As part of the Internal Revenue Code, specific organizations would have to report their activities for every calendar year for documentation purposes. Such organizations must fill what is termed 'Form 990'.
The Form 990 (described as the "Return of Organization Exempt from Income Tax) is explicitly designed for firms exempted from paying taxes every year. It basically contains spaces where the organization fills out information about its governance, financial information, and other essential activities.
A crucial aspect of this form is the information provided is usually made public, unlike the Income-tax returns filed by profit firms. The form is one of the requirements that must be filled to grant any organization a "Tax-Exempt" status.
There is a particular information form 990 requires from the organization. This may include its mission, activities which have portrayed the vision, and other significant events for the year in view. A part of the objective of form 990 is to give Uncle Sam the idea that the organization can maintain its tax-exempt status while in operation.
A section is dedicated to revealing how the organization is run and the names of those at the helm of affairs. This includes names of principal directors, highest-paid employees, and other strategic partners of the organization. Its common knowledge that any organization with a tax-exempt status does not have to pay its principals high, else they may declare bankruptcy.
Form 990 is made of 12 distinct parts:
The summary of the organization, including the revenue generated, expenses, and assets.
The part where a director swears under oath that the information provided is true, accurate to the best of his knowledge, and is aware of the penalty for perjury.
The statement of all accomplishments for the year in view, the mission and vision, and a summary of the income and expenses for the three most significant activities in furtherance of the mission.
A list of schedules of events to be completed.
Statements on any other status it has received from the IRS.
Information about the governing body of the organization.
The principal officers' compensation and payment plan, including past and present, board of trustees, and any information on employees who receive above $100,000, including partners and contractors.
Statement on funds received that may not be classified as business income.
An in-depth summary of the expenses.
Balance sheet for the organization
An in-depth summary of the assets of the organization
All financial statements and reports. This includes if the financial reports were audited by an independent, third-party auditing agency.
The following list of firms or groups must fill the form 990 every year. They include:
Nonprofits: organizations with a nonprofit mandate need to fill out form 990. Basically, organizations that post more than $25,000 in revenues are required by law to fill it.
Foundations founded by private entities: such groups, regardless of size, must fill out Form 990-PF.
Every other organization is not listed in the next section.
Nonprofits with income less than $25,000. Although it is not recognized by law, they are considered too small, probably due to constraints in IRS staff strength.
Religious Organizations. All faith-based organizations are totally exempt from filling out form 990.
Religious educational institutions. All schools that are not colleges but owned by faith-based organizations are not required to submit a filled form 990.
Political institutions. All political-related institutions are not allowed to submit a form 990 to the IRS.
Nonprofits are not yet documented. All nonprofits that haven't applied to the IRS for tax-exempt status may not submit since the IRS does not have information on them in the first place.
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