At Lewis Group CPAs, we’ve spent years sitting across the desk from passionate non-profit leaders who want to change the world but find themselves bogged down by the IRS. If your fiscal year wrapped up on December 31, that May 15th deadline for Form 990 is likely looming over your calendar like an uninvited guest. It’s the primary tool the government uses to look under the hood of your organization, and frankly, it’s not something you want to rush through with a cup of lukewarm coffee at midnight on the 14th.
The IRS Isn’t Just Checking Math
The 990 is a public document. Donors and grantors can see how much you spend on programs versus how much goes toward keeping the lights on. A common mistake we see is “misclassification”. If you accidentally dump all your expenses into “management and general” because it was easier than tracking program-specific costs, you might look less efficient than you actually are.
Our team often handles comprehensive accounting services to ensure these allocations make sense long before May rolls around. We want your financial statements to reflect the heart of your work, not just a pile of receipts.
Three Frequent Stumbling Blocks for Tax-Exempt Entities
Why do things go sideways? It’s in the fine print. Here are a few things that tend to trip up even the most seasoned board members:
- Unrelated Business Income (UBI): Did your tax-exempt group make money from something outside your core mission? If so, the IRS wants their cut via Form 990-T.
- Governance Disclosures: They want to know if you have a conflict-of-interest policy. If you say “yes” but don’t actually have one on file, that’s a red flag.
- Incomplete Schedules: Skipping Schedule L (transactions with interested persons) is a classic mistake that can lead to a formal inquiry.
Don’t Ignore the “Public Support” Test
Maintaining your status as a non-profit organization requires proving you aren’t just funded by one or two wealthy individuals. This “public support test” is a math problem that spans five years. If you fail it, you could be reclassified as a private foundation, which carries much stricter rules and higher taxes. It’s a bit like a fitness test for your funding; you have to show that the community is actually backing you. We often help clients navigate these IRS compliance standards to ensure no surprises pop up during a review.
The High Cost of Silence
What happens if you don’t file? If you miss filing three years in a row, your tax-exempt status is automatically revoked. Getting it back is a mountain of paperwork and fees that nobody has time for. We see it all the time—organizations get so focused on their amazing outreach that the “boring” paperwork slips through the cracks. But at the end of the day, you can’t help people if your doors are closed due to a regulatory headache.
If the thought of tax forms makes your head spin, let’s talk. We specialize in tax planning and preparation specifically for the non-profit sector. We’ll handle the spreadsheets so you can get back to the mission that started it all.
Let’s Get Your Filing Right
Don’t wait until the week of May 15th to realize your books aren’t ready. Reach out to us at Lewis Group CPAs to schedule a consultation. We’re here to take the weight off your shoulders and keep your focus where it belongs. Visit our contact page or give us a call at (360) 896-8221 to get started.
