Which Form 990 should I file and how do I report revenue?

The IRS publishes detailed Form 990 instructions, but finding answers to specific reporting questions can take some digging. Which return should an organization file? Does a restricted grant count as program service revenue? Questions like these came up during NATP's Working Through Form 990 Step-by-Step webinar, viewable on demand. Here are six answers that apply beyond the situations that prompted them.

Which Form 990-series return should an organization file?

The return will depend on the organization’s type, gross receipts and total assets at year-end:

• Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ, is available when gross receipts are normally $50,000 or less. An eligible organization may choose to file a full return instead.
• Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, is available when gross receipts are less than $200,000 and total assets at year-end are less than $500,000.
• Form 990, Return of Organization Exempt from Income Tax, is required when gross receipts are $200,000 or more or total assets at year-end are $500,000 or more.
• Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation, is filed by private foundations regardless of their receipts or assets.

For an organization that has existed for at least three years, the Form 990-N gross-receipts test averages the current tax year and the two preceding tax years. Different tests apply to newer organizations. Some organizations must file a particular return regardless of size, so check the organization’s filing category before relying on the thresholds alone.

Is a restricted grant a contribution or program service revenue?

A donor restriction does not turn a grant into program service revenue. The restriction tells the organization how it may use the funds. The more important question is whether the payer receives something directly in exchange. If so, the payment may be program service revenue; otherwise, it remains a contribution or grant. A government grant primarily benefiting the public goes on Form 990, Part VIII, Line 1e; a payment for the government's direct needs may instead go on Line 2.

Do separate gifts from one donor count together for Schedule B, Schedule of Contributors?

Yes. The general $5,000 Schedule B threshold is based on a contributor's total for the tax year, rather than a single check. Under the general rule, combine separate and independent gifts of $1,000 or more from that contributor; gifts below $1,000 may be disregarded in determining the total. Qualifying publicly supported §501(c)(3) organizations may use a special threshold based on the greater of $5,000 or 2% of total contributions. Check which rule applies before deciding that a donor is absent from Schedule B.

Is revenue from a sponsored event program service or fundraising income?

The event's primary purpose controls the classification. Fees for a retreat that directly provides the organization's exempt-purpose education, counseling, or religious instruction are program service revenue. If the event is primarily a fundraiser, the amount paid for benefits received is fundraising-event income; the amount above the fair market value (FMV) of those benefits is a contribution. The fact that the organization calls an event a “retreat” or has a sponsor does not settle the reporting.

Does renting space to a business create unrelated business income (UBI)?

Not automatically. First ask whether providing the space contributes importantly to the organization’s exempt purpose. For example, access to a community center’s sports courts may be a related program activity. If the rental is unrelated, rent from real property is excluded from unrelated business taxable income (UBTI). Substantial services for the renter, significant personal property included with the rental, rent based on net profits, or debt financing can change the result. The renter’s for-profit status alone does not determine the tax treatment; examine the rental terms and what the organization actually provides.

What if an organization has missed several years of Form 990 filings?

First determine which return or notice was required for each year and verify the organization's current exempt status. Missing a required Form 990-series return or Form 990-N for three consecutive years triggers automatic revocation, effective on the due date of the third missed filing. If the IRS revokes its status, the organization must apply for reinstatement; filing late returns alone will not restore exemption.

The filing method also depends on the year. Older returns outside the IRS electronic filing window may need to be filed on paper using that year's form and instructions. Check the available method for each period and the requirements for any reinstatement application before preparing delinquent returns.

For a fuller walkthrough of the return and its schedules, check out NATP's Working Through Form 990 Step-by-Step on-demand webinar.