organisations other than private foundations whose gross receipts are normally not more than $5,000 (IRC § 6033(a)(1), (a)(3))^TY2026 The exceptions are statutory and short (IRC § 6033(a)(3)): the annual return requirement does not apply to churches, their integrated auxiliaries and conventions or associations of churches; to the exclusively religious activities of any religious order; or to a listed organisation other than a private foundation whose gross receipts are normally not more than $5,000 — the listed class being religious organisations, IRC § 170(b)(1)(A)(ii) educational organisations, government- or publicly supported charities and cruelty-prevention organisations, organisations operated in connection with a religious organisation, IRC § 501(c)(8) fraternal beneficiary societies, and wholly government-owned IRC § 501(c)(1) corporations (IRC § 6033(a)(3))^TY2026 Note what the list does not contain — there is no general small-organisation exception, because the small organisation is picked up by the electronic notice instead. an organisation relieved of the annual return by the gross receipts exception must nonetheless furnish annually, in electronic form, its legal name, mailing and web addresses, taxpayer identification number, the name and address of a principal officer, and evidence of the continuing basis for the exception — and must give notice when it ceases to exist (IRC § 6033(i))^TY2026

Which form. gross receipts normally $50,000 or less — Form 990-N, with the option of filing a full return instead; gross receipts under $200,000 and total assets under $500,000 — Form 990-EZ or Form 990; gross receipts of $200,000 or more, or total assets of $500,000 or more — Form 990; a private foundation files Form 990-PF regardless of amount^TY2026 The asset test is a trap in one direction only: an organisation below the receipts ceiling but above the asset ceiling files the full Form 990, not Form 990-EZ, because the two Form 990-EZ conditions are joined by “and” while the two full Form 990 conditions are joined by “or.”

Normally. The Form 990-N threshold is not read against a single year. gross receipts are normally $50,000 or less where the organisation has existed 1 year or less and received or was pledged $75,000 or less in its first tax year; has existed between 1 and 3 years and averaged $60,000 or less in each of its first two tax years; or is at least 3 years old and averaged $50,000 or less over the immediately preceding 3 tax years including the year being measured^TY2026

When. the annual return of an organisation exempt under IRC § 501(a) is due on or before the 15th day of the 5th month following the close of the taxable year — 15 May for a calendar-year organisation (IRC § 6072(e); Treas. Reg. § 1.6033-2(e))^TY2026 Form 8868 requests an automatic 6-month extension of time to file an exempt organization return, and is also used by the trustee of a trust required to file Form 1041-A or Form 5227 and by a Form 5330 filer^TY2026 There is no second extension; the six months are all there is.

Electronically, without exception. any organisation required to file a return under IRC § 6033 must file it in electronic form (IRC § 6033(n), added by Pub. L. 116-25 § 3101(a) on 1 July 2019)^TY2026 The mandate reaches Form 990, Form 990-EZ, Form 990-PF and Form 990-T alike.

Unrelated business income is a separate return. every organisation described in IRC § 511(a)(2) and subject to the IRC § 511(a)(1) tax must file Form 990-T for a taxable year in which it has gross income included in computing unrelated business taxable income of $1,000 or more, and filing it does not relieve the organisation of any other return (Treas. Reg. § 1.6012-2(e))^TY2026 Form 990-T is an income tax return, filed alongside the information return rather than instead of it, and it carries its own payment and estimated tax obligations.

What a late return costs. for a return required to be filed in 2027 — the return for tax year 2026 — the IRC § 6652(c)(1)(A) penalty on the organisation is $25 for each day the failure continues, capped at the lesser of $13,000 or 5 percent of the organisation’s gross receipts for the year^TY2026 where gross receipts exceed $1,339,500 for the year, the daily penalty for a return required to be filed in 2027 rises to $130 and the cap to $66,500 (IRC § 6652(c)(1)(A))^TY2026 The step is abrupt: an organisation just over the gross receipts line pays more than five times the daily rate and faces a cap five times higher. the Secretary may make a written demand on an organisation subject to the penalty, specifying a reasonable future date for filing; a person who fails to comply pays $10 for each day after that date, capped at $6,500 on all persons for any one return, for a return required to be filed in 2027 (IRC § 6652(c)(1)(B))^TY2026 failure to comply with the IRC § 6104(d) public inspection requirements costs $25 a day, capped at $13,000 for any one annual return or report; the same $25 a day applies to a failure to make exempt status application materials available, with no cap at all, for failures relating to returns required to be filed in 2027 (IRC § 6652(c)(1)(C), (D))^TY2026

Where those numbers come from. the underlying statutory amounts are $20 a day capped at the lesser of $10,000 or 5 percent of gross receipts, rising to $100 a day capped at $50,000 where gross receipts exceed $1,000,000, and $10 a day capped at $5,000 for managers — each indexed since 2014 under IRC § 6652(c)(7) by reference to the IRC § 1(f)(3) cost-of-living adjustment measured from calendar year 2013 (IRC § 6652(c)(1), (c)(7))^TY2026 The statutory figures are still the ones printed in the Code, so a source that quotes them is not wrong about the statute — it is merely not current. Always work from the revenue procedure for the calendar year in which the return was required to be filed, not the tax year it reports.

The one filing with no monetary penalty. the IRC § 6652(c)(1) penalty does not apply to the annual electronic notice required under IRC § 6033(i), so a late Form 990-N carries no monetary penalty — only the three-year automatic revocation clock (IRC § 6652(c)(1)(E))^TY2026 Form 990-N is due by the 15th day of the fifth month after the close of the tax year — 15 May for a calendar-year organisation — and there is no penalty for a late submission, though three consecutive missed years still costs the exemption^TY2026

Three years and it is gone. an organisation that fails to file the annual return or notice for 2 consecutive years is notified by the Secretary; one that fails for 3 consecutive years has its IRC § 501(a) exempt status revoked on and after the due date set for the third return or notice, and the Secretary publishes and maintains a list of the organisations revoked (IRC § 6033(j)(1))^TY2026 after two consecutive missed annual returns or notices the Secretary must notify the organisation that the Service has no record of a filing for two consecutive years and warn it about the revocation that follows a third — a step added to IRC § 6033(j)(1) by Pub. L. 116-25 § 3102(a) on 1 July 2019^TY2026 an organisation whose exemption is automatically revoked must apply for reinstatement whether or not it was originally required to apply, and reinstatement may be made retroactive to the date of revocation if the organisation shows reasonable cause for each of the three failures (IRC § 6033(j)(2), (3))^TY2026

Public inspection. the organisation itself must make its exempt status application materials, its annual IRC § 6033 returns and any Form 990-T available for inspection during regular business hours at its principal office and at each regional or district office with three or more employees (IRC § 6104(d)(1)(A))^TY2026 Failure to comply is itself penalised, and the penalty for withholding the application materials has no ceiling.

Current figures

How it works in practice

Compute gross receipts before choosing a form, and compute them the way the Service does — total amounts received from all sources during the annual accounting period, without subtracting any costs or expenses. An organisation that nets its fundraising gala against its gala expenses will understate gross receipts and may file the wrong return, which is a failure to file the required return rather than a harmless substitution.

Read the two thresholds in the right direction. Form 990-EZ is available only where gross receipts are under the receipts ceiling and total assets are under the asset ceiling. The full Form 990 is required where gross receipts reach the first or total assets reach the second. An asset-rich, receipts-poor organisation — an endowed foundation-like charity, a land trust — is on the full return regardless of how little came in.

Diary the extension as a single event. Form 8868 buys six months automatically and nothing more, so a calendar-year organisation that extends is filing by 15 November. Missing that date starts the daily penalty running from the extended due date, not from the original one, which is the only mercy in the provision.

When a late filing has already happened, get the arithmetic right before advising on abatement. The daily rate and the cap both depend on gross receipts, and the cap is often the operative number: for a small organisation the 5 percent-of-gross-receipts limit bites long before the dollar cap does. Reasonable cause relief under the general standard applies, and a first-time filer that misread the thresholds has a better story than one that simply forgot.

How this has changed

Electronic filing became universal in stages. The Taxpayer First Act, Pub. L. 116-25 § 3101(a), added IRC § 6033(n) on 1 July 2019 requiring every return under the section to be filed electronically; Form 990-T followed in 2021 once the Service built the channel for it. There is no longer a paper return in the series, and no hardship exception in the statute.

The penalty amounts have moved every year since 2014, when Pub. L. 113-295 added the inflation adjustment at IRC § 6652(c)(7) for failures relating to returns required to be filed in calendar years beginning after 2014. That is why so much secondary material still carries the unindexed daily rate and cap printed in the Code: correct as a reading of the statute and wrong as an answer to what a client owes.

The gross receipts threshold that separates the ordinary daily penalty from the higher one has drifted with the same index. The Code sets it at one million dollars; the indexed figure for returns required to be filed in 2027 is well above that, and an organisation sitting between the two is in the ordinary tier even though a plain reading of the statute would put it in the higher one.

Automatic revocation, added by the Pension Protection Act in 2006 and effective for years beginning after 2006, gained its warning letter in 2019 through Pub. L. 116-25 § 3102(a). The letter is a notification after two consecutive misses, not a grace period, and revocation still runs from the due date of the third.

Exam focus

Know the four-line chart cold, and know which conjunction goes with which line. Expect a fact pattern that gives both a receipts figure and an asset figure precisely so that the two point at different forms.

Know the due date as the 15th day of the 5th month, know that Form 8868 is a single automatic six-month extension, and know that a calendar-year filer therefore lands on 15 November if it extends.

Know that Form 990-T is required at the Treas. Reg. § 1.6012-2(e) floor of gross income counted toward UBTI — gross income, not net, and not the tax. Know that the daily penalty and its cap both scale with gross receipts, that the Form 990-N notice is outside the penalty, and that three consecutive misses of any of these revokes exemption.

Check yourself

1. A calendar-year charity has gross receipts of $180,000 and total assets of $540,000. Which return must it file, and by when if it extends?

Answer: Form 990. Gross receipts are under $200,000, but total assets are at least $500,000, and the full Form 990 is required where either test is met. The original due date is 15 May; a timely Form 8868 gives an automatic six months, so the extended date is 15 November. There is no further extension.

2. An organisation with gross receipts of $45,000 files its required annual return 25 days late. What is the penalty?

Answer: On the figures published for returns required to be filed in 2027, $25 a day for 25 days is $625, and the cap — the lesser of $13,000 or 5 percent of $45,000, which is $2,250 — does not bite. The answer changes with the filing year, so check the revenue procedure for the year the return was due rather than working from the statutory $20.

3. A church with substantial receipts has never filed a Form 990. Is its exemption at risk?

Answer: No. IRC § 6033(a)(3)(A)(i) excepts churches, their integrated auxiliaries and conventions or associations of churches from the annual return requirement outright, and IRC § 6033(j) revokes only for failure to file a return or notice required under IRC § 6033(a)(1) or (i). With no requirement there is no failure. The same is true of the exclusively religious activities of a religious order.

4. A social club exempt under IRC § 501(c)(7) rents its hall to non-members and takes in $4,000 of gross rental income from them for the year. It files Form 990 on time. Anything else?

Answer: Form 990-T. Treas. Reg. § 1.6012-2(e) requires it of any organisation subject to the IRC § 511(a)(1) tax with gross income included in computing UBTI of $1,000 or more, and $4,000 clears that. Whether the rental produces taxable UBTI after the specific deduction and the IRC § 512(b) modifications is a separate computation; the filing obligation is triggered by gross income alone.

5. An organisation misses its Form 990-N in three consecutive years but has always been well under $50,000 of gross receipts. It receives no bill. Is anything wrong?

Answer: Yes — its exemption was automatically revoked on the due date of the third missed notice. IRC § 6652(c)(1)(E) is why no bill arrived: the notice is outside the daily penalty. The absence of a penalty is not evidence that nothing happened, and the organisation must now apply afresh for reinstatement.