FEDERAL REQUIREMENTS (FORM 990) TO MAINTAIN 501(c)3 STATUS

Must file an annual information return with the IRS even if revenue is $0. No fee to the IRS to file a Form 990.

Types of Form 990 and Their Requirements

• Form 990-N: revenue < or = $50,000 in the fiscal year
  • File an Electronic Notice (e-postcard)
• Form 990 – EZ: revenue between $50,000 – $200,000 and total assets < $500,000
• Form 990: revenue > $200,000 or total assets > $500,000

NOTE: Form 990 is required to be available to the public upon request; organizations are not required to post
them to their website. However, it will be available at guidestar.org.

DUE DATE

• 5 months after fiscal year end, on the 15th day (i.e. if fiscal year end is 12/31, the filing is due 5/15)
• Option to request 6-month extension (i.e. 12/31 return would then be due 11/15)
• Failure to file for consecutive 3 years will result in the loss of the organization’s tax
  exempt status

• Secretary of State – https://mblsportal.sos.state.mn.us/Business/Search
  • MUST renew annual registration by 12/31 (regardless of fiscal year)
  • No fee to renew; can be completed online (create account on Secretary of State website)
  • Failure to renew may result in consequences for the organization
• Attorney General – https://www.ag.state.mn.us/charity/
  • If any of the following exist for the organization, it MUST register with the AG’s office AND file an annual report:
    • pays staff, independent contractors, or professional fundraisers or
    • holds > $25,000 in assets or
    • has > $25,000 in revenue

DUE DATE

• 7 months after fiscal year end, on the 15th day (i.e. if fiscal year end is 12/31, the filing is due 7/15)
• Option to request 4-month extension (i.e. 12/31 return would then be due 11/15)
• Failure to file for consecutive 3 years will result in the loss of the organization’s tax exempt status

AUDIT REQUIREMENTS

More than $750,000 in revenue

• MUST file audited financial statements prepared in accordance with GAAP
  • May NOT treat Form 990 as audited financial statement

Less than $750,000 in revenue AND files Form 990

• Not required to submit audited financial statements
  • May use Form 990 as financial statement if numbers were prepared in accordance with GAAP.

Less than $750,000 in revenue AND does not file Form 990

• Not required to submit audited financial statements
• If 990-EZ, 990-N, or 990-PF, must complete financial section of annual report and may not treat tax return as its financial statement.

Filing fee: $25 (plus late fees, if applicable); can file electronically or by mail

Form W-2 – Required for every employee you paid during the calendar year

• IRS Link to General Instructions for form – https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
• Social Security Administration threshold for e-filing W2’s is 10 or more
  • If 10 or more combined forms W2, 1099, 1095, etc. they must all be e-filed
  • Be sure all box 12 codes are correct and being reported.
• MN e-filing is also required for 10 or more forms W2/1099 combined.
• Due Date: generally last day in January following end of calendar year

ACA (Affordable Care Act) Reporting

• Fully insured (third-party insurance provider) – Employers with 50 or more full-time and full-time equivalent employees are considered applicable large employers (ALEs) and therefore MUST furnish Form 1094-C and 1095-C to eligible employees
• Self-Insured and Level-Funded – All ALEs and small employers (regardless of employee count) must furnish forms to all active/non-active employees and dependents (Form 1094-C and Form 1095-C for ALEs; Form 1094-B and 1095-B for small employers)

Workers’ Compensation Insurance

• Minnesota requires insurance for employees, volunteers, Board members, and 1099 contractors – no minimum number of employees
• Nonprofit associations which do not pay more than $1,000 in wages in a year are NOT required to have workers’ compensation insurance

Independent Contractors – 1099 Reporting

• Compensation paid to individuals, partnerships, LLCs (but not corporations), who are not considered employees, aggregating $600 or more, in the calendar year
  • Payment for reimbursable items (i.e. mileage) is EXCLUDED from consideration
• Payment of $600 or more to attorneys are reportable, whether or not the business is incorporated
• Rents, annuities, and other payments (i.e. prizes) aggregating more than $600 or more are reportable

DUE DATE: Typically last day in January following calendar year-end

• Recipient of the Form 1099 must receive the form post-marked no later than due date
• Transmittal of Form 1096 due to the IRS no later than the due date
• If filing more than 10 Form 1099s, then MUST file electronically with IRS
• Failure to file or filing late may result in a penalty of up to $660 per Form 1099

Sales and Use Tax Filings https://www.revenue.state.mn.us/book/export/html/10021

Contributions – Donor Acknowledgement Letters

• IRS requires nonprofits to send written acknowledge letters to donors who give more than $250 in a calendar year; can be via mail or email; can be in the form of a receipt

• Minimum of three active Board members during the calendar year
  Documentation of at least one meeting held during the calendar year

Grant Reporting and Compliance Requirements

• Performance Review Process
• Financial Reconciliation of Account Balances and Systems
• Financial Review and Budgeting Process
• Board Member Transition and Orientation
  • Review and update signatory designations and authorizations
• Review Bank Relationships – Line of Credit, Debt Agreements (Covenants)
• Review and Update Employee Handbook
• Review/Renew Corporate Insurance
  • Directors and Officers
  • Professional Liability
  • Cyber Security