Most people know what a non-profit organization is. It’s an organization that does not make money off of the actions or services they provide. But one question that comes up a lot from people who do not work in a non-profit company is if the organization does not make a profit, do they still have to file a tax return? Even though most non-profit organizations receive some type of tax exemption, they are still required by law to file an information return with the IRS. The most common form that a non-profit organization would have to file is known as a form 990.

What is the IRS Form 990?

The IRS expects non-profit organizations to fill out a 990 form in order for them and the public to determine if an organization is fulfilling their non-profit status. This includes information such as the finances of the organization, as well as all associated programs and an updated mission statement if it changes. In non-profit organizations, Spring Hill residents should be aware that the public is the most important aspects of a non-profit company, so they should also be included when seeing the tax information of a specific organization.

What if a Non-Profit Fails to File a 990 Form?

Even though a non-profit is supposed to file an information return every year, no action is taken against them until the company has passed three years without any filings. After three years for non-profit Organizations, Spring Hill residents should know that the non-profit is punished by having their tax exemption status revoked. This means that in some instances, a non-profit organization would have to pay applicable taxes even though they do not actually make a profit. This is why it is extremely important for a non-profit to file the appropriate tax information even if they have no taxes taken out every year.

*Disclaimer: The views expressed here are those of the authors and do not necessarily represent or reflect the views of Suncoast CPA Group*