Tax Exempt Status

Let’s Talk About Form 990 Part 2 – Filing Requirements

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In recent years, thousands of tax-exempt organizations have lost exemption status for failure to file a Form 990 for three consecutive years. In this article, we write about the filing requirements under the tax law because we believe this tax information is especially important for nonprofits to know. This is not legal or tax advice, and is not a substitute for the need to seek professional advice.

This article for the most part, pertains to organizations required to file either a Form 990, 990-EZ or 990-N. The first consideration with respect to the Form 990 is the type of tax exempt organization. There are several types of organizations that qualify for tax exempt status under Code Section 501. Some organizations that are tax-exempt are not required to file based upon its exempt purpose. For example, a church and its integrated auxiliaries are not required to file. There are many other similar examples of religious and political organizations that are not required to file, which are not mentioned here – another reason organizations in doubt should have their situation reviewed by a legal or tax professional.

In general, organizations that must file a Form 990, 990-EZ or 990-N are:

  • Code Section 501(c)(3) charitable organizations (not including private foundations);
  • Code Section 501(c) subsection organizations except (c)(21), Black Lung Trusts;
  • Code Section 501(e) cooperative hospital service organizations;
  • Code Section 501(k) child care organizations; and
  • Code Section 501(n) charitable risk pools

The next consideration regarding the filing requirements is the minimum income and asset thresholds.

  • Organizations with gross receipts of $200,000 or greater and assets of $500,000 or greater must file a Form 990.
  • Organizations with gross receipts greater than $50,000 and less than $200,000 and total assets less than $500,000 must file Form 990-EZ or a complete Form 990.
  • Organizations that generally have gross receipts less than $50,000 must file a Form 990-N or a complete Form 990 or 990-EZ.

Gross receipts generally are the total sum of all amounts received by the tax-exempt organization from all sources during the period covered by the return. The organization is not permitted to offset expenses in calculating its gross receipts for purposes of determining the filing requirement. According to the instructions in Form 990, the organization must also account for amounts received using the same method of accounting used to keep the organization’s books or financial records. Hence, if the organizations uses the accrual method, it must calculate gross receipts using the accrual method.

This article provides general information only. Thus, it is important for organizations to seek appropriate tax advice regarding its filing requirements from a professional who can review the organization’s facts and circumstances and exercise appropriate judgment regarding the organization’s situation.

IRS Automatic Revocation of Nonprofit Tax Exemption

Organizations that are required to file an IRS Form 990, 990-EZ or 990-PF or submit an annual electronic notice on Form 990-N are subject to automatic revocation if the exempt organization fails to file for three consecutive years.  The consequence of automatic revocation can be economically devastating for struggling non-profit organizations since the organization may be required to file a Form 1120 corporate income tax return or Form 1041 Estates & Trusts return and pay applicable taxes on income received.


Organizations previously eligible to file Form 990-EZ or Form 990-N for each of the three prior consecutive years that have lost their tax-exempt status may be eligible for retroactive reinstatement by filing for recognition of tax exemption on the required Form 1023 or Form 1024 and paying the appropriate user fee no later than 15 months of the date on the organization’s Revocation Letter (CP-102A) or the date the organization appeared on the Revocation List on the IRS Website, whichever is later.   This process is called the “Streamlined Retroactive Reinstatement Process”. 


The IRS will not impose a penalty for failure to file annual returns for the three consecutive taxable years that caused the revocation if the organization is successfully reinstated under the Streamlined Retroactive Reinstatement Process and files paper Forms 990-EZ for all 3 previous taxable years.  For organizations eligible to file Form 990-N, the organization is not required to file a prior year Form 990-N or Form 990-EZ to avoid penalties if reinstated.  

Organizations should contact a qualified attorney as soon as possible if they do not qualify for or need assistance complying with the requirements under the Streamlined Retroactive Reinstatement Process.