EO operational requirements: Recordkeeping requirements for Exempt Organizations


What records must a tax-exempt organization keep?

An exempt organization must keep books and records needed to show that it complies with the tax rules. The organization must be able to document the sources of receipts and expenditures reported on its annual return and on any tax returns it must file. Records must support income, expenses, and credits reported on exempt organization annual returns and tax returns. For example, an organization needs to keep records of revenues derived from, and expenses attributable to, an unrelated trade or business so that it can properly prepare Form 990-T, Unrelated Business Income Tax Return, and calculate its unrelated business taxable income

Remember, even if 990-N is filed, or no return is filed, records must be maintained showing activities conducted, income received and expenses incurred.

Books and records must be available for inspection by the IRS. If the IRS examines an organization’s returns, the organization must have records to explain items reported. Having a complete set of records will speed up the examination.

For more information, see Publication 4221-PC, Compliance Guide for 501(c)(3) Public Charities PDF, Publication 4221-PF, Compliance Guide for 501(c)(3) Private Foundations PDF; or Publication 4221-NC, Compliance Guide for Tax-Exempt Organizations (other than 501(c)(3) Public Charities and Private Foundations) PDF.