Page 121 - Washington Nonprofit Handbook 2018 Edition

TIP:

A tax-exempt organization should consider its Form 990 information returns to be public
relations tools and should treat the preparation process as an opportunity to promote the
organization’s programs and good works to the public.

(viii) Organizations With a Tax Exemption Application Pending

Organizations that have applied for tax exemption but have not yet received
a determination letter should file a Form 990 or other applicable form as if their
tax-exempt status had been recognized. Small organizations that meet the
requirements to file the Form 990-N “e-postcard” but are still waiting for their
determination letter will need to call the IRS at (877) 829-5500 to notify the IRS that
they are eligible to use the Form 990-N filing system.

b. Form 990-T: Organizations with UBI

An exempt organization that has $1,000 or more in gross UBI in a taxable
year must report such income on Form 990-T, which must be filed in addition to the
informational Form 990. Exempt organizations are also required to make quarterly
estimated UBI tax payments, calculated at rates similar to corporate rates.
Penalties apply for late filing, late payment or underpayments of taxes on income
reportable on Form 990-T. Organizations generating UBI should consult an
accountant.

c. Federal Returns and Reports Required of Organizations with
Employees

y Federal Income Tax Withholding. Most tax-exempt organizations
are required to withhold and pay federal income tax on their
employees’ wages in the same manner as for-profit organizations.
Organizations should consult a bookkeeper, accountant or payroll
management advisor regarding this and the other requirements listed
in this section. See Chapter 67.

y Social Security Taxes. Most tax-exempt organizations are required to
withhold and pay Federal Insurance Contributions Act (FICA) taxes in
the same manner as for-profit companies. See Chapter 67.

WASHINGTON NONPROFIT HANDBOOK -110- 2018