Do I Owe The IRS?

IRS Form 990 is titled: Return of Organization Exempt from Income Tax. If you own a non-profit, you may wonder “Do I owe the IRS?” The use of IRS form 990 will give you the answer, as it is an annual return that is required to be filed by certain tax exempt organizations. Who must file? Generally all federally tax exempt organizations must file, with the exception of churches and state institutions. A full list of organizations that must file is available on the IRS.gov website.

Why must federally tax exempt organizations file a Form 990 return? This return is not a tax return in the traditional sense of the term. The Form 990 is an informational return used by the IRS to gather information on an organization’s mission, programs and finances. Getting tax exempt status under the Internal Revenue Code is very difficult. An organization must prove, in general, that their operations, finances and business structure exist solely for tax exempt purposes. The IRS is concerned with knowing that their actions are not substantially geared toward political motivations and that the profits do not inure to private persons or shareholders, among many other factors.

IRS Return Form 990 is used to gather information on the organization annually to ensure they are complying with the necessary conditions to maintain their tax exempt status. Specifically, the return discloses the business’s mission, number of employees and the management structure, income and expenses, which are divided between those for exempt purposes and those that are unrelated to their tax exempt purposes, assets and details on their activities.

Gaining tax exempt status is very beneficial for any organization’s charitable goals. The IRS has some strict laws in place that allow specific organizations to gain that status if they meet the criteria. Form 990 is required to ensure that the organizations with tax exempt status continue to abide by the laws that provide them that status. It also helps maintain that organizations are not abusing their tax exempt status, and because these returns are public, Form 990 functions to inform the masses and potential donors of the organization’s goals and operations. Sometimes non-profit organizations can lose their status and owe the IRS. If so, working with Community Tax practitioners can help you find out “Do I owe the IRS?” and how to solve your business tax problems. Call us today for more information and a free-consultation on how our tax professionals can assist you!