Table of Contents
Use Form 990-T, Exempt Organization Business Income Tax Return, to:
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Report unrelated business income;
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Figure and report unrelated business income tax liability;
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Report proxy tax liability;
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Claim a refund of income tax paid by a regulated investment company (RIC) or a real estate investment trust (REIT) on undistributed long-term capital gain.
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Request a credit for certain federal excise taxes paid.
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Any domestic or foreign organization exempt under section 501(a) or section 529(a) must file Form 990-T if it has gross income from a regularly carried on unrelated trade or business, of $1,000 or more. See Regulations section 1.6012-2(e). Gross income is gross receipts minus the cost of goods sold. (See Regulations section 1.61-3.)
A disregarded entity, as described in Regulations sections 301.7701-1 through 301.7701-3, is treated as a branch or division of its parent organization for federal tax purposes. Therefore, financial information applicable to a disregarded entity must be reported as the parent organization's financial information.
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Organizations liable for the proxy tax on lobbying and political expenditures must file Form 990-T. See the Line 37- Proxy Tax on page 16 for a discussion of the proxy tax. If your organization is only required to file Form 990-T because of the proxy tax, see Proxy Tax Only under Which Parts To Complete, beginning on page 4.
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Colleges and universities of states and other governmental units, as well as subsidiary corporations wholly owned by such colleges and universities, are also subject to the Form 990-T filing requirements. However, a section 501(c)(1) corporation that is an instrumentality of the United States and both organized and exempted from tax by an Act of Congress does not have to file.
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Organizations that are liable for other taxes (such as the section 1291 tax (line 35c or 36 of Form 990-T) or recapture taxes (line 42 of Form 990-T)) must file Form 990-T. See pages 16 and 17 of the instructions for a discussion of these items. If your organization is only required to file Form 990-T because of these taxes, see Other Taxes under Which Parts To Complete, beginning on page 4.
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Fiduciaries for the following trusts that have $1,000 or more of unrelated trade or business gross income must file Form 990-T:
1. Individual Retirement Accounts (IRAs) described under section 408(a), 2. Simplified Employee Pensions (SEPs) described under section 408(k), 3. Simple Retirement Accounts (SIMPLE) described under section 408(p), 4. Roth IRAs described under section 408A(b), 5. Coverdell education savings accounts (ESAs) described under section 530(b), 6. Archer Medical Savings Accounts (Archer MSAs) described under section 220(d), and 7. Qualified tuition programs described under section 529.
IRAs and other tax-exempt shareholders in a RIC or REIT filing Form 990-T only to obtain a refund of income tax paid on undistributed long-term capital gains should complete Form 990-T as explained in IRAs and other tax exempt shareholders in a RIC or REIT, on page 5.
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The date the return is required to be filed (including extensions), or
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The date that the return is actually filed.
For details, see Pub. 598, Tax on Unrelated Business Income of Exempt Organizations.
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In which substantially all the work is performed for the organization without compensation; or
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That is carried on by a section 501(c)(3) or 511(a)(2)(B) organization mainly for the convenience of its members, students, patients, officers, or employees; or
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That sells items of work-related equipment and clothes, and items normally sold through vending machines, food dispensing facilities or by snack bars, by a local association of employees described in section 501(c)(4), organized before May 27, 1969, if the sales are for the convenience of its members at their usual place of employment; or
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That sells merchandise substantially all of which was received by the organization as gifts or contributions; or
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That consists of qualified public entertainment activities regularly carried on by a section 501(c)(3), (4), or (5) organization as one of its substantial exempt purposes (see section 513(d)(2) for the meaning of qualified public entertainment activities); or
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That consists of qualified convention or trade show activities regularly conducted by a section 501(c)(3), (4), (5), or (6) organization as one of its substantial exempt purposes (see section 513(d)(3) for the meaning of qualified convention and trade show activities); or
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That furnishes one or more services described in section 501(e)(1)(A) by a hospital to one or more hospitals subject to conditions in section 513(e); or
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That consists of qualified pole rentals (as defined in section 501(c)(12)(D)), by a mutual or cooperative telephone or electric company; or
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That includes activities relating to the distribution of low-cost articles, each costing $8.60 or less, by an organization described in section 501 and contributions to which are deductible under section 170(c)(2) or (3) if the distribution is incidental to the solicitation of charitable contributions; or
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That includes the exchange or rental of donor or membership lists between organizations described in section 501 and contributions to which are deductible under section 170(c)(2) or (3); or
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That consists of bingo games as defined in section 513(f). Generally, a bingo game is not included in any unrelated trade or business if:
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Wagers are placed, winners determined, and prizes distributed in the presence of all persons wagering in that game, and
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The game does not compete with bingo games conducted by for-profit businesses in the same jurisdiction, and
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The game does not violate state or local law; or
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That consists of conducting any game of chance by a nonprofit organization in the state of North Dakota, and the conducting of the game does not violate any state or local law; or
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That consists of soliciting and receiving qualified sponsorship payments that are solicited or received after December 31, 1997. Generally, qualified sponsorship payment means any payment to a tax-exempt organization by a person engaged in a trade or business in which there is no arrangement or expectation of any substantial return benefit by that person—other than the use or acknowledgment of that person's name, logo, or product lines in connection with the activities of the tax-exempt organization. See section 513(i) for more information.
An employees' trust defined in section 401(a), an IRA (including SEPs and SIMPLEs), a Roth IRA, a Coverdell ESA, and an Archer MSA must file Form 990-T by the 15th day of the 4th month after the end of its tax year. All other organizations must file Form 990-T by the 15th day of the 5th month after the end of their tax year. If the regular due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. If the return is filed late, see the discussion of Interest and Penalties on page 4.
To file Form 990-T, mail or deliver it to: Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0027.
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DHL Express (DHL): DHL Same Day Service, DHL Next Day 10:30 am, DHL Next Day 12:00 pm, DHL Next Day 3:00 pm, and DHL 2nd Day Service.
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Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.
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United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.
mailing date. Private delivery services cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.
Generally, an organization filing Form 990-T must make installment payments of estimated tax if its estimated tax (tax minus allowable credits) is expected to be $500 or more. Both corporate and trust organizations use Form 990-W, Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations, to figure their estimated tax liability. Do not include the proxy tax when computing your estimated tax liability for 2008.
To figure estimated tax, trusts and corporations must take the alternative minimum tax (if applicable) into account. See Form 990-W for more information.
The organization must pay any tax due in full by the due date of the return without extensions. Some organizations (described below) are required to electronically deposit all depository taxes, including their unrelated business income tax payments.
The organization must make electronic deposits of all depository taxes (such as employment tax, excise tax, unrelated business income tax) using the Electronic Federal Tax Payment System (EFTPS) in 2008 if:
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The total deposits in 2006 were more than $200,000 or
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The organization was required to use EFTPS in 2007.
If an organization is required to use EFTPS and fails to do so, it may be subject to a 10% penalty. If an organization is not required to use EFTPS, it may participate voluntarily. To enroll in or get more information about EFTPS, call 1-800-555-4477. To enroll online, visit www.eftps.gov.
If the organization does not use EFTPS, deposit unrelated business income tax payments (and estimated tax payments) with Form 8109, Federal Tax Deposit Coupon. If you do not have a preprinted Form 8109, you may use Form 8109-B to make deposits. You can get this form only by calling 1-800-829-4933. Be sure to have your EIN ready when you call.
Do not send deposits directly to an IRS office; otherwise, the organization may have to pay a penalty. Mail or deliver the completed Form 8109 with the payment to an authorized depositary (such as a commercial bank or other financial institution authorized to accept federal tax deposits).
Make checks or money orders payable to the depositary. To help ensure proper crediting, write the organization's EIN, the tax period to which the deposit applies, and “Form 990-T” on the check or money order. Be sure to darken the “990-T” box under “Type of Tax” and the appropriate “Quarter” box under “Tax Period” on the coupon. Records of these deposits will be sent to the IRS. For more information, see “Marking the Proper Tax Period” in the instructions for Form 8109.
If the organization prefers, it may mail the coupon and payment to: Financial Agent, Federal Tax Deposit Processing, P.O. Box 970030, St. Louis, MO 63197. Make the check or money order payable to “Financial Agent.”
For more information on deposits, see the instructions in the coupon booklet (Form 8109) and Pub. 583, Starting a Business and Keeping Records.
If the organization owes tax when it files Form 990-T, do not include the payment with the tax return. Instead, mail or deliver the payment with Form 8109 to an authorized depositary, or use the EFTPS, if applicable.
Your organization may be subject to interest and penalty charges if it files a late return or fails to pay tax when due. Generally, the organization is not required to include the interest and penalty charges on Form 990-T because the IRS can figure the amount and bill the organization for it.
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The annualized income or adjusted seasonal installment method is used.
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The organization is a “large organization” computing its first required installment based on the prior year's tax.
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Form 720, Quarterly Federal Excise Tax Return;
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Form 941, Employer's QUARTERLY Federal Tax Return;
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Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; or
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Form 945, Annual Return of Withheld Federal Income Tax.
If you are filing Form 990-T only because of the proxy tax, other taxes, or only to claim a refund, go directly to Proxy Tax Only , Other Taxes , or Claim for Refund (see later).
If the amount on line 13, column (A), Part I, is more than $10,000, complete all lines and schedules that apply.
If Part I, line 13, column (A) is $10,000 or less, then complete:
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The heading (the area above Part I).
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Part I, column (A), lines 1-13.
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Part I, line 13, for columns (B) and (C).
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Part II, lines 29-34.
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Parts III-V.
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Signature area.
Filers with $10,000 or less on line 13, column (A) do not have to complete Schedules A through K (however, refer to applicable schedules when completing column (A) and in determining the deductible expenses to include on line 13 of column (B)).
Organizations that are required to file Form 990-T only because they are liable for the proxy tax on lobbying and political expenditures must:
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Fill in the heading (the area above
Part I) except items E, H, and I. -
Enter the proxy tax on lines 37 and 39.
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Complete Part IV and the Signature area.
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Attach a schedule showing the proxy tax computation.
Organizations that are required to file Form 990-T only because they are liable for recapture taxes, the section 1291 tax, or other items listed in the instructions for line 42 must:
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Fill in the heading (the area above
Part I) except items E, H, and I. -
Complete the appropriate lines of Parts III and IV.
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Complete the Signature area.
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Attach all appropriate forms and/or schedules showing the computation of the applicable tax or taxes.
If your only reason for filing a Form 990-T is to claim a refund, complete the following steps:
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Fill in the heading (the area above
Part I) except items E, H, and I. -
Enter -0- on line 13, column (A), line 34, and line 43.
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Enter the credit or payment on the appropriate line (44a-44g).
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Complete lines 45, 48, and 49 and the Signature area.
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For claims described below, follow the additional instructions for that claim.
The consolidated return provisions of section 1501 do not apply to exempt organizations, except for organizations having title holding companies. If a title holding corporation described in section 501(c)(2) pays any amount of its net income for a tax year to an organization exempt from tax under section 501(a) (or would, except that the expenses of collecting its income exceeded that income), and the corporation and organization file a consolidated return as described below, then treat the title holding corporation as being organized and operated for the same purposes as the other exempt organization (in addition to the purposes described in section 501(c)(2)).
Two organizations exempt from tax under section 501(a), one a title holding company, and the other earning income from the first, will be includible corporations for purposes of section 1504(a). If the organizations meet the definition of an affiliated group, and the other relevant provisions of Chapter 6 of the Code, then these organizations may file a consolidated return. The parent organization must attach Form 851, Affiliations Schedule, to the consolidated return. For the first year a consolidated return is filed, the title holding company must attach Form 1122, Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return. See Regulations section 1.1502-100 for more information on consolidated returns.
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File an information return on Forms 1099-A, B, DIV, INT, LTC, MISC, MSA, OID, R, and S;
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Report acquisitions or abandonments of secured property through foreclosure;
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Report proceeds from broker and barter exchange transactions;
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Report certain dividends and distributions;
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Report interest income;
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Report certain payments made on a per diem basis under a long-term care insurance contract, and certain accelerated death benefits;
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Report miscellaneous income (such as payments to providers of health and medical services, miscellaneous income payments, and nonemployee compensation);
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Report distributions from an Archer MSA;
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Report original issue discount;
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Report distributions from retirement or profit-sharing plans, IRAs, SEPs, or SIMPLEs, and insurance contracts; and
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Proceeds from real estate transactions.
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Controlled a foreign partnership (that is, owned more than a 50% direct or indirect interest in the partnership).
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Owned at least a 10% direct or indirect interest in a foreign partnership while U.S. persons controlled that partnership.
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Had an acquisition, disposition, or change in proportional interest in a foreign partnership that:
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Increased its direct interest to at least 10% or reduced its direct interest of at least 10% to less than 10%.
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Changed its direct interest by at least a 10% interest.
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Contributed property to a foreign partnership in exchange for a partnership interest if:
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Immediately after the contribution, the organization directly or indirectly owned at least a 10% interest in the foreign partnership; or
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The FMV of the property the organization contributed to the foreign partnership in exchange for a partnership interest, when added to other contributions of property made to the foreign partnership by the organization or a related person during the preceding 12-month period, exceeds $100,000.
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Any listed transaction that is the same as or substantially similar to tax avoidance transactions identified by the IRS.
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Any transaction offered under conditions of confidentiality for which the organization paid an advisor a fee of at least $250,000.
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Certain transactions for which the organization has contractual protection against disallowance of the tax benefits.
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Any transaction resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.
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Certain transactions resulting in a tax credit of more than $250,000, if the organization held the asset generating the credit for 45 days or less.
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Certain transactions identified by the IRS in published guidance as a “transaction of interest” (a transaction that the IRS believes has a potential for tax avoidance or evasion, but has not yet been identified as a listed transaction).
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Form 8886-T. Use Form 8886-T, Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction, to disclose information with respect to each prohibited tax shelter transaction to which the organization is a party.
An accounting method is a set of rules used to determine when and how income and expenses are reported. Figure taxable income using the method of accounting regularly used in keeping the organization's books and records.
Generally, permissible methods include:
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Cash,
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Accrual, or
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Any other method authorized by the Internal Revenue Code.
In all cases, the method used must clearly show taxable income.
See Pub. 538, Accounting Periods and Methods, for more information.
The return must be filed using the organization's established annual accounting period. If the organization has no established accounting period, file the return on the calendar-year basis.
To change an accounting period, some organizations may make a notation on a timely filed Form 990, 990-EZ, 990-PF, or 990-T. Others may be required to file Form 1128, Application To Adopt, Change, or Retain a Tax Year. For details on which procedure applies to your organization, see Rev. Proc. 85-58, 1985-2 C.B. 740, and the instructions for Form 1128.
If the organization changes its accounting period, file Form 990-T for the short period that begins with the first day after the end of the old tax year and ends on the day before the first day of the new tax year. For the short period return, figure the tax by placing the organization's taxable income on an annual basis. For details, see Pub. 538 and section 443.
Your organization may be required to file an annual information return on:
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Form 990, Return of Organization Exempt From Income Tax;
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Form 990-EZ, Short Form Return of Organization Exempt From Income Tax;
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Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation; or
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Form 5500, Annual Return/Report of Employee Benefit Plan.
If so, include on that information return the unrelated business gross income and expenses (but not including the specific deduction claimed on line 33, page 1, or any expense carryovers from prior years) reported on Form 990-T for the same tax year.
The organization may round off cents to whole dollars on Form 990-T and its schedules. If the organization does round to whole
dollars, it must
round all amounts. To round, drop amounts under 50 cents and increase amount from 50 to 99 cents to the next dollar. For example,
$1.39 becomes $1 and
$2.50
becomes $3.
If two or more amounts must be added to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.
If you need more space on the form or schedules, attach separate sheets. On the attachment, write the corresponding form or schedule number or letter and follow the same format. Show totals on the printed form. Also, include the organization's name and EIN. The separate sheets should be the same size as the printed form and should be attached after the printed form.
Under section 6104(d), a section 501(c)(3) organization that files Form 990-T, must make its entire annual exempt organization business income tax return (including amended returns) available for public inspection.
The Form 990-T and related schedules must be made available for public inspection for a period of 3 years from the date the Form 990-T is required to be filed, including extensions.
A 501(c)(3) organization must make its annual returns available in two ways:
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By office visitation, and
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By providing copies or making them widely available.
A 501(c)(3) organization must make its annual returns available for public inspection without charge at its principal, regional, and district offices during regular business hours.
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May have an employee present,
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Must allow the individual conducting the inspection to take notes freely during the inspection, and
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Must allow an individual to make photocopies of documents at no charge but only if the individual brings photocopying equipment to the place of inspection.
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The only services provided at the site further the organization's exempt purposes (for example, day care, health care, or scientific or medical research), and
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The site does not serve as an office for management staff, other than managers who are involved only in managing the exempt function activities at the site.
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Within a reasonable amount of time after receiving a request for inspection (normally, not more than 2 weeks), and
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At a reasonable time of day.
A 501(c)(3) organization must provide copies of its annual returns to any individual who makes a request for a copy in person or in writing unless it makes these documents widely available.
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The next business day following the day that the unusual circumstances end, or
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The fifth business day after the date of the request.
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Receipt of a volume of requests (for document copies) that exceeds the 501(c)(3) organization's daily capacity to make copies,
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Requests received shortly before the end of regular business hours that require an extensive amount of copying, or
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Requests received on a day when the 501(c)(3) organization's managerial staff capable of fulfilling the request is conducting official duties (for example, student registration or attending an off-site meeting or convention) instead of its regular administrative duties.
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Be located within reasonable proximity to the principal, regional, or district office where the individual makes the request, and
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Provide document copies within the same time frames as the 501(c)(3) organization.
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Is addressed to a 501(c)(3) organization's principal, regional, or district office,
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Is delivered to that address by mail, electronic mail (email), facsimile (fax), or a private delivery service approved by the IRS (see Private Delivery Services on page 3 for a list), and
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Gives the address to which the document copies should be sent.
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Requested document copies must be mailed within 30 days from the date the 501(c)(3) organization receives the request.
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Unless other evidence exists, a request or payment that is mailed is considered to be received by the 501(c)(3) organization 7 days after the postmark date.
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If an advance payment is required, copies must be provided within 30 days from the date payment is received.
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If the 501(c)(3) organization requires payment in advance and it receives a request without payment or with insufficient payment, it must notify the requester of the prepayment policy and the amount due within 7 days from the date it receives the request.
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A request that is transmitted to the 501(c)(3) organization by email or fax is considered received the day the request is transmitted successfully.
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Requested documents can be emailed instead of the traditional method of mailing if the requester consents to this method.
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Postmark date,
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Private delivery date,
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Registration date for certified or registered mail,
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Postmark date on the sender's receipt for certified or registered mail, or
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Day the email is successfully transmitted (if the requester agreed to this method).
Example.
The ABC Organization retained an agent to provide copies for all written requests for documents. However, ABC Organization received a request for document copies before the agent did.
The deadline for providing a response is referenced by the date that the ABC Organization received the request and not when the agent received it. If the agent received the request first, then a response would be referenced to the date that the agent received it.
A 501(c)(3) organization does not have to provide copies of its annual returns if it makes these documents widely available. However, it must still allow public inspection by office visitation.
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The Internet posting requirement— This is met if:
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The document is posted on a World Wide Web page that the 501(c)(3) organization establishes and maintains, or
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The document is posted as part of a database of like documents of other tax-exempt organizations on a World Wide Web page established and maintained by another entity.
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Additional posting information requirement—This is met if:
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The World Wide Web page through which the document is available clearly informs readers that the document is available and provides instructions for downloading the document;
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After it is downloaded and viewed, the web document exactly reproduces the image of the annual return as it was originally filed with the IRS, except for any information permitted by statute to be withheld from public disclosure; and
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Any individual with access to the Internet can access, download, view, and print the document without special computer hardware or software required for that format (except software that is readily available to members of the public without payment of any fee) and without payment of a fee to the 501(c)(3) organization or to another entity maintaining the web page.
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Reliability and accuracy requirements—To meet this, the entity maintaining the World Wide Web page must:
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Have procedures for ensuring the reliability and accuracy of the document that it posts on the page;
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Take reasonable precautions to prevent alteration, destruction, or accidental loss of the document when posted on its page; and
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Correct or replace the document if a posted document is altered, destroyed, or lost.
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Notice requirement—To meet this, a 501(c)(3) organization must notify any individual requesting a copy of its annual return where the documents are available (including the Internet address). If the request is made in person, the 501(c)(3) organization must notify the individual immediately. If the request is in writing, it must notify the individual within 7 days of receiving the request.
A penalty may be imposed on any person who does not make the annual returns (including all required attachments to each return) available for public inspection according to the section 6104(d) rules discussed above. If more than one person fails to comply, each person is jointly and severally liable for the full amount of the penalty. The penalty amount is $20 for each day during which a failure occurs. The maximum penalty that may be imposed on all persons for any one annual return is $10,000.
Any person who willfully fails to comply with the section 6104(d) public inspection requirements is subject to an additional penalty of $5,000 (section 6685).
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