The IRS states that if an organization normally has gross receipts of $50,000 or less, it may submit the Form 990-N. This is an electronic notice that requires much less information than the Form 990-EZ and Form 990. It’s important to note that this gross receipts threshold isn’t as straightforward as it may seem! To determine whether an organization normally has gross receipts of $50,000 or less, one must consider the age of organization.
An organization’s gross receipts are considered to be normally $50,000 or less if the organization is:
- Up to one year old and has received donations or pledges of $75,000 or less during its first tax year
- Between one and three years old and averaged $60,000 or less in gross receipts during each of its first two tax years
- Three years old or more and averaged $50,000 or less in gross receipts for the immediately preceding 3 tax years (including the year for which the return would be filed)
According to the IRS, gross receipts are the total amount an organization received from all sources during its tax year. No costs or expenses should be subtracted from this amount. To calculate gross receipts from the Form 990 it would be the sum of the following lines from Part VIII, column A: 6b(i), 6b(ii), 7b(i), 7b(ii), 8b, 9b, 10b and 12. To calculate gross receipts from the form 990-EZ it would be the sum of the following lines from Part I: 5b, 6c, 7b, and 9.
It is important to review your organizations gross receipts every year as the filing requirement may change based on the organization’s age and related gross receipts threshold.