IRS Form 990 Governance Guidance

Automatic Revocation of Exemption List

On June 8, 2011, the Internal Revenue Service (IRS) released a list of more than 275,000 nonprofits that had their tax-exempt status automatically revoked due to failure to file annual returns. View the IRS automatic revocation list, and read the National Council's special webpage on automatic revocation and download a tip sheet on what to do if your organization's tax-exempt status was revoked.

Good governance practices are essential to sustaining a nonprofit’s mission. But what exactly is “good governance”? There is no single set of expectations for good governance. However, as a result of the 2008 revision of the IRS Form 990, certain practices are expected to be followed by nonprofits, large and small. Collectively the questions asked by the IRS in the revised Form 990 reflect the opinion of the IRS that certain governance practices, together with written policies, will result in compliance with the laws governing tax-exempt organizations.

• Resources from the National Council about specific governance policies that are referred to in the Form 990.
• Visit the IRS website for helpful Form 990 Resources.
• Review the “Check sheet” on governance issues released by the IRS in 2009. This information is used by the IRS when they are examining nonprofits during an audit. Nonprofit boards can use this tool to benchmark their own organization’s governance practices.
• Review a checklist for 990 compliance developed by the American Council on Education.   
• Read a White Paper on Governance in Form 990 by BoardSource.
• Read the report, Advancing Good Governance, prepared by BoardSource and FSG Social Impact Advisors (2009). Or read the Executive summary.

Read all about state and federal annual filing requirements for nonprofits.

Does your nonprofit have to file the IRS Form 990?

Update: the law has changed as a result of the passage of the Federal Pension Protection Act in 2006. Starting in 2007, all nonprofits recognized as tax-exempt by the IRS (or those awaiting recognition) must now file an annual information return. (Previously smaller nonprofits – those with less than $25,000 in gross receipts annually – did not have to file. Now, all tax-exempt organizations must file.) Failure to file for three consecutive years will result in automatic revocation of tax-exemption.

• Did you miss the deadline? If you missed the deadline, read FAQs from the IRS about automatic revocation of tax exempt status.
• Download a guidance paper from Guidestar.org explaining what you need to know about revocation of tax-exempt status.
• Listen to the recording of a National Council webinar, “Learn from the Experts – What Forms Must Nonprofit Tax-Exempt Organizations File with the IRS to Meet Requirements and Preserve Tax Status?,” with guest presenter Stephen Clarke, IRS Tax Specialist (February 23, 2010)
• Most small tax-exempt organizations whose annual gross receipts are normally $50,000 or less may now electronically submit Form 990-N, also known as the e-Postcard, unless they choose to file a complete Form 990 or Form 990-EZ.
• Certain nonprofits are exempt from filing the IRS 990 altogether.
• Read guidance from the IRS about which form your organization needs to file.

Read all about governance policies.