Do I have to file a tax return with the IRS for last year for my new nonprofit animal rescue? We have not even come out of the red with our vet bills yet.
Yes. The requirement to file a tax information return exists without regard to the financial results of the organization. Most tax-exempt nonprofits, with a very few exceptions such as churches, are required to file a tax information return every year, but the threshold for the type of return required has been changing over the last few years. Until the Pension Protection Act of 2006, there was a regulatory exemption for organizations that normally received less than $25,000 in gross revenue a year, but that rule has been eliminated. Now, even a very small organization is required to file, and if any organization that is required to file fails to do so for three consecutive years, it will automatically lose its tax-exempt status.
Most organizations exempt under Section 501(c) are required to file some version of Form 990, depending on their gross revenue. (Private Foundations must file Form 990-PF, without regard to the amount of income.) The thresholds for the various versions have changed every year since the introduction of the revised Form 990 but are now final. (See Ready Reference Page: “New ‘Core Form’ 990 Presents Revised Look for Nonprofit Finances”) For fiscal years beginning January 1, 2010 and thereafter, an organization must file the full Form 990 if it has gross revenue of $200,000 or more OR total assets of $500,000 or more at the end of its fiscal year.
An organization with gross receipts of less than $200,000 AND total assets of less than $500,000 at the end of the year may file a Form 990-EZ, which is significantly less complicated. Organizations with gross receipts normally less than $50,000 a year may now file the electronic postcard Form 990-N. (See Ready Reference Page: “Small Nonprofits Must File E-Postcard to Retain Exemption”) Depending on your gross revenues, not your net, you may be able to choose the Form you want to file.