How does an Exempt organization change its accounting period while filing 990?
20 views | Last modified 4/12/2024 10:08:19 AM EST |

Applicable To
990-PF 990-N 990-EZ 990 8868 1120-POL

When an organization wants to change its accounting period, it must file the respective 990 forms by the due date of the short tax period from which the accounting period is to be changed. A short tax period in a taxable year is a period that is less than 12 months.

Say a foundation, following a Calendar Tax Year as its accounting period from the year it was formed, decides to change its accounting period to a Fiscal Year ending October 31; here's what they need to do:  

  • File a 990 return within the short tax period, which begins on January 1 and ends on October 31.  
  • Mention 'Change in Accounting Period' at the top of the short tax period return. 
  • Transmit the 990 form to the IRS.

The organization's new accounting period will now begin on November 1 and end on October 31, and that is what they need to choose in their 990's going forward. 

Form 1128

Form 1128, Application to Adopt, Change, or Retain a Tax Year, must be used by the exempt organization that has already changed its accounting period within the previous ten calendar years.

Note: By filing Form 990-N for the short tax period, an organization cannot change its accounting period. The organization must submit Form 990 or 990-EZ, or Form 1128.

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