Land Trust 990s and Audits
All nonprofit organizations are now required to file some version of Form 990 each year, and the new form includes additional questions about conservation easements. We encourage you to learn more about the IRS rules for maintaining tax exempt stauts so we can avoid more audits of land trusts in the years ahead!
Who Needs to File | The New 990 | Keeping Your Tax Exemption | Land Trust Audits
All Nonprofits Must File a 990 or Lose their Exempt Status
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 3 consecutive years will automatically lose it's tax exempt status. Returns are due on the 15th of the fifth month following the end of your fiscal year--May 15 for calendar year filers. For tax year 2009, the filing requirements are:
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Organizations with gross receipts of more than $500,000 or total assets of more than $1.25 million must file the Form 990.
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Organizations with gross receipts of less than $500,000 and total assets less than $1.25 million, may file Form 990-EZ.
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Organizations with annual gross receipts of $25,000 or less must file the e-Postcard (also called the Form 990-N). Read more about the e-Postcard here.
These thresholds will change for the 2010 tax year. The filing thresholds for the full 990 will be permanently set at $200,000 gross receipts and $500,000 total assets, and allowable receipts for the e-Postcard will increase to $50,000. Learn more about filing requirements.
In addition to being required by the IRS, many state agencies that regulate charitable solicitations also require charities to file the full Form 990 as part of their annual report.
What Land Trusts Need to Know About the New Form 990
In 2008, the IRS introduced a new Form 990 with many new questions and definitions. The new Schedule D 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 and Partners
- The New 990 at a Glance from K&L Gates
- Seven Things You Can Do to Prepare for the New 990 from K&L Gates
Forms and Highlights from the IRS
- Links to Form 990, Schedules and Instructions
- Overview of Form 990 Redesign For Tax Year 2008 (PDF, 43KB)
- Background Paper on the new Form 990 (PDF, 81KB)
- Schedule D, Supplemental Financial Statements – Highlights (PDF, 43KB)
Keeping Your Tax Exempt Status
Of course, 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, Volumes I & II, part of our Land Trust Standards and Practices Cirriculum. This page is no substitute for those volumes or professional tax advice, but we've listed some new 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 new 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 organizations' tax exemptions.
Land Trust Audits
Over the past year, the Internal Revenue Service has greatly increased it's audits of nonprofit organizations. Some of these audits have been of land trusts. For advice anticipating and responding to an IRS audit of your land trust, you may be interested in "An Unwanted Visitor: What to Do if the IRS Comes Calling," an article from the Summer 2009 edition of Saving Land by Sheila McGory-Klyza.
Learning from IRS Audit Closing Letters to Land Trusts
To help land trusts understand what the IRS is looking at, we've posted some examples of closing letters sent to land trusts at the successful completion of their audits. These letters reveal how the IRS views the details of running a land trust and may include conditions for a nonprofit organization to retain its tax exempt status and/or additional advice. More>>
If your organization is audited, we’d like to hear about it so we can highlight resources available to you. Please email policy@lta.org. Thanks.
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