News Detail

Time to File Your 990 (U.S. Chapters Only)

1/27/2020

ACI chapters are independent legal entities. As such, each chapter is required to file its own reports with governmental authorities. Previously, only certain tax-exempt organizations were required to file Form 990. Under Section 3101 of the Taxpayer First Act, all tax-exempt organizations will eventually need to do so. This includes submitting Form 990-T for unrelated business income tax, if applicable.

All Form 990s are available through the IRS website. This new requirement takes effect for taxable years after July 1, 2019. As such, a tax-exempt organization with a fiscal year starting after July 1, 2019, is not required to electronically file its FY2019 annual return. However, the organization must file electronically its annual return for FY 2020.  Under certain conditions, the act does permit a delay to mandatory e-file for organizations.  The majority of U.S. based chapters will only need to file Form 990-N (e-Postcard), which can be found here.

Notice Before Revocation of Tax-Exempt Status (U.S. Chapters Only)
Effective July 1, 2019, Section 3102 of the Taxpayer First Act requires the IRS to issue a notice informing a tax-exempt organization of its failure to file Form 990s for two consecutive years and the possibility of automatic revocation of tax-exempt status if it fails to file for a third consecutive year. U.S. based chapters should ensure that their contact information is current with the IRS to avoid missing such notices. 

Yes, some chapters may pay taxes!
A common misconception is that a chapter will never have to pay taxes if it has received tax-exempt status. Tax-exempt status means that the chapter does not pay corporate federal income tax on income from activities that are substantially related to the purposes for which the chapter was given the exemption. The chapter would have to pay taxes on any “unrelated business income.” For example, advertising revenues (minus printing costs) from newsletters or a directory, are considered unrelated business income and a Form 990T must be filed. For more information on UBIT, contact your local tax preparer.

For more information, chapters should contact their tax accounting professional or the IRS website.