4.75.30  Returns and Reports Filed by Exempt Organizations

4.75.30.1  (06-01-2003)
Overview

  1. Most exempt organizations (including private foundations) must file various returns and reports at some time during (or following the close of) their accounting period. This section discusses the returns and reports required to be filed by Exempt Organizations. This includes, among others, Forms 990/990-EZ, 990-N, 990-PF, and 990-BL.

    • The various returns and reports that might be required;

    • Who is required to file them;

    • Under what circumstance they are required; When they are due to be filed

    • When they are due to be filed

4.75.30.2  (06-01-2010)
Information Returns and Reports

  1. The type of return required by an organization to file is determined by the amount of its gross receipts or total assets.

4.75.30.2.1  (06-01-2010)
Form 990, 990-EZ and 990–N

  1. Political organizations (as defined by section 527(e)(1)) which have gross receipts of $25,000 or more for the taxable year, shall file Form 990.

    Note:

    In the case of a political organization which is a qualified State or local political organization (as defined in section 527(e)(5)), the amount of gross receipts is increased to $100,000.

  2. Small tax exempt organizations and nonexempt charitable trusts may file Form 990-EZ instead of Form 990 if gross receipts and total assets fall within the range and period as shown in the chart below.

    Form 990-EZ Filing Amounts for 2008 - 2010
    File Form 990-EZ for If gross receipts are less than And if total assets are less than
    2008 (generally filed in 2009) $1,000,000 $2,50,000
    2009 (generally filed in 2010) $500,000 $1,250,000
    2010 and later $200,000 $500,000

    1. Under the Pension Protection Act of 2006, most small tax exempt organization with gross receipts normally $25,000 or less (increasing to $50,000 beginning with the 2010 tax year) are not required to file Form 990 (or Form 990-EZ). Instead, the organization is required to electronically submit Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ.

  3. Exceptions to the Form 990/990-EZ filing requirement are as follows:

    1. State or local committee of a political party, or political committee of a State or local candidate;

    2. Caucus or association of State or local officials;

    3. Authorized committee (as defined in section 301(6) of the Federal Election Campaign Act of 1971) of a candidate for Federal office

    4. National Committee (as defined in section 301(14) of the Federal Election Campaign Act of 1971) of a political party;

    5. United States House of Representatives or United States Senate campaign committee of a political party committee;

    6. Organizations which are required to report under the Federal Election Campaign Act of 1971 as a political committee (as defined in section 301(4) of such Act); or

    7. to which section 527 applies for the taxable year solely by reason of subsection (f)(1) of such section.

    8. An organization that normally has annual gross receipts of not more than $25,000 (increasing to $50,000 beginning with the 2010 tax year). For the definition of “normally not more than $25,000, ” See Rev. Proc. 83-23, 1983-1, C.B. 687;

    9. A church, an interchurch organization of local units of a church, a convention or association of churches, or an integrated auxiliary of a church;

    10. A school below college level affiliated with a church or operated by a religious order, even though it is not an integrated auxiliary of a church;

    11. A mission society sponsored by, or affiliated with, one or more churches or church denominations, more than one-half of the activities of which are conducted in, or directed at persons in, foreign countries ;

    12. An exclusively religious activity of any religious order;

    13. A state institution, whose income is excluded from gross income under IRC § 115(a); and certain other affiliates of governmental units. See Rev. Proc. 95-48;

    14. An organization described in IRC § 501(c)(1);

    15. A private foundation exempt under IRC § 501(c)(3) and described in IRC § 509(a);

    16. A stock bonus, pension or profit-sharing trust which qualified under IRC § 401;

    17. A religious or apostolic organization described in IRC § 501(d);

    18. Black lung benefit trust described in IRC § 501(c)(21).

  4. An integrated auxiliary of a church is an organization that is exempt under IRC § 501(c)(3), is affiliated with a church, and whose principal activity is exclusively religious. Examples of organizations considered to be integrated auxiliaries are :

    • Men's or women's organization

    • Religious school (such as a seminary)

    • Mission society

    • Youth group

  5. Organizations which are not considered to be integrated auxiliaries are:

    • church related hospitals

    • old age homes

    • schools of general academic nature. See Treas. Reg. § 1.6033-2(g)(5)

  6. A church affiliated college exempt from income tax under IRC § 501(c)(3) that trains ministers and lay workers to serve the religious functions of a church is an integrated auxiliary. See Revenue Ruling 77-381, 1977-2 C.B. 462.

  7. By the Commissioner’s discretionary authority, church related schools below college level are excepted from filing an annual return. See Treas. Reg. § 1.6033-2(g)(1)(vii).

  8. Any nonexempt charitable trust (described in IRC § 4947(a)(1) not treated as a private foundation is also required to file Form 990 if its gross receipts are normally more than $25,000 per year.

  9. An organization described in IRC § 501(c)(3) that is otherwise required to file Form 990, including foreign organizations and cooperative service organizations described in IRC §§ 501(e) and (f), child care organizations described in IRC § 501(k), as well as IRC § 4947(a)(1) nonexempt charitable trusts which are not private foundations, must also complete Schedule A of that form, “Organizations Exempt Under Section 501(c)(3)”.

    Note:

    The Omnibus Budget Reconciliation Act of 1987 provided additional return requirements for IRC § 501(c)(3) organizations. To the extent required Forms 990 or 990-PF, must provide information concerning direct or indirect transfers to, and direct or indirect transactions and relationships with, organizations described in IRC § 527 or described in IRC § 501(c) other than IRC § 501(c)(3).

  10. If in any year an organization is properly included as a subordinate organization on a group return, it should not file Form 990. See IRM 4.75.24.

  11. In Rev. Proc. 86-23, 1986-1 C.B. 564, pursuant to the Commissioner’s discretionary authority, the Service set forth an additional class of organizations that are not required to file an annual return for tax years beginning after December 31, 1975. To be included in this class an organization must be:

    1. Described in IRC §§ 501(c)(3) and 509(a)(1), (2), or (3);

    2. Affiliated with a church or convention or association of churches; and

    3. Meet the "internal support " requirement set forth in section 5 of Rev. Proc. 86-23.

  12. The" internal support" requirement is met unless the organization both:

    1. Offers admissions, goods, services, or facilities for sale, other than on an incidental basis to the general public (except goods, services, or facilities sold at a nominal charge or substantially below cost), and

    2. Normally receives more than 50 percent of its support from a combination of governmental sources; public solicitation of contributions, such as through a community fund drive, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or business.

  13. If a tax-exempt organization’s gross receipts are normally $25,000 or less, and the organization elects to file the Form 990 or Form 990-EZ, it must complete the entire return; otherwise, it must file the Form 990-N. An organization that only completes those items of information on the Form 990 or Form 990-EZ that are required to be provided on an electronic Form 990-N will not be deemed to have met its electronic notice requirement.

  14. Form 990, 990-EZ and 990-N are due on or before the 15th day of the fifth month following the close of the organization’s annual accounting period. (Refer to IRC § 6072(e).) .Thus, for a calendar year taxpayer, Form 990, 990-EZ, or 990-PF is due May 15 of the following year.

    Note:

    Extensions of time to file may be requested by filing a Form 8868. This form allows for an automatic 3 month extension from the normal due date. Further extensions (not automatic) of time can be requested on form 8868 if the original 3 months granted were not sufficient.

    An organization cannot request an extension for filing the Form 990-N; however, there is no penalty for filing it late.

  15. Penalty provisions for failure to file required returns are covered in the penalty handbook (IRM 20.1).

4.75.30.2.1.1  (06-01-2010)
Filing Requirements for Political Organizations

  1. The filing requirements that apply to those political organizations that:

    • Wish to be tax exempt political Organizations, and

    • Receive or expect to receive $25,000 or more in gross receipts in any taxable year are as follows:

    • If The Organization is: It May Be Required To File
      FEC political committee, state or local candidate committee or state or local committee of a political party Form 1120 POL
      Qualified state or local political organization (QSLPO)1 Form 8871
      Form 1120-POL; and
      FORM 990
      Caucus or association of state or local officials1 Form 8871
      Form 8872; and
      Form 1120-POL
      Any other political organization, including other federal political organizations and other state or local political organizations. Form 8871
      Form 8872
      Form 1120-POL, and
      Form 990 or Form 990-EZ

      Note:

      An organization may be both a QSLPO and a caucus or association of state or local officials. If so, it is not required to file Form 8872 and Form 990.

  2. A political organization does not have to file Form 1120-POL except where it has taxable income after taking the $100 specific deduction.

4.75.30.2.1.2  (06-01-2010)
Filing Requirement for Supporting Organizations

  1. For tax years ending after August 17, 2006, all section 509(a)(3) supporting organizations are required to file an annual information return with the IRS regardless of the organization's gross receipts. On its annual information return, a supporting organization must:

    • List the section 509(f)(3) organizations with respect to which it provides support,

    • Indicate whether it is a Type I, Type II, or Type III supporting organization, and

    • Certify that the organization is not controlled directly or indirectly by disqualified persons (other than by foundation managers and other than one or more publicly supported organizations).

4.75.30.2.1.3  (06-01-2010)
Electronic Filing Requirement

  1. An organization is required to file Form 990 Electronically if it has $10 million or more in total assets and also file at least 250 returns in a calendar year, (including income, excise, employment tax, and information returns such as Forms W-2 and 1099. Private foundations and non-exempt charitable trusts are required to file Forms 990-PF electronically regardless of their asset size, if they file at least 250 returns annually.

  2. Tax-exempt organizations required to file Form 990-N must do so electronically. There is no paper form Other filers may elect to file Form 990 electronically.

  3. Example: If a tax-exempt organization having $10 million in total assets has 245 employees, it must file Form 990 electronically because each Form W-2 and quarterly Form 941 is considered a separate return. Therefore, the organization in this example would file a total of 250 returns (245 W-2's, four 941's, and one 990).

  4. If an organization is required to file a return electronically but does not, the organization is considered to have not filed its return. See Regulations section 301.6033-4 for more information.

    Note:

    The IRS may waive the requirement to file electronically in cases of undue hardship. For information on filing a waiver, see Notice 2005-88 which is on page 1060 of Internal Revenue Bulletin 2005-48.

4.75.30.2.1.4  (06-01-2010)
Public Inspection Requirements

  1. IRC § 6104(b) and (d) require that the annual return, Form 990/990 EZ, including Schedule A and certain information on Schedule B, must be made available for public inspection by the IRS and the organization.

  2. Tax exempt IRC § 527 organizations must make their forms (other than Form 1120-POL) publicly available for inspection and copying at their principal place of business. The IRS also posts Form 8871 and Form 8872 on its web site at www.irs.gov/polorgs.

4.75.30.2.2  (06-01-2010)
Form 990 Group Return

  1. The essential requirements for a group return being filed by a central organization on behalf of two or more subordinate organizations are:

    1. The central organization itself must be exempt but not necessarily under the same provision as that of the subordinate organizations;

    2. The subordinate organizations must be affiliated with the central organization at the close of its accounting period;

    3. The subordinates must have the same accounting period as the central organization;

    4. The subordinates must be subject to the general supervision or control of the central;

    5. All subordinates included in the group return must be exempt under the same paragraph of IRC § 501(c) and be included in the central organization’s group exemption letter; and

    6. Each year the central organization must get authorizations from all the subordinates that are covered by the group return permitting it to include them in such return. If the parent organization is required to file a return itself, it must file a separate return and may not be included in the group return.

  2. The regulations and instructions applicable to an organization filing a regular Form 990 are applicable to a central organization filing a group return on behalf of itself and its subordinates. In addition, a schedule will be attached listing each subordinate organization who is included, showing its name, address, and employer identification number. A list showing the subordinate organizations not covered should also be included with the central organization’s filing of the return.

  3. The command code "EOGEN" may be utilized to research group exemption numbers.

4.75.30.2.3  (06-01-2010)
Filing Requirements Before Exemption is Established

  1. An organization which has filed an application claiming exemption under IRC § 501(c) but has not yet received a ruling or determination letter from the Service as to its exempt status should file Form 990, or Form 990-PF if it admits it is a private foundation. In such case, the organization must state on Form 990 or Form 990-PF indicating its application is pending with the Service. See Treas. Reg. § 1.6033-2(c).

4.75.30.2.4  (06-01-2010)
Substitutes for Parts of Form 990

  1. Labor organizations exempt under IRC § 501(c)(5) may substitute copies of Forms LM-2, Labor Organization Financial Report, and LM-3, Short Form Labor Organization Financial Report, for Portions of Form 990. The originals of Forms LM-2 and LM-3 are filed with the Department of Labor.

  2. Organizations exempt under IRC § 501(c)(9), (17), (18), or (20) may file copies of Form 5500-C, Annual Return/Report of Employee Benefit Plan (with fewer than 100 participants, none of whom is an owner-employee) as substitutes for portions of Form 990. The originals of these forms are filed with the Service pursuant to section 104 of the Employee Retirement Income Security Act of 1974.

  3. When an organization described in (1) or (2) above files a substitute, it must complete Form 990 in all other respects. See Rev. Proc. 79-6,1979-1 C.B. 485, for other limitations when using the approved substitute forms.

4.75.30.2.5  (06-01-2010)
Form 990-BL-Black Lung Benefit Trusts

  1. Form 990-BL, Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons, is required for each trust exempt under IRC § 501(c)(21), if the trust normally has gross receipts in each taxable year in excess of $10,000.

  2. It is also required of the trusts, trustees, and disqualified persons if excise taxes are due under IRC § 4951 or 4952. See instructions for Form 990-BL for parts of the return these entities must complete.

    Note:

    Parts I, II, and III of Form 990-BL are available for public inspection only with respect to exempt trusts. Part IV and Schedule A are not available for public inspection.

  3. Coal mine operators and persons making excess contributions under IRC § 192 to an IRC § 501(c)(21) trust are required to file Form 6069, Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust.

    Note:

    This form is not available for public inspection.

4.75.30.2.6  (06-01-2010)
Religious or Apostolic Organizations

  1. Every religious or apostolic association or corporation described in IRC § 501(d) which is exempt under IRC § 501(a) must file an information return on Form 1065, U.S. Partnership Return of Income, for each taxable year, stating specifically the items of gross income and deductions, and its taxable income.

  2. Attached to the return must be a statement showing the name and address of each member of the organization and the amount of each member’s deemed dividend for such year. The statement cannot allocate any deductions or losses to members.

  3. The member’s deemed dividend equals the member’s distributive share of the organization’s taxable income computed after allowances for deductions and losses. The organization, not the member, is entitled to take deductions for expenditures.

4.75.30.3  (06-01-2010)
Form 990-PF

  1. IRC § 6033(c) requires an annual return on Form 990-PF, Return of Private Foundation, by all organizations (including foreign organizations) which have private foundation status under IRC § 509(a). This would also include private operating foundations, organizations that made an election under IRC § 41(e)(6), and organizations making an IRC § 507 termination.

  2. For organizations that are trusts, Rev. Proc. 83-32, 1983-1 C.B. 723, explains the return filing requirements, including those for:

    • Charitable remainder trusts under IRC § 664

    • Nonexempt charitable and split-interest trusts

    • Pooled income funds, and

    • Exempt trusts

  3. IRC § 6033(d)(1) requires that nonexempt charitable trusts described in IRC § 4947(a)(1) which are treated as private foundations must also file Form 990-PF.

  4. Nonexempt charitable trusts which are treated as private foundations may file Form 990-PF, instead of Form 1041, to satisfy the requirements of IRC § 6012 provided they have no taxable income. However, if the nonexempt charitable trusts have taxable income under Subtitle A of the IRC, both Form 1041 and Form 990-PF are required to be filed.

  5. IRC § 6033(d)(2) requires an annual return on Form 990-PF by private foundations not exempt from tax under IRC § 501(a).

  6. Treas. Reg. § 1.6033-2(a)(4) provides for purposes of IRC § 6033(d) the term nonexempt private foundation means a taxable organization (other than an IRC § 4947(a)(1) trust) that is a private foundation.

    Example: A private foundation subsequently determined not to be exempt under IRC § 501(a) because it is not described in IRC § 501(c)(3). (See IRC § 509(b) and Treas. Reg. § 1.509(b)-1).

  7. Form 990-PF is due on or before the 15th day of the fifth month following the close of the organization’s annual accounting period, as provided in Treas. Reg. § 1.6033-2(e). Refer to IRM 4.75.30.2.1 (above), for a discussion on filing extensions.

  8. Beginning with Form 990-PF returns filed in 2001, instead of attaching a list of certain contributors to Form 990-PF, the foundation must now complete Schedule B, “Schedule of Contributors” and attach it to Form 990-PF.

  9. Penalty provisions for failure to file required returns are covered in the penalty handbook (IRM 20.1).

4.75.30.3.1  (06-01-2010)
Public Inspection of Form 990-PF

  1. IRC § 6104(d) requires Form 990-PF be made available by foundation managers for inspection at the principal office of the foundation during regular business hours by any citizen on request. If the request is made in person, the copy will be provided immediately and, if made in writing, shall be provided within 30 days.

  2. A principal office can be a regional or district office if the organization regularly maintains one or more regional or district offices having 3 or more employees, at each such region or district.

  3. Copies will be provided to the requestor without charge other than a reasonable fee for reproduction and mailing costs.

  4. IRC § 6033(c)(2) provides that the foundation managers shall furnish copies of the annual return to State officials.

  5. A private foundation must provide copies to any individual who makes a request for a copy in person or in writing unless it makes these documents widely available. (Posting the return on an internet web site would be an example of making these documents widely available)

  6. Under IRC § 6104(b), the private foundation differs from other IRC § 501(c)(3) entities as it is required to disclose its contribution information to the public, including names and addresses of contributors.

4.75.30.4  (06-01-2010)
Returns of IRC § 4947(a)(2) Trusts

  1. There are a number of annual returns required to be filed by split-interest trusts described in IRC § 4947(a)(2). For years ending on or after December 31, 1975, Form 5227 is required to be filed by split-interest trusts which are treated as if they were private foundations for purposes of any of the foundation excise tax provisions. See Treas. Reg § 53.6011-1(d).

  2. Those split-interest trusts that are charitable remainder trusts described in IRC § 664 are also required to file Form 1041 as a supplemental schedule to Form 5227, but only for those years for which such trust had unrelated business taxable income.

  3. Other types of split-interest trusts file Form 1041 as their annual income tax return for any year in which they have at least $600 of gross income or have any taxable income. See Treas. Regs. 1.6012-3(a).

  4. The information return, Form 1041-A, is required by IRC 6034 to be filed by split-interest trusts described in IRC 4947(a)(2) except for those years for which the split-interest trust is required to distribute all of its income pursuant to its governing instrument.

4.75.30.5  (06-01-2010)
Return Of Certain Excise Taxes On Charities- Form 4720

  1. Public charities that made the election under IRC §501(h) and owe tax on excess lobbying expenditures must file Form 4720 to report the liability and pay the tax.

  2. All IRC § 501(c)(3) organizations that made a political expenditure must file Form 4720 to report the liability and pay the tax.

  3. All charitable organizations described in IRC § 170(c) or § 664(d) that make certain premium payments on personal benefit contracts must file Form 4720.

  4. Disqualified persons and organization managers must file Form 4720 to pay taxes on excess benefit transactions imposed on them.

  5. In the case of a tax imposed by IRC § 4945(a), the annual return shall be filed for the year in which an act giving rise to liability occurred. See Treas. Reg. § 53.6011-1(b). However, if Form 4720 is due for a particular year it should include all taxes imposed by IRC §§ 4941 through 4945 for such year.

  6. Every person liable for tax imposed by IRC §§ 4941 through 4945, and every private foundation and trust described in IRC § 4947(a)(2), which has engaged in an act of self-dealing, as defined in IRC § 4941(d) giving rise to tax, shall file an annual return on Form 4720, Return of Certain Excise Taxes on Charities and Other Persons under Chapters 41 and 42 of the Internal Revenue Code.

  7. In the case of any tax imposed by IRC §§ 4941 through 4944, Form 4720, shall be filed for each year, or part thereof, in the taxable period, as defined in IRC §§ 4941(e)(1), 4942(j)(1), 4943(d)(2), and 4944(e)(1).

  8. Foundation managers and disqualified persons who are liable for excise tax under IRC Chapter 42 may, if they have the same taxable year as the foundation, use the foundation’s Form 4720 as their own.

  9. In order to use the foundation’s Form 4720, the Foundation Manager must sign the foundation’s Form 4720 and complete those parts of the form relating to their involvement in Chapter 42 violations and resultant liability for Chapter 42 taxes. Otherwise they must file a separate Form 4720. See Treas. Reg § 53.6011-1(c).

  10. Form 4720 is due on or before the due date for the Form 990-PF or the Form 5227, Split-Interest Trust Information Return, whichever is applicable.

  11. A separate Form 4720, filed by foundation managers or disqualified persons, is due on or before the due date of the related organization’s Form 990-PF or Form 5227, when the filer’s taxable year is the same as the organization’s.

  12. Otherwise, a separate Form 4720 is due on or before the 15th day of the 5th month following the close of the individual’s or corporation’s taxable year.

4.75.30.6  (06-01-2010)
Returns Relating to Certain Dispositions of Donated Property

  1. IRC § 6050L provides that if the donee of any charitable deduction property, as defined in IRC § 6050L(b), sells, exchanges, or otherwise disposes of such property within two years after its receipt, the donee must file an information return and furnish a copy of such return to the donor. The return is filed on Form 8282 Donee Information Return. Additionally, a signed appraisal summary, Form 8283, “Noncash Charitable Contributions”, must be filed if the donated property exceeds $5,000 in value.

  2. In the case of each failure to file an information return with the Secretary on the date prescribed therefore (determined with regard to any extension of time for filing), the person failing to so file such return shall pay $50 for each such failure, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $100,000.See IRC § 6721.

4.75.30.7  (06-01-2010)
Form 990-T

  1. Form 990-T, Exempt Organization Business Income Tax Return, is required to be filed by any organization exempt from tax under IRC § 501(a) (except United States instrumentalities described in IRC 501(c)(1), and qualified tuition programs exempt under IRC § 529(a), having gross income from an unrelated business of $1,000 or more.

  2. Organizations liable for the IRC § 6033(e)(2) proxy tax on lobbying and political expenditures are required to file Form 990-T.

  3. The Tax Reform Act of 1969 extended application of the unrelated business income tax to virtually all exempt organizations including churches. However, churches or conventions or associations of churches, having business activities which were carried on before May 27, 1969, are subject to the tax on the income from those activities still carried on only for years beginning after December 31, 1975.

  4. Special rules for organizations exempt under sections 501(c)(7), (9), (17), and (19) are described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations.

  5. Form 990-T is due on or before the fifteenth day of the fifth month following the close of the taxable year. P.L. 95-628, 1978-2 C.B. 435. Refer to IRC § 6072(e).

  6. Pursuant to Section 6104(d)(2), 501(c) (3) organizations must make Forms 990–T available for public inspection and copying for the three-year period beginning on the last day prescribed for filing such return. The IRS is also required to make Forms 990–T of section 501(c)(3) organizations publicly available pursuant to section 6104(b).

  7. Penalty provisions for failure to file required returns are covered in the penalty handbook (IRM 20.1).

4.75.30.8  (06-01-2010)
Lobbying Expenditures Made By 501(c)(3) Organizations

  1. The Tax Reform Act of 1976 permits certain IRC § 501(c)(3) organizations to elect application of a prescribed formula to determine whether their legislation-related expenditures will affect exempt status for years beginning after December 31, 1976. Form 5768, “Election/Revocation of Election by an Eligible Section 501(c)(3) Organization to make Expenditures to Influence Legislation”, is used to make this election or to revoke a previous election.

  2. Form 5768 must be signed and postmarked within the first taxable year to which it applies. When the form is used to revoke the election, it must be signed and postmarked before the first day of the taxable year to which it applies.

4.75.30.8.1  (06-01-2010)
Who May Make the Lobbying Election

  1. Generally, IRC § 501(c)(3) organizations described in IRC § 170(b)(1)(A)(ii), (iii), (iv), (vi), IRC § 509(a)(2) and IRC § 509(a)(3), other than those that support IRC § 501(c)(4), (5) or (6) organizations, may make the lobbying election. The following organizations are not permitted to make the election:

    • Organizations described in IRC § 170(b)(1)(A)(i), relating to churches

    • Integrated auxiliaries of a church or convention or association of churches

    • Members of an affiliated group of organizations if any members of the group are described in (a) or (b) above, and

    • Private Foundations

4.75.30.8.2  (06-01-2010)
Tax on Excess Lobbying Expenditures-IRC § 4911

  1. Eligible IRC § 501(c)(3) organizations making the lobbying election but make excess lobbying expenditures must pay a tax on the excess expenditures in accordance with IRC § 4911. This is reported on Schedule F, Form 4720.

4.75.30.9  (06-01-2010)
Exempt Organizations Engaging in Political Activity

  1. Organizations exempt under IRC § 501(c) must file Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations, for any year in which its taxable income exceeds the $100 specific deduction:

  2. The Form 1120-POL is due on or before the 15th day of the 3rd month following the end of the exempt organization’s annual accounting period. An automatic extension of three months may be requested by filing Form 7004, Application for Automatic Extension of Time to File Corporation Income Tax Return.

  3. Organizations exempt under IRC § 501(c) setting up separate segregated funds for political activities must file Form 1120-POL for the segregated funds as a separate organization. This does not apply to IRC § 501(c)(3) organizations which may not set up separate funds for political activities.

4.75.30.9.1  (06-01-2010)
IRC § 527 Organizations

  1. A political organization is required to give notice electronically via Form 8871 to the Service within 24 hours of its establishment that it is a political organization described in IRC § 527. Until it files the form, its income, including contributions is subject to taxation.

  2. Form 8871, Political Organization Notice of 527, has to be filed by the organization if it has or has reason to expect to have, contributions exceeding $50,000 or expenditures exceeding $50,000 in a calendar year.

  3. Tax exempt political organizations, other than QSLPOs that file Form 8871 must file Form 8872, Political Organization Report of Contributions and Expenditures, to disclose information concerning:

    1. Expenditures that aggregate $500 or more per person, per calendar year, and

    2. Contributions that aggregate $200 or more per person, per calendar year.

  4. A tax exempt political organization that does not disclose this information must pay an amount equal to the highest corporate tax rate (35%) multiplied by the amount of contributions and expenditures not disclosed.

  5. The Form 1120-POL is due on or before the 15th day of the third month after the close of the organization’s taxable year. Refer to IRC § 6072(b).

4.75.30.10  (06-01-2010)
Change in Accounting Period

  1. A tax-exempt organization that wishes to change its annual accounting period and has not changed its accounting period within the previous ten years may file an information return for the short period indicating a change in accounting period is being made. If the organization has changed its accounting period within the previous ten years, however, it is required to file Form 1128, Application To Adopt, Change, Or Retain A Tax Year., with the Campus where it files its annual information return. This procedure does not apply to IRC §§ 521, 526, 527 or 528 organizations. This application must be filed within fifteen days of the fifth month following the close of the short period. See Rev. Proc. 85-58, 1985-2, C.B. 740, superseding Rev. Proc. 79-2, 1979-1 C.B. 482, and Rev. Proc. 76-9, 1976-1 C.B. 547.

  2. A central organization exempt from income tax may obtain approval for a group change in annual accounting period for its subordinate organizations exempt on a group basis by filing Form 1128 with the Service Center where the central organization files its annual information return. This application must be filed within fifteen days of the fifth month following the close of the short period. Rev. Proc. 79-3, 1979-1 C.B. 483, modifying Rev. Proc. 76-10, 1976-1 C.B. 548.

4.75.30.11  (06-01-2010)
Liquidations, Dissolutions, etc.

  1. IRC § 6043(b) provides, in certain cases, an organization exempt from taxation under IRC § 501(a) must file information with respect to its liquidation, dissolution, termination, or substantial contraction.

  2. The information required by IRC § 6043(b) must be submitted with the annual information return filed by the organization under IRC § 6033. The information is required to be completed on Schedule N, “Liquidation, Termination, Dissolution, or Significant Disposition of Assets,” of Form 990 return.

  3. See Treas. Reg. § 1.6043-3 for special rules and exceptions.

4.75.30.12  (06-01-2010)
Estimated Tax Payments

  1. Before the Tax Reform Act of 1986, exempt organizations subject to the unrelated trade or business income tax imposed by IRC § 511, and private foundations subject to the net investment income excise tax imposed by IRC § 4940, were required to pay estimated taxes annually with their returns.

  2. For taxable years beginning after December 31, 1986, provided the unrelated business income or excise tax liability based on investment income is expected to be $500 or greater, these organizations are required to figure the estimated tax on Form 990-W. Each payment must be accompanied by Form 8109, Federal Tax Deposit Coupon. Due dates for estimated tax payments are on the 15th day of the fourth, sixth, ninth, and twelfth months of the taxable year.

  3. All Form 990-PF and 990-T filers are subject to the estimated tax requirements. However, for taxable years beginning after December 31, 1987, no penalty will be assessed for failure to pay estimated tax if the organization’s tax liability for the taxable year is less than $500.

  4. IRC § 6655 sets forth the requirements and penalty provisions applicable to payment and nonpayment of estimated tax.

4.75.30.13  (06-01-2010)
Digests of Precedent Rulings

  1. Organizations exempt under IRC §§ 501(c) or 501(d) are not relieved from filing Forms 1096 or 1099 and reporting payments of income specified by IRC § 6041(a). See Rev. Rul. 56-176, 1956-1 C.B. 560.

  2. Failure or inability to file the required information return or to comply with the provisions of IRC § 6033 or the regulations thereunder, may result in the termination of the exempt status of an organization previously held exempt, on the grounds the organization has not established it is observing the conditions required for continuation of an exempt status. See Rev. Rul. 59-95, 1959-1 C.B. 627.

  3. A group information return, Form 990, may be filed by a State agency for all exempt state-chartered credit unions under its control and supervision in lieu of separate returns by each credit union. See Rev. Rul. 60-364, 1960-2 C.B. 382.

  4. A separately incorporated subsidiary of an organization exempt under IRC § 501(a) may not consider itself exempt merely because of its relationship to the exempt parent. Further, the inclusion of the financial information of the subsidiary on the information return of the parent does not satisfy the reporting requirements of the subsidiary. See Rev. Rul. 67-174, 1967-1 C.B. 119.

  5. A student government association controlled by a university must file information returns for years beginning after 1969, unless excepted from filing under IRC §. 6033(a)(2). See Rev. Rul. 71-553, 1971-2 C.B. 404, superseding Rev. Rul. 56-133, 1956-1 C.B. 559.

  6. A charitable organization supported primarily by contributions from a community chest must file information returns for years beginning after 1969, unless excepted from filing under IRC § 6033(a)(2). See Rev. Rul. 71-554, 1971-2 C.B. 405, superseding Rev. Rul. 67-271, 1967-2 C.B. 407.

  7. If the exempt status of an educational organization excepted from filing annual information returns is revoked, the periods of limitation provided by IRC § 6501(a) will not bar assessment of any income tax for the years the organization has not, in fact, filed returns. See Rev. Rul. 71-55, 1971-1 C.B. 403.

  8. In determining whether the gross receipts of a local lodge of a tax-exempt fraternal beneficiary society are sufficient to require it to file an information return, as provided in IRC § 6033, insurance premiums collected from its members, maintained separately without use or benefit, and remitted to its parent organization which issued the insurance contracts, are not gross receipts of the local lodge. See Rev. Rul. 73-364, 1973-2 C.B. 393.

  9. Certain church-related organizations which are not integrated auxiliaries of churches and are covered by a group exemption ruling issued to a central or parent church organization and having filing dates in 1977 of May 15, June 15, and July 15, receive automatic extensions of the time these returns must be filed. See Announcement 77-74, 1977-18 C.B. 26.

  10. An exempt organization, without reasonable cause, files an incomplete information return by omitting material information has failed to file a return for purposes of the penalty imposed by IRC § 6652(d)(1) and the period of limitations on assessment and collection of tax under IRC § 6501(c)(3). See Rev. Rul. 77-162, 1977-1 C.B. 400.

  11. A church-affiliated college exempt from tax under IRC § 501(c)(3) training ministers and lay workers to serve religious functions in the church is an integrated auxiliary of a church within the meaning of Treas. Reg § 1.6033-2(g)(S)(i) and is not required to file an annual return on Form 990. See Rev. Rul. 77-381, 1977-2 C.B. 462.

  12. Treas. Reg. § 1.6033-2(c) requires the filing of an information return by an organization claiming an IRC § 501(a) exempt status prior to the establishment of that status; therefore, Rev. Rul. 54-393, 1954-2 C.B. 125, is obsolete. See Rev. Rul. 79-30, 1979-1 C.B. 454.

  13. The central organization of a group that wishes to change accounting periods for its subordinate organizations should file Form 1128 with the Service Center where it files its annual information return. See Rev. Proc. 76-10, 1976-1 C.B. 547 is modified. Rev. Proc. 79-3, 1979-1 C.B. 483.

  14. Organizations may substitute certain forms for the detailed income statement and balance sheet portions of Form 990. See Rev. Proc. 79-6, 1979-1 C.B. 485.

  15. Rev. Proc. 83-23, 1983-1 C.B. 667 contains a current list of those organizations exempt under IRC § 501(c) are not required to file an annual information return on Form 990.

  16. Rev. Proc. 83-23 has been supplemented by Rev. Proc. 86-23, 1986-1 C.B. 564, which establishes an additional class of organizations, affiliated with a church or convention of churches and exempt under IRC § 501(c)(3), is not required to file an annual information return on Form 990. Rev. Proc. 83-23 was further supplemented to add an additional class of organizations, affiliated with a governmental unit, which are not required to file Form 990. See Rev. Proc. 95-48,1995-2, C.B. 418.


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