How does the IRS know about your organization’s unrelated home business earnings? The answer is the fact that it calls for your organization to self-report. In other words, the IRS expects that you will stick to the honor program. If you ever fail to report, or if you ever underreport your earnings, you could possibly face penalties for negligence, substantial understatement of tax, and fraud. (The IRS can figure out about your negligence given that it conducts audits of nonprofit organizations..) Nonprofits will have to report unrelated home business earnings on IRS Form 990-T, which is titled Exempt Organization Home business Earnings Tax Return. All exempt organizations which have gross earnings (gross receipts minus the expense of goods sold) from an unrelated trade or home business of $1,000 or even more will have to file this form.
Together with the exception of specific retirement accounts and educational accounts, it's essential to file Form 990-T by the 15th day of your 5th month just after the finish of your tax year for the organization. An automatic six-month extension of time is on the market for corporations, and also a three-month automatic extension is on the market for trusts. Form 990-T is filed together with the Internal Income Service Center in Ogden, Utah. IRS Form 990-T and detailed directions for completing the form are on the market at www.irs.gov/charities/index.html beneath the “Forms and publications” link.
