Question: Lina filed Form 990, Return of Organization Exempt From Income Tax, by May 15, 2024, which is the due date for Alley Cats Rescue, a tax-exempt organization filing on a calendar year basis. Shortly after, the Form 990 was returned to her along with IRS Letter 2694C indicating there was information missing from her submission. She immediately called the IRS and found out that when information is missing from the Form or Schedules are omitted, the return is sent back to the filing organization and considered “not timely filed” – hence the letter to spur a correction. When she reviewed her submission, she noticed that she did not include Schedule O (Form 990), Supplemental Information to Form 990 or 990-EZ. Was Lina required to file Schedule O with Form 990?
Answer: Yes, Schedule O is a required attachment for all filers of Form 990, as seen in Part IV, Checklist of Required Schedules, Line 38. It is recommended that the schedule be prepared at the same time as the other sections of the Form 990 so that essential explanations are not inadvertently omitted. The specific use of the form is explained in its instructions: 2023 Schedule O (Form 990).
An incomplete Form 990 is considered not timely filed, and the penalty is $20 a day for each day the return is late, not to exceed lesser of $12,000 or 5% of gross receipts. If annual gross receipts exceed $1,208,500, the penalty jumps to $120/day with the maximum penalty of $60,000 [§6652(c)(1)(A)].
The IRS recommends that the preparer “… return a complete and accurate return within 10 days of the date of the letter to avoid penalties. The date we receive a complete and accurate return is the date we consider your return filed.”
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.