Non-Profit

Non-profit organizations are generally tax-exempt and don’t need to file revenue forms, but the Internal Revenue Service still requires lots of information — all to be painfully extracted and meticulously organized on IRS Form 990.

Not every tax form requires a payment of tax. Sometimes information is what the IRS is after. For example, Forms 990, 990-EZ, and 990-PF (the three are forms of Form 990) are considered information returns or reporting forms. The public uses the information on these returns to evaluate nonprofits and how they operate. On these forms, you can see what a nonprofit’s income and expenses are, how much it pays its key people, and other useful information that can help you assess what a nonprofit does.

Form 990 is a fairly critical form for the public disclosure of information because the law doesn’t require typical annual reports from nonprofit organizations. Even financial audits by independent accountants aren’t required by law (except in special circumstances).

The organizations that must file the Form 990s don’t have to pay federal income tax on income that’s related to their exempt purposes and programs. However, many private foundations do have to pay an excise tax that’s based on their investment income.

After an organization files its completed Form 990 or Form 990-EZ, it’s available for the world to see. This public access is required under Section 6104 of the Internal Revenue Code. Form 990-PF (for private foundations) must also be made available for public inspection by the private foundation, but that usually requires an appointment and a trip down to the foundation’s main office.