Reporting Nonprofit Compensation on the Form 990 – Which Form Should Be Used?

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 3. May 2011 09:21

What nonprofits must disclose to the IRS about executive compensation depends on which version of the IRS Form 990 (the annual report required of most tax exempt organizations) must be filed. What's more, the form needed may have changed recently. 

Even the very smallest nonprofits must now file annually, even though it may involve a very short postcard. For the past few years, the IRS has changed the thresholds of financial activity that triggered filing the full Form 990 rather than the short form, called the Form 990-EZ, as the major revision in Form 990 was phased into use. As always, churches are given automatic tax exempt status and are not required to report to IRS annually.

What triggers the use of the more complex Form 990 versions and thus the more detailedcompensation reporting level of “annual gross receipts,” defined by the IRS as the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses?

If a charity has a fiscal year that coincides with the calendar, then the May 15 deadline for filing is used. Returns are typically due on the fifteenth day of the fifth month after the end of the organization's fiscal year, but filing a Form 8868 before the due date gives an automatic three-month extension; an additional three-month extension may be requested on Form 8868 if the organization shows reasonable cause why the return cannot be filed by the extended due date.   

Check out which form to file below – and remember reporting on executive compensation is different for each form!

2010 Tax Year and later                                                         

(Filed in 2011 and later)                           Form to File           Instructions

Gross receipts normally ? $50,000            990-N                    n/a              

(May also choose to file a full return)                                                                            

 

Gross receipts < $200,000, and                990-EZ                   Instructions

Total assets < $500,000                             or 990                            

 

Gross receipts ? $200,000, or                     990                        Instructions

Total assets ? $500,000                                                                      

 

Private foundation                                      990-PF                   Instructions

Some Must File Electronically

Almost all types of Forms 990 and Forms 8868 for the extension can be e-filed, but some organizations are required to e-file. These include the following organizations:

  • e-Postcard (Form 990-N) filers - Small tax-exempt organizations (those normally with annual gross receipts up to $50,000 for tax years ending on or after December 31, 2010).  Learn more and file at e-Postcard (Form 990-N).
  • Certain large tax-exempt organizations - Exempt organizations with $10 million or more in total assets if the organization files at least 250 returns in a calendar year, including income, excise, employment tax and information returns. Private foundations and non-exempt charitable trusts are required to file Forms 990-PF electronically regardless of their asset size if they file at least 250 returns annually.

All nonprofits can take advantage of the benefits of e-filing:

  • Identify errors before filing – Software shows location of errors in the return.
  • Faster acknowledgements – IRS sends acknowledgments within 24 hours. 
  • Built-in accuracy checks – Typical paper Form 990 returns have an average error rate of more than 25 percent, whereas e-filing software catches most errors before the return is submitted.

Check out www.efile990.org for more information.