Penalties For Not Filing 990 with IRS – Don’t Lose your 501c3 Status

Failure to file a 990, or an extension by the due date, brings $20 per day fines until the 990 is filed ($10,000 or 5% of gross revenue maximum penalty per 990 owed). For nonprofit organizations earning more than $1,000,0000 in revenue, that fine becomes $100 per day the 990 is late ($50,000 maximum penalty per 990 due). Your organization must file its annual 990 on time.

If an organization fails to file its 990 for three consecutive years, the IRS will automatically revoke tax-exempt status. Revocation is a horrible situation for any nonprofit and means individual and corporate donations are no longer tax- deductible. Losing tax-deductible status alone can dry up all potential funding sources for a nonprofit. If that weren’t bad enough, having tax-exempt status revoked means the corporation is now liable for paying taxes.

Failure to file 990s is the most common reason organizations lose their501c3 status. Reinstatement is possible but costly and time-consuming. Reinstatement can also provide issues with Charity Registration renewals in the future. It is much less expensive to remain in annual compliance.

BryteBridge has a team of tax professionals capable of handling your organization’s reporting needs. Plus, we have affordable packages that combine your required 990 with filing requirements unique to your state, as described next.