What this checklist is for. Running an exempt organization's annual compliance calendar. For the substantive framework, see Nonprofit Governance, Unrelated Business Income, and Private Inurement.

Phase 1 — Federal filings

  • File the annual information return — Form 990, 990-EZ, 990-N, or 990-PF — by the 15th day of the 5th month after the fiscal year end, with a six-month extension available on Form 8868.
  • Confirm the correct form for the organization's size; thresholds change.
  • Never miss three consecutive years. Failure to file for three consecutive years results in automatic revocation of exemption under 26 U.S.C. § 6033(j), with no further notice, and reinstatement requires a new application and a fee.
  • File Form 990-T if gross unrelated business income is $1,000 or more, and remember that for a § 501(c)(3) organization it is publicly disclosable.
  • Confirm § 512(a)(6) siloing — each separate unrelated trade or business computed separately, with losses from one not offsetting income from another.
  • File Forms W-2, W-3, 941, and 940 as an employer, and Forms 1099-NEC for contractors.
  • File Form 5500 for any benefit plan above the threshold.
  • File Form 1098-C for donated vehicles, and confirm Form 8283 signatures for non-cash gifts over $5,000 requiring a qualified appraisal.
  • Make estimated tax payments on unrelated business income where required.

Phase 2 — Board review and governance actions

  • Circulate the Form 990 to the full board before filing, with a memorandum explaining the governance answers and any Schedule L entries. The form asks whether this was done, and the answer is public.
  • Use Schedule O to explain anything unusual rather than leaving it to inference.
  • Collect annual conflict of interest disclosures from every director and officer, review them, and document the review.
  • Hold the board meetings the bylaws require, with notice, quorum, and minutes that record what was considered rather than only what was voted.
  • Approve the annual budget and review financial statements at least quarterly.
  • Meet with the auditor in executive session without management present.
  • Conduct a board self-assessment and review whether any director's circumstances have changed in a way that affects independence.
  • Confirm the conflict of interest, whistleblower, document retention, gift acceptance, expense reimbursement, and investment policies remain current, and that the expense policy is an accountable plan.
  • Confirm officers and directors are correctly listed with the state and on the Form 990.

Phase 3 — Compensation and insider transactions

  • Review executive compensation using the three-step procedure at 26 C.F.R. § 53.4958-6: approval by an independent body with no conflict, reliance on appropriate comparability data, and contemporaneous documentation of the basis. Obtain a new comparability study every two to three years.
  • Confirm the conflicted person left the room for the discussion and the vote — abstention alone is not recusal.
  • Confirm every economic benefit to a disqualified person is reported on a W-2, 1099, Form 990, or a written employment contract. An unreported perquisite is an automatic excess benefit regardless of amount or reasonableness.
  • Apply the same three-step procedure to property transactions with insiders, supported by an independent appraisal.
  • Identify disqualified persons — anyone with substantial influence in the last five years, plus family and 35-percent-controlled entities — and confirm the list is current.
  • Confirm no compensation exceeds the § 4960 threshold without accounting for the excise tax.
  • For a private foundation, apply the § 4941 self-dealing analysis instead, which prohibits transactions with disqualified persons even at fair market value.

Phase 4 — State and local

  • File the annual report with the secretary of state in the state of incorporation and in every state of foreign qualification.
  • Confirm the registered agent is current.
  • Renew charitable solicitation registrations in every state where the organization solicits, with the required financial reports and, above revenue thresholds, audited financial statements.
  • Reassess where the organization is actually soliciting — new campaigns, new mailing lists, new grant applications to state-based funders, and where contributions are actually coming from.
  • Confirm professional fundraiser and fundraising counsel registrations and contract filings.
  • Renew state income and franchise tax exemptions where a renewal is required.
  • Renew sales tax exemption certificates, and confirm the organization is using them correctly.
  • File property tax exemption applications and any annual affidavit, and confirm that any portion of the property leased or used for unrelated purposes is treated correctly.
  • Confirm employment tax accounts in every state where an employee works, and whether the reimbursable unemployment election remains the right choice.

Phase 5 — Program, funds, and activity limits

  • Reconcile restricted funds line by line against the gift instruments and grant agreements — not an assurance, an actual reconciliation. Restricted fund misuse is a breach of the duty of obedience and is enforceable by the attorney general.
  • Confirm endowment spending complies with UPMIFA and the applicable gift instruments, and document the prudence factors considered.
  • Review unrelated business activities and confirm each is correctly characterized, including whether any exclusion applies — volunteer labor, convenience, donated merchandise, qualified sponsorship, or bingo.
  • Confirm debt-financed income under § 514 is identified, because leverage converts otherwise-excluded rent and investment income into UBTI.
  • Total lobbying expenditures against the § 501(h) limits if the election is in place, or against the substantial part test if not — and consider making the election on Form 5768 if the organization lobbies at all.
  • Confirm no political campaign intervention occurred, and review any voter education, candidate forum, or voter guide activity for nonpartisanship.
  • Review grants to individuals and to non-public charities, and for a private foundation confirm expenditure responsibility where required.
  • Review foreign activities and grants for sanctions screening and anti-terrorism compliance.

Phase 6 — Risk, records, and periodic reviews

  • Review insurance: general liability, directors and officers (confirming it responds to attorney general proceedings), property, workers' compensation, professional liability where services are provided, sexual abuse and molestation coverage where the organization serves minors or vulnerable adults, and cyber.
  • Screen employees, contractors, and vendors against exclusion and sanctions lists where the organization receives federal funds.
  • Apply the document retention schedule, and suspend it for anything under a litigation hold.
  • Confirm public inspection obligations are met — the exemption application, the last three Forms 990, and any Form 990-T available on request, with donor names redacted on Schedule B for public charities.
  • Confirm contribution acknowledgments were issued for gifts of $250 or more, with the required content, and that quid pro quo disclosures were made for contributions over $75.
  • Obtain the audit or review required by revenue thresholds, funder agreements, or state law.
  • Every three years, review the bylaws, the policies, and the articles against what the organization actually does — a mission that has expanded beyond the stated purpose is an organizational test problem.
  • Confirm the public support test calculation, and address any trend toward private foundation classification before it happens.

Common mistakes

  • Missing Form 990 filings, particularly the 990-N, which is the most common cause of automatic revocation.
  • Soliciting in unregistered states, especially after launching an online campaign.
  • Setting executive compensation without the three-step procedure, forfeiting the rebuttable presumption.
  • Unreported perquisites, which are automatic excess benefits.
  • Applying public charity rules to a private foundation, where self-dealing is prohibited even at fair market value.
  • Treating restricted funds as general operating support.
  • Never making the § 501(h) election and relying on an undefined substantiality standard.
  • Minutes that record only motions, providing no evidence of deliberation.
  • Letting property tax exemption lapse by missing an annual filing.
  • Failing to file Form 990-T on unrelated income, or offsetting one unrelated business's loss against another's income.

Primary authority

Related

This checklist is educational and not legal advice. Filing thresholds and deadlines change, and state charitable solicitation, tax exemption, and nonprofit corporation requirements vary substantially. Consult qualified exempt organizations counsel and a tax advisor.