Top 10 Form 990 Audit Triggers No One Told You About

Timely and accurate filing of Form 990 is essential to the ongoing success of your nonprofit. We often run into the false notion that since it is a nonprofit filing the return, that the IRS really doesn’t pay that much attention to what’s reported. They DO pay attention! In fact, Form 990 can be the very thing that generates an audit of your organization.
📚 ADDITIONAL RESOURCES:
•ARTICLE: "Top 10 Form 990 Audit Triggers No One Told You About" bit.ly/3hY8iqH
•ARTICLE: “What is IRS Form 990?” bit.ly/3IsyQvX
•ARTICLE: “Understanding the IRS Form 990” bit.ly/3LUR2QI
•ARTICLE: “Mixing Business and Charity" bit.ly/35DGcOT
📱 Check out our video on 5 Best Practices to Ensure Smooth IRS Form 990 Preparation at • 5 Best Practices to En...
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0:00 Introduction
1:31 Audit Trigger #1 - Failure to File a Complete Return
2:27 Audit Trigger #2 - Acknowledging a "Diversion" of Assets
3:33 Audit Trigger #3 - Acknowledging Prohibited Political Activity
4:11 Audit Trigger #4 - Unrelated Business Income
5:04 Audit Trigger #5 - Acknowledging Excess Benefit Transactions with Disqualified Persons
6:13 Audit Trigger #6 - Unreasonable Compensation
7:20 Audit Trigger #7 - Foreign Grant Activity
8:08 Audit Trigger #8 - Fundraising Income and Expense Discrepancies
9:08 Audit Trigger #9 - Non-Employee Services, But No 1099-NEC
10:02 Audit Trigger #10 - Loans to Disqualified Persons
11:24 The Good News
11:47 Conclusion

[@FoundationGroup]

If you need help filing your Form 990, we’d love to help! You can fill out our form at bit.ly/3LQabDr or give us a call at 888-361-9445.

[@waynecmontgomery]

Hey Greg, Great video and very educational, however, when talking about UBI or Unrelated Business Income Tax (trigger 4), you need to let people know about the workaround which is setting up a "RELATED ORGANIZATION" see schedule R of form 990 or 990EZ this avoids UBIT or Unrelated business income tax. Also, I would suggest if your executives are going to borrow money that they borrow money from a "RELATED ORGANIZATION" set up by the nonprofit, however, you do NOT want the nonprofit to own more than 50% of the "RELATED ORGANIZATION" see 512(b)(13) reporting requirements. Also just to further stress the first part of your video the IRS will put you under the charity support test if you are a "PUBLI CHARITY" every 5 to 6 years and you will have a stricter review as a private foundation or private operating foundation (annually). As a secondary question does your firm handle local property tax exemptions? Also, be aware that some state AGs will enforce federal law/code or work with the IRS to investigate your organization.

[@jennifertherese9487]

I NEED TO CALL YALL LOL TO DO MINE AGAIN

[@AngelaGreben]

I think AI needs to start doing IRS audits.

[@patdiedrich6539]

You mention a ratio of 10-20% of UBI to total revenue causing a risk to non-profit status. Is this gross UBI, or UBI after deducting related expenses? We have advertising revenue which is offset by our readership costs, so have not had to pay taxes. We would like to increase our advertising revenue, even though we would need to pay taxes on it, but I don't want to risk our non-profit status, as our gross advertising revenue is already close to 20% of our total gross revenue. If we are able to use net UBI (or net profit before tax for UBI) when calculating that ratio, we could generate quite a bit more revenue. Should we use gross or net UBI when determining that ratio to total revenue?

[@FoundationGroup]

Gross...always gross.