Navigating the 990-EZ Tax Form and Instructions

Organizations such as tax-exempt organizations, section 527  political organizations, and nonexempt charitable trusts will make use of the 990-EZ tax Form to provide the information required by the IRS under section  6033. The IRS tax Form 990-EZ is officially referred to as the short form return of the firms that are exempt from paying the income tax. This is indeed a simple tax return form that has been designed for small tax-exempt organizations with gross receipts that are less than $200,000 and total assets are less than $500,000 at the end of the tax year. The 990-EZ tax Form offers all pertinent information regarding the organization’s mission, programs, and finances, rendering it transparent to the public and the IRS regarding its operations.

Who is Required to File the 990-EZ Tax Form?

Tax-exempt organizations must meet the following criteria to file the 990-EZ tax form.

• They should have a valid tax-exempt status under sections 501(c), 527, or 4947 (a) of the Internal Revenue Code.
• The gross receipts of the organization should be less than $200,000, and the total assets at the end of the tax year should be less than $500,000.

990-EZ Tax Form Due Date

It is required for the tax-exempt organization to file a 990-EZ tax Form by the 15th day of the 5th month after the tax year of the organization ends. For organizations that file the tax returns as per the calendar, then the due date for this tax form will be due on the 15th of May, for the following year. In case the due date for the tax Form falls on a legal holiday or a weekend, then the deadline for filing the tax Form will get extended to the next business day. Businesses requiring an extension to file the tax Form can request an extension with the IRS by filing Form 8868.

Penalty for Filing Form 990-EZ

If the organization fails to file the 990-EZ tax form by the due date, the IRS will impose penalties based on its annual gross receipts. For organizations with a gross receipt of $1,000,000 or less, the penalty would be around $20 per day, and this penalty can move up to $10,000.

For organizations with annual gross receipts exceeding $1,129,000, the penalty would be around $110 per day, up to a maximum of $56,000. This penalty will apply each day after the due date of the original tax return. The IRS might also impose a penalty if the organization files an incomplete return, such as failing to complete the required line item or failing to fill the required part of the tax schedule Form.

Navigating 990-EZ Tax Form

In order to complete the IRS 990-EZ tax form, it is mandatory to understand the line-by-line instructions of completing this tax Form. Also, before starting to fill out this tax Form, it is pertinent to keep mandatory information such as name, address, tax-exempt status, tax period, and accounting method ready. The tax Form is divided into different Items and Parts, and we are required to understand all of this, to understand the form and fill it pertinently.

1. Item A of 990-EZ Tax Form

This section collects all the information regarding the tax period of the organization.  Organizations can choose the calendar option if their organization follows the calendar tax year. If the organization follows the fiscal tax year, they can choose the tax period begin and tax period end date.

2. Item B of 990-EZ Tax Form

Item B of the 990-EZ tax form will have a number of checkboxes, and the taxpayers are required to check the most suitable and appropriate boxes to indicate the changes that they make on their current return, compared with their previously filed 990-EZ return. The following are the application checkboxes in the tax return form.

Change of address: Organizations should check the box if they have changed their address and have not reported the change on the previously filed Form 990-EZ.

Final return checkbox: Tax filers should check this box if their organization has terminated its existence or ceased to be an organization under Section 501 (a) or Section 527. They can file their final tax return as an exempt organization or Section 4947 (a) (1) trust. The organization might need to attach their Schedule N along with their final 990-EZ tax form.

Change in Name: This box is to be checked if the organization has changed its legal name and has yet to report the change on the previously filed 990-EZ tax form. The organization is also required to attach the supporting documents for the name change, on the basis of the type of organization.

Amended return: This box is to be checked if the organization is filing an amended return for the tax year to amend the previously filed return for the same tax year. It is required to attach Schedule O and explain which schedules, parts, and attachments of the 990-EZ tax form are to be amended and describe them in those amendments as well.

Initial return: This box should be checked if the organization is filing a 990-EZ tax form for the first time and has not filed a 990 return previously.

Pending Application: This box is to be checked if the organization has either filed Form 1023, Form 1023-EZ, Form 1024, or 1023-A with the IRS and is awaiting a response or is claiming tax-exempt status under section 501 (a) and has not filed Form 1023, 1023-EZ or 1024 A, in order to get its tax-exempt status from the IRS.

Item C of 990-EZ Tax Form

Under this section, the legal name of the organization and its operating address are to be entered. If the organization operates outside the United States, it is important to check the foreign address checkbox, and the address of the operating country and postal code are to be entered.

Item D of 990-EZ Tax Form

This section is dedicated to entering the EIN of the organization. In case the filing organization has more than one EIN and is trying to decide which EIN to use, it can send its query to the Department of Treasury, IRS.

Item F of 990-EZ Tax Form

The IRS generally assigns a group exemption number to the parent organization of a group that has a group exemption letter. If the organization is included in the group exemption, then this exemption number must be entered in the tax form. In case the organization is covered under a group exemption letter as a subordinate organization, then it should file Form 990-EZ only if it is not included in a group return that is filed by the parent organization of the tax year.

Item G of 990-EZ Tax Form

The accounting method is a practice that is followed by taxpayers or tax preparers to report the expenses and revenue of the organization for the tax year. In this section, taxpayers should choose their organization’s accounting method, be it cash, accrual, or other. In case the other is selection, the accounting method is to be mentioned.

Item H of 990-EZ Tax Form

This box is to be checked if the organization is not required to file Schedule B. Failure of the organization to either check the box in item H or file Schedule B might result in a determination that the return that is filed with the IRS needs to be completed.

Item I of 990-EZ Tax Form

In this section, the website name of the organization is to be entered, including the website link. In case the organization doesn’t maintain a website, then NA is to be entered as applicable.

Item J of 990-EZ Tax Form

This section portrays the organization’s tax-exempt status, offering it complete relief from paying the taxes. In case the organization chooses this box in the tax form, the tax-exempt status of the organization should be entered. For example, if the organization is exempt under section 501(c ), this has to be entered along with the appropriate subsection number within the parentheses.

Item K of 990-EZ Tax Form

This is a legal entity form that includes trusts, corporations, unincorporated associations, and other entities. Under this section, the legal entity of the organization is defined as a trust, association, corporation, or other. In case Other is selected, then that form of the organization is to be chosen.

Item L of 990-EZ Tax Form

Item L determines the gross receipts of the organization. The Sum of lines 5b, 6c, 7b to line 9 will be calculated as gross receipts of the organization. In case the gross receipts calculated on an item are $200,000 or more, and total assets are $500,000 or more, the organization is expected to file Form 990 instead of Form 990-EZ.

Organizations choosing to file the 990-EZ tax form should file it online with an IRS-authorized tax filing agency like Tax2efile. E-filing is one of the best options for fixing all the errors in the tax Form before submitting it. It will also ensure that the tax form is securely submitted at an appropriate cost.