Tax Extensions for Charities and Non-Profits

All organizations which are considered tax-exempt under the Internal Revenue Code (section 501(a)) should be familiar with IRS Tax Form 990 that is used to report activities to the IRS.

IRS Tax Form 990 (Return of Organization Exempt From Income Tax)

Tax Form 990 is an annual information return with 12 pages and 12 parts. This form is used by tax-exempt organizations to report their income, expenditures, and other activities to the IRS (as required by section 6033).

Note that Form 990 goes beyond the traditional disclosures of salaries, donations, and operating expenses. It requires non-profits to explain their fundamental organizational structure, processing and management procedures for handling donations, and salary structures for top officials.  The IRS clearly takes an active role in non-profit oversight, making sure that the organizations in question are worthy of tax-exempt status.

Form 990 must be filed by a tax-exempt organization if it has either of the following:

Gross receipts greater than or equal to $200,000 at the end of the tax year, or
Total assets greater than or equal to $500,000 at the end of the tax year

“Gross receipts” refers to the total amounts received by the organization from all sources during the tax year, without subtracting any costs or expenses.

So what does this mean for you — the non-profit administrator, charity director, or finance manager? It means that this year, you should consider getting a tax extension.

For information regarding tax-exempt organizations, see IRS Publication 557 (Tax-Exempt Status for Your Organization), IRS Publication 4221-NC (Compliance Guide for Tax-Exempt Organizations), and IRS Publication 4220 (Applying for 501(c)(3) Tax-Exempt Status).

Requesting a Tax Extension

Tax-exempt organizations can use IRS Form 8868 (Application for Extension of Time to File an Exempt Organization Return) to request an automatic 3-month tax extension. Form 8868 can also be used to apply for an additional 3-month (non-automatic) tax extension if the first 3 months weren’t enough. Note that the IRS requires organizations to demonstrate “reasonable cause” for the additional tax extension.

It is not uncommon for non-profit groups to be busy and understaffed, and getting a tax extension can give you the time to ensure that your tax return is in full compliance.

FileLater.com provides online tax extension filing services for businesses as well as individuals. Whether you’re filing a personal or business tax extension, the dedicated support team at FileLater is here to help!