A Comprehensive Guide for Tax-Exempt Organizations
Form 990-EZ is the IRS's streamlined annual information return for small to mid-sized tax-exempt organizations. This guide explains the 2011 version of the form in plain language, helping organizations understand their filing obligations and navigate the process successfully.

What the Form Is For

Form 990-EZ is an annual information return required by the Internal Revenue Service for tax-exempt organizations under section 501(a), certain political organizations under section 527, and nonexempt charitable trusts under section 4947(a)(1). Think of it as the tax-exempt world's equivalent to a tax return—it's not about paying taxes, but rather about transparency and accountability.

The form serves multiple important purposes. First, it provides the IRS with essential information about your organization's finances, activities, and compliance with federal tax law. Second, it becomes a public document (with some exceptions for contributor information) that donors, grant-makers, and the general public can review to understand your organization's operations. Many people rely on Form 990-EZ as their primary source of information about a nonprofit, so accuracy and completeness are crucial.

Who qualifies to use Form 990-EZ? Organizations with gross receipts of less than $200,000 during the tax year and total assets of less than $500,000 at year-end can use this shorter form instead of the full Form 990. However, there are exceptions: sponsoring organizations of donor-advised funds, organizations operating hospital facilities, and certain controlling organizations must file Form 990 regardless of their size. Private foundations use Form 990-PF instead.

The completed return includes Parts I through VI (Part VI applies only to section 501(c)(3) organizations), covering revenue and expenses, balance sheets, program accomplishments, officer compensation, and other key information. Additional schedules may be required depending on your organization's specific activities.

IRS Form 990-EZ Instructions

When You’d Use It (Including Late and Amended Returns)

Original Filing Deadline

Form 990-EZ must be filed by the 15th day of the 5th month after your organization's accounting period ends. For calendar-year organizations, this means May 15, 2012, for the 2011 tax year. If your organization uses a fiscal year, the deadline is 4½ months after your fiscal year ends. When the due date falls on a weekend or legal holiday, you file on the next business day.

Extensions

If you need more time, file Form 8868 to request an automatic 3-month extension. If that's still not enough, you can apply for an additional 3-month extension (not automatic) by showing reasonable cause. In total, you can potentially get up to 6 months of additional time.

Late Filing

If you miss the deadline without filing for an extension, attach a statement to your return explaining why it's late. The IRS may assess penalties, but reasonable cause can help you avoid them. Organizations liquidating, dissolving, or terminating must file by the 15th day of the 5th month after liquidation.

Amended Returns

You can file an amended Form 990-EZ anytime to correct or add information to a previously filed return. Use the 2011 version of the form to amend your 2011 return. Check the "Amended return" box in Item B of the header, complete the entire form with corrected information (not just the changes), and list the amended parts in Schedule O with descriptions of what changed. You must make the amended return available for public inspection for 3 years from the filing date or 3 years from the original due date, whichever is later. State law may also require you to file amended returns with state agencies.

IRS Form 990-EZ Instructions

Key Rules for the 2011 Tax Year

Eligibility Thresholds

You can use Form 990-EZ only if your organization had gross receipts under $200,000 and total assets under $500,000 at year-end. Both conditions must be met. Gross receipts include all amounts received from all sources during the year without subtracting costs or expenses.

Electronic Filing Option

While electronic filing was optional for most organizations in 2011, those filing at least 250 returns of any type during the calendar year and having $10 million or more in total assets were required to file electronically. Organizations that failed to file electronically when required were considered to have not filed at all (except when reporting name changes).

Compensation Reporting Changes

The 2011 form introduced significant changes to how officer, director, trustee, and key employee compensation is reported in Part IV. Addresses no longer needed to be listed, and organizations only had to report compensation shown on Forms W-2 and 1099-MISC. A new $10,000-per-item exclusion applied for "other compensation" items under that amount. Compensation should be reported for the calendar year ending with or within the organization's tax year.

Supporting Organizations

Section 509(a)(3) supporting organizations must file Form 990 or 990-EZ even if their gross receipts are normally $50,000 or less, unless they qualify for specific exceptions (integrated auxiliary of a church, exclusively religious activities of a religious order, or organizations with gross receipts normally not more than $5,000 that support section 501(c)(3) religious organizations).

Accounting Methods

Organizations generally use the same accounting method (cash or accrual) on the return that they use for their books and records. However, the method must clearly reflect income to be acceptable for IRS purposes.

IRS Form 990-EZ Instructions

Step-by-Step Filing Process (High Level)

Step 1: Determine Your Filing Requirement

First, confirm that Form 990-EZ is the right form for your organization. Calculate your gross receipts and verify your year-end total assets. If both are below the thresholds ($200,000 and $500,000 respectively) and you're not in an exception category, you can use 990-EZ.

Step 2: Gather Your Financial Records

Collect your financial statements, contribution records, payroll information, and documentation of program activities for the tax year. You'll need revenue totals, expense breakdowns, beginning and ending balance sheet information, and details about your programs and accomplishments.

Step 3: Complete the Form Header

Fill in your organization's identifying information: name, address, employer identification number (EIN), tax year dates, accounting method, and website. Check appropriate boxes for amended returns, address changes, name changes, initial returns, or terminations.

Step 4: Complete Part I (Revenue and Expenses)

Report all revenue sources (contributions, program service revenue, investment income, etc.) and all expenses by category. Calculate your net assets or fund balance changes. This section provides the financial overview of your organization's year.

Step 5: Complete Part II (Balance Sheet)

Report your organization's financial position at the beginning and end of the year, including cash, assets, liabilities, and net assets. The ending net assets on line 27 must match line 21 in Part I.

Step 6: Complete Part III (Program Service Accomplishments)

Describe your organization's exempt purpose and detail your three largest program services. This is where you tell your story—explain what you do, who you serve, and what you accomplished.

Step 7: Complete Part IV (Officers and Key Employees)

List all officers, directors, trustees, and key employees with their titles, hours worked, and compensation. This information demonstrates governance and ensures transparency about who runs the organization.

Step 8: Complete Part V (Other Information)

Answer questions about significant activities, unrelated business income, political expenditures, loans, and other compliance matters. Complete required schedules based on your "Yes" answers.

Step 9: Complete Part VI (For 501(c)(3) Organizations Only)

If you're a section 501(c)(3) organization, complete this section about lobbying, political activities, transfers to related organizations, and highly compensated employees and contractors.

Step 10: Sign and File

An officer authorized to sign must sign the return under penalties of perjury. File with the IRS Ogden, Utah address (or electronic filing system). Keep copies and all supporting documentation for at least 3 years.

IRS Form 990-EZ

Common Mistakes and How to Avoid Them

Mistake #1: Filing an Incomplete Return

Many organizations leave lines blank, skip required schedules, or fail to answer all questions. The IRS may return incomplete returns and assess penalties. Solution: Answer every applicable question, even if the answer is zero or "No." If you answer "Yes" to questions that trigger additional schedules, complete those schedules fully.

Mistake #2: Wrong Compensation Reporting

Organizations often report compensation incorrectly in Part IV or fail to use the proper calendar year. Solution: Report compensation from Forms W-2 and 1099-MISC for the calendar year ending with or within your tax year. Include only reportable compensation in column (c) and properly categorize health benefits and other compensation in columns (d) and (e).

Mistake #3: Netting or Offsetting Amounts

Some organizations incorrectly reduce contributions by fundraising expenses or net other amounts that should be reported separately. Solution: Report contributions at gross amounts on line 1. Report fundraising expenses separately, and any losses from uncollectible pledges or refunds should go on line 20 with an explanation in Schedule O.

Mistake #4: Missing the Electronic Filing Requirement

Organizations subject to mandatory electronic filing who file paper returns are considered to have not filed at all. Solution: Determine if you filed 250 or more returns during the calendar year and have assets of $10 million or more. If so, you must file electronically.

Mistake #5: Failing to File Schedule B Properly

Schedule B (Schedule of Contributors) has specific rules about what must be filed and what's made public. Solution: File Schedule B if required, understanding that for non-section 527 organizations, most contributor information is not made public (though it must still be filed with the IRS).

Mistake #6: Using the Wrong Form Version

Using a form from the wrong year creates processing problems. Solution: Always use the 2011 Form 990-EZ for the 2011 tax year, even if you're filing late or amending. Each tax year has its own form version.

Mistake #7: Balance Sheet Discrepancies

The ending net assets in Part II must match the amount calculated in Part I, but organizations often have mismatches. Solution: Double-check that line 27, column (B) in Part II equals line 21 in Part I. Reconcile any differences before filing.

IRS Form 990-EZ Instructions

What Happens After You File

Public Disclosure

Your completed Form 990-EZ (except certain contributor information on Schedule B) becomes available for public inspection. The IRS makes it available, and your organization must also provide copies upon request. Many organizations proactively post their returns on their websites to demonstrate transparency.

IRS Processing

The IRS processes your return and adds the information to its databases. While Form 990-EZ is an information return (not a tax return where you calculate tax owed), the IRS reviews it for completeness and compliance.

Penalties for Non-Filing or Late Filing

If you don't file or file late without reasonable cause, the IRS can assess penalties of $20 per day, up to the lesser of $10,000 or 5% of your gross receipts. For organizations with gross receipts exceeding $1 million, the penalty increases to $100 per day with a maximum of $50,000. Individual responsible persons can face additional penalties of $10 per day (maximum $5,000 total) if they fail to respond to IRS requests for a complete return.

State Filings

Many states accept Form 990-EZ to satisfy state reporting requirements. Check whether the states where you're registered require you to file copies with them, either automatically or upon request.

Three-Year Revocation Rule

Organizations that fail to file required returns for three consecutive years automatically lose their tax-exempt status. This is a serious consequence that requires reapplying for exemption.

Maintenance of Exempt Status

Filing Form 990-EZ is essential to maintaining your tax-exempt status. Regular, accurate filing demonstrates your organization's commitment to transparency and compliance with federal tax law.

IRS Penalties Information

Frequently Asked Questions (FAQs)

Q1: Can we file Form 990-N (e-Postcard) instead of Form 990-EZ?

No. Form 990-N is only for organizations with gross receipts of $50,000 or less. If your gross receipts are between $50,000 and $200,000, and your assets are under $500,000, you must file Form 990-EZ (you cannot file the simpler 990-N).

Q2: What if our organization had a short year (less than 12 months)?

File Form 990-EZ for the short period. If the short year began and ended in 2011 (before December 31, 2011), use the 2010 form. If your short year resulted from changing your accounting period and you've changed periods within the last 10 years, attach Form 1128. Write "Change of Accounting Period" at the top of the return.

Q3: Do we need to file if we haven't yet received our determination letter?

Yes. Organizations claiming tax-exempt status under section 501(a) must file Form 990 or 990-EZ even if they haven't yet received IRS recognition of exempt status. Check the "application pending" box in Item B of the form header.

Q4: Can we file Form 990-EZ if we're a section 509(a)(3) supporting organization?

Yes, supporting organizations can file Form 990-EZ if they meet the size thresholds (under $200,000 gross receipts and under $500,000 total assets). However, supporting organizations must file even if their gross receipts are normally $50,000 or less (they cannot file Form 990-N), unless they qualify for specific religious organization exceptions.

Q5: What if we have unrelated business income?

If your organization has unrelated business gross income of $1,000 or more, you must file Form 990-T (Exempt Organization Business Income Tax Return) in addition to Form 990-EZ. Answer "Yes" to line 35a in Part V and ensure you file Form 990-T separately.

Q6: How do we report donated services or volunteer time?

You cannot report the value of donated services or volunteer time on Form 990-EZ, even if you track these amounts in your financial statements. The IRS instructions specifically prohibit reporting such values.

Q7: Where do we send the completed form?

Mail Form 990-EZ to: Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0027. Foreign organizations and organizations in U.S. possessions use P.O. Box 409101, Ogden, UT 84409. You can also file electronically, which is required for some larger organizations.

IRS Form 990-EZ Instructions

Important Reminder: This guide provides general information about Form 990-EZ for the 2011 tax year. For specific situations, consult the complete official instructions at IRS.gov or seek advice from a qualified tax professional familiar with tax-exempt organizations.