Forgetting to file an extension for Form 990 means your organization's annual information return is considered late, which can result in significant penalties from the Internal Revenue Service (IRS). The IRS imposes daily penalties until the return is filed, with varying maximums based on your organization's gross receipts.
Understanding Form 990 Filing Requirements
**Form 990** is the annual information return required by the IRS for most tax-exempt organizations. Its purpose is to provide the IRS and the public with information about the organization's operations, financial activities, and governance.- Original Due Date: The original deadline to file Form 990 is typically the 15th day of the 5th month after your organization's tax year ends (e.g., May 15th for calendar-year filers).
- Extensions: Organizations can request an automatic 6-month extension to file Form 990 by submitting Form 8868, Application for Extension of Time to File an Exempt Organization Return, by the original due date. Forgetting to file this extension means the original deadline for your Form 990 was missed, leading to late filing penalties.
Penalties for Late Filing Form 990
If your organization fails to file Form 990 by its due date (including any approved extensions), the IRS will assess penalties. These penalties are determined by the organization's gross receipts for the taxable year.The following table summarizes the daily penalties:
| Gross Receipts | Penalty Per Day | Maximum Penalty |
|---|---|---|
| ≤ $1,000,000 | $20 | $10,000 or 5% of the organization's gross receipts |
| > $1,000,000 | $100 | $50,000 |
These penalties accrue daily from the due date until the return is filed, up to the maximum amounts specified.
Additional Consequences Beyond Monetary Penalties
Beyond the immediate monetary penalties, there are more severe repercussions for consistent non-filing:- Automatic Revocation of Tax-Exempt Status: If an organization fails to file its required Form 990-series return for three consecutive years, its tax-exempt status will be automatically revoked by the IRS. This means the organization will lose its tax-exempt privileges and may be subject to income tax on its earnings, and donors may no longer be able to deduct contributions. Reinstating tax-exempt status can be a complex and costly process.
- Loss of Public Trust: Timely and transparent financial reporting is crucial for maintaining public trust and confidence, especially for charitable organizations. Late or non-filing can damage an organization's reputation and hinder its ability to raise funds.
What to Do If You've Missed the Deadline
If you have forgotten to file an extension and subsequently missed the Form 990 filing deadline, it's crucial to act quickly:- File Immediately: Prepare and submit your Form 990 as soon as possible to stop the accumulation of daily penalties.
- Consider Penalty Abatement: If there was a reasonable cause for the late filing (e.g., natural disaster, serious illness of the responsible person), you may be able to request penalty abatement from the IRS. This typically involves writing a letter explaining the circumstances and providing supporting documentation.
- Maintain Accurate Records: Ensure all financial records are well-organized and readily accessible to prevent future filing issues.
Timely filing of Form 990 is essential for maintaining an organization's tax-exempt status and avoiding costly penalties.
