IRS Form 990N filing and submitting to IRS is easy when your Form 990N is rejected by IRS. Re-filing Form 990N is becoming a common practice as the IRS started to reject many of the tax Form 990N. So it is important for every tax filer to know why the IRS 990 Form is rejected on your return and need to know how to correct it to avoid penalties or losing the tax-exempt status.
Reasons for IRS 990N Form Rejections
- An organization needs to get the tax-exempt status from the IRS:
Before filing a Form 990, the organization must file for a tax-exempt status by using the Form 1023 or Form 1024 from the IRS.
- When the tax filer comes under a 501 (c) (3), then there are chances that they have applied Form 1023 (Application for recognition of exemption under 501 (c) (3) of the Internal Revenue Code) already:
If the organization has applied for the exempt filing previously but it did not receive the confirmation, then there will be an option to select. When you miss checking this box, then the possibility of IRS rejection will be high and you need to re-file.
- The tax filer must provide the organization’s tax year appropriately and must not file the return by changing the tax year of the organization. The provided tax period by the organization must match with the database of the IRS unless the organization was terminated in the reporting tax year:
Among the other reasons, the most common error is this one. Generally, the IRS holds all your records for the organization’s tax year. Most of the filers consider that they are operating on a calendar year basis but it is actually incorrect. So to get clear about and determine the operating period of your organization, you just need to simply call the IRS and get the details about the organization. In order to do that you just need your organization’s EIN and other details such as contact address, mobile number, and principal officer’s information?
- The IRS reserves the right to cancel the user’s exempt organization status for numerous reasons. Therefore, the filer needs to figure out the reason with the IRS before starting to file the return:
This case occurs when a particular organization did not file their return for consecutive 3 years. If this is the condition, then the IRS will revoke the status of tax exemption for the concerned organization. Hence, the filer needs to re-file the Form 1023 or Form 1024 to regain the status with the IRS.
- The IRS has various exceptions to apply for the official IRS recognition of tax-exempt status by filing Form 1023 or Form 1024.
If your organization comes under 501 (c) (3) and has gross receipts of $ 5,000 or less annually then you are not required to apply. In addition, if the organization comes under section 501 (c) (4), (c) (6), or (c) (7) and others, you do need to apply technically. The IRS takes the position that it will not accept the recognition of tax-exempt status. In that case, your Form 990N will be rejected and you cannot meet the new notification requirements.
Ensure to check with the IRS Exempt Organization Division through your organization’s authorized representative or officer before submitting Form 990-N. Then state that your organization needs to submit Form 990N but have not applied for the exempt status with the IRS. You will be asked a few questions regarding that and you need to create a file in their system. This may take up to 45 days to process.
All the mentioned reasons are the top 5 major reasons for an organization’s IRS form 990N rejections. When you e-file Form 990N with us Tax2efile, we can alert you when the form is rejected with the reason so that you can re-file your forms quick with the proper information. With the corrections made, you can re-transmit the form to the IRS at no additional cost.
Hope this blog provides a clear picture of the major reasons for your IRS 990N Form rejection. For further assistance and clarifications, connect with our US-based customer support team via call us at 703-229- 0326 or send a mail to email@example.com. We are happy to assist and serve you at any time.