What IRS Form 990-T (2017) Is For
Form 990-T for the 2017 tax year is used when a tax-exempt organization earns unrelated business income that does not support its exempt purposes. Most organizations must file when unrelated business taxable income from activities regularly carried on reaches $1,000 or more. This rule applies to nonprofit organizations, universities, certain trusts holding Individual Retirement Accounts (IRAs), and some entities affiliated with an S Corporation. The Internal Revenue Service uses the form to determine income tax owed under the Internal Revenue Code section governing Unrelated Business Income Tax.
When You’d Use IRS Form 990-T (2017)
You would use this form when your organization is exempt under federal tax law and earns income derived from unrelated trade, investment income, royalty income, real property rentals, or other services not substantially related to exempt purposes. It also applies when income received from business activity shows a profit during the 2017 tax year. Late or amended filings are still allowed, although refunds typically expire after statutory deadlines. Most organizations file late after realizing they have missed revenue or deductions.
Key Rules or Details for 2017
- UBIT rules: Organizations exempt under federal tax law reported Unrelated Business Income Tax using 2017 rules that applied when activities were regularly carried out and produced profit unrelated to exempt purposes. These rules helped determine income tax owed.
- Aggregation allowed: Most organizations to combine unrelated business income and deductions from the same activity without siloing, which simplified the calculation of net income across activities conducted in different departments.
- NOL carryovers: Net operating losses can be carried back two years and forward twenty years, which helps taxpayers offset taxable income generated through unrelated trade or business activities, including fundraising events.
- AMT applicability: The Alternative Minimum Tax still applies to any corporation subject to UBIT, affecting the final amount of taxation owed by charitable institutions or other exempt organizations.
- Blended rates: Fiscal year filers transitioning into 2018 utilized blended corporate tax rates due to federal tax changes, which affected how income received late in the year was taxed.
- Filing threshold: Filing was required when unrelated business income exceeded $1,000, even if employees or volunteers regularly assisted in carrying out the same activity involving donated goods.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Gather the necessary records
Collect documents showing payments received, deductions claimed, and revenue tied to unrelated business activity. This includes receipts, investment statements, rental agreements, or any other materials that show how funds were generated during the 2017 tax year.
Step 2: Download and use the correct 2017 form
Use only the 2017 version of Form 990-T because later forms have different rules, line numbers, and tax law references. The Internal Revenue Service requires the correct year to ensure proper reporting and accurate taxation.
Step 3: Prepare and attach all required schedules
Attach schedules explaining how income was produced from real property, dividends, interest income, or activities considered regularly carried out. These attachments support deductions, clarify business activities, and help determine eligibility for exceptions.
Step 4: Mail the form to the IRS Service Center
Mail the completed form to the appropriate Internal Revenue Service address listed for the 2017 tax year. Include all signatures and keep proof of mailing because late filings may lead to interest or penalties based on Unrelated Business Income Tax rules.
Step 5: Keep copies of all submitted documents
Retain copies of the form, schedules, and supporting documents for reference. These records help maintain the organization's tax-exempt status and support its exemption in the event that questions arise about activities conducted or income derived.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Using the wrong form year: Some organizations file using a newer version, which changes calculations and causes IRS issues. Avoid this issue by downloading the exact 2017 form to ensure correct income reporting.
- Misclassifying income: Revenue from trade shows, real property rentals, or other services may be treated incorrectly as exempt. Avoid this by applying the three tests to determine whether unrelated business activity is regularly carried on.
- Leaving out schedules: Missing schedules cause delays and questions about deductions or fair market value calculations. Avoid this by reviewing the instructions and attaching documents supporting property values, dividends, deductions, and other revenue details.
- Incorrect NOL handling: Errors occur when applying old NOL rules for net income calculations. Avoid this issue by reviewing the 2017 carryback and carryforward guidance to ensure the correct reduction of unrelated business taxable income.
- Overlooking interest and penalties: Failing to include interest or penalties can result in IRS notices. Avoid this by verifying that amounts paid match income tax owed under Unrelated Business Income Tax rules.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
The Internal Revenue Service reviews the filing and updates its records, a process that can take several weeks to complete. Late or amended filings may take longer to process, depending on the documentation. If additional tax is due, the IRS sends a notice detailing interest, penalties, or adjustments. Amended filings follow similar procedures, although refunds for the 2017 tax year are generally unavailable due to statutory limits.
FAQs
How do I file IRS Form 990-T 2017 for a tax-exempt organization?
You file it by completing the 2017 form, attaching schedules, and mailing it to the IRS. Late filings are accepted, even though refunds may no longer be applicable.
Does an exempt organization owe income tax when business income tax applies?
Yes, unrelated business taxable income from activities not tied to exempt purposes is subject to Unrelated Business Income Tax, even when the organization is tax-exempt.
When is income from an activity regularly carried for net income reporting?
It is regularly carried out when an organization performs the same activity consistently, such as a commercial business. This helps determine whether UBIT applies.
How does investment income affect exempt organization business reporting?
Investment income, such as interest or dividends, is typically excluded, although exceptions apply to debt-financed property or controlled corporation rules.
Does an S Corporation shareholder need to file when business activity produces UBIT?
Some trusts or exempt organizations owning S Corporation shares must report unrelated business income if their allocated activities generate taxable income.
When do other services require Form 990 for Unrelated Business Income Tax?
Services unrelated to exempt purposes must be reported when they generate one thousand dollars or more in unrelated business taxable income for the year.
How does IRS Form 990 T 2017 relate to exempt purposes?
It separates unrelated business activity from charitable operations, allowing the organization to remain compliant with federal taxation rules and maintain its exemption.
For more resources on filing or understanding prior-year IRS forms, visit our guide on Nonprofit & Exempt Organization Forms.
