Tax Issues for Land Trusts
In 2008, the IRS introduced a new Form 990 with many new questions and definitions, including Schedule D, which contains additional reporting requirements for conservation easements. All land trusts filing a full 900 should read the current instructions to the form very carefully and consult with a knowledgeable attorney or financial advisor.
Advice from the Land Trust Alliance
- Detailed Guide to the Form 990
- Guidance on How to Account for Conservation Easements
- Highlights of Schedule D Conservation Easement Questions
- Looking for advice on how to document conservation easement donations? Please visit the Conservation Donation Rules web page »
Forms and Highlights from the IRS
All nonprofit organizations are now required to file some version of the Form 990 each year. Starting with tax year 2009 (returns filed in 2010), an organization that has not filed for three consecutive years will automatically lose its tax-exempt status. The automatic revocation of exemption is effective as of the due date of the third required annual filing or notice. Unlike personal income tax returns, returns are due by the 15th day of the fifth month after the close of an organization’s tax year. For example, if a land trust’s tax year closes on December 31, its 990 is due by the following May 15.
For tax years 2010 and later (filed in 2011 and later), the filing requirements are:
- Organizations with annual gross receipts greater than or equal to $200,000 or total assets greater than or equal to $500,000 must file the Form 990.
- Organizations with gross receipts of less than $200,000 and total assets less than $500,000 may file Form 990-EZ.
- Organizations with annual gross receipts normally less than or equal to $50,000 must file the e-Postcard (also called the Form 990-N). Read more about the e-Postcard here. Learn more about filing requirements.
In addition to being required by the IRS, some state agencies that regulate charitable solicitations also require charities to file the full Form 990 as part of their annual report.
The purpose of Form 990 is to assess compliance with nonprofit law. Those rules are discussed at great length in Nonprofit Law and Recordkeeping for Land Trusts, Volume I: Complying with Federal, State and Local Law, part of the Standards and Practices Curriculum. This page is no substitute for those volumes or professional tax advice, but here are some guidelines and helpful refreshers from the IRS:
- IRS Nonprofit Governance Guidelines: In 2008, the IRS published a list of recommended governance policies and practices for tax-exempt organizations. These guidelines are consistent with Land Trust Standards and Practices and reflect themes stressed in the Form 990 and recent audits, including transparency, financial oversight and accountability.
- Compliance Guide for 501(c)(3) Public Charities: A concise pamphlet that summarizes the rules for maintaining your tax-exempt status.
- Stay Exempt: An IRS "micro-site" with virtual workshops and mini-courses to help nonprofit leaders maintain their organization’s tax exemption.
- Publication 557, Tax-Exempt Status for Your Organization: This is the IRS' detailed guide to securing and protecting your organization's tax-exempt status.
If your organization is audited, please email us so we can highlight resources available to you.