The IRS Form 990 is a cornerstone of nonprofit compliance. It provides financial transparency, ensures accountability, and allows the IRS to verify that organizations continue to qualify for tax-exempt status. Most nonprofits must file a version of the Form 990 annually, but not all are required to. Understanding which nonprofits are exempt from filing a 990 is critical for nonprofit leaders, accountants, and compliance professionals.
Churches and Religious Organizations
One of the largest groups exempt from filing Form 990 are churches and their integrated auxiliaries. This exemption covers:
- Churches, synagogues, mosques, and other houses of worship.
- Conventions or associations of churches.
- Integrated auxiliaries such as church-affiliated schools or mission societies.
The rationale for this exemption is rooted in the Constitution’s protection of religious freedom. Unlike most nonprofits, these organizations do not need to file Form 990 to maintain their tax-exempt status.
Small Nonprofits
Organizations with gross receipts under $50,000 per year are also exempt from filing the standard Form 990 or 990-EZ. Instead, they may file a simplified Form 990-N (e-Postcard). This electronic notice requires only basic information such as the organization’s name, address, and principal officer.
While the 990-N is brief, it’s still crucial: failing to file it for three consecutive years can lead to automatic revocation of tax-exempt status.
Government-Related Organizations
Certain nonprofits closely tied to government functions are also exempt. These include:
- State institutions such as universities, when supported by government funding.
- Governmental units or affiliates operating programs with direct public oversight.
Because these entities are already subject to government reporting requirements, the IRS does not require them to file Form 990.
Subsidiaries of Exempt Organizations
In some cases, a nonprofit may be exempt if it is a subordinate or affiliate covered by a group exemption. For example, national organizations with local chapters often have a group ruling with the IRS. In these cases, the parent organization may file a consolidated report, relieving the local affiliate of filing obligations.
Key Takeaway
While many nonprofits are exempt from filing a 990, exemption does not eliminate the need for good recordkeeping or compliance. Churches, small nonprofits, government-affiliated organizations, and certain affiliates may qualify—but all nonprofits should track their obligations carefully.
For guidance on whether your nonprofit is required to file and how to stay compliant, consulting a CPA experienced in nonprofit law is the best step forward.