Form 990 Red Flags & Common Mistakes: A Nonprofit’s “Public Resume” Checklist (and How to Fix Them)

Written By Eric Dembinski

Why Form 990 is higher-stakes than people think

Form 990 isn’t just an IRS compliance form. The IRS explicitly notes that some members of the public rely on Form 990/990-EZ as their primary or sole source of information about an organization—meaning how you’re perceived can be heavily shaped by what’s in it.

So yes, it’s a tax filing. But it’s also your nonprofit’s “public resume.” And like any resume: typos, inconsistencies, and awkward disclosures raise eyebrows.

The 10-point Form 990 “red flag” scan (for boards + executive directors)

If you only do one thing: do this quick scan before the return gets filed.

1) Did we file the right return (990 vs 990-EZ vs 990-N)?

  • If gross receipts are normally $50,000 or less, you generally file Form 990-N (unless exceptions apply).

  • If gross receipts are under $200,000 and assets are under $500,000, you can choose Form 990-EZ instead of full Form 990.

Red flag: Your revenue/assets don’t match the form type. This is a “we don’t have our basics together” signal.

2) Are we on time?

Form 990 is due the 15th day of the 5th month after year-end (May 15 for calendar-year filers).

Red flag: “We’ll file late but it’s fine.” It’s not “fine”—penalties can apply unless reasonable cause.

3) Are we e-filing correctly?

For many organizations, e-filing is required. IRS guidance explains that the Taxpayer First Act requires many exempt orgs to e-file Form 990/990-PF (with limited exceptions).
And the Form 990 instructions are blunt: if you’re required to e-file and you don’t, you’re treated as having failed to file (even if you mailed a paper return).

Red flag: “We mailed it.” If you were required to e-file, that can be the same as not filing.

4) Are we risking automatic revocation?

Miss filing for three consecutive years and you can automatically lose tax-exempt status.
The IRS explains revocation is effective on the original due date of the third missed filing/notice.

Red flag: “We skipped last year but it’s fine.” It’s only “fine” until it’s catastrophic.

5) Does the story match reality?

Part I, Part III (program service accomplishments), and Schedule O should all tell a consistent story with the financials. The Form 990 instructions call out that perception can be driven by what’s presented. IRS

Red flag: Big revenues drop, major program changes, large contractor payments—without clear explanation.

6) Governance section: are we accidentally admitting weak controls?

Form 990 asks governance questions (policies, independence, etc.). Inconsistent or sloppy answers tend to read like, “We don’t run a tight ship.”

Red flag: “We have a conflict of interest policy” on one line and “No, we don’t monitor conflicts” somewhere else. (Yes, people notice.)

7) Compensation: anything that looks surprising without context?

Not “high comp is bad,” but “high comp with no explanation looks spicy.”

Red flag: Related-party transactions or unusual benefits without clean disclosure/explanation.

8) Schedule B: did we handle contributor info correctly?

  • For 501(c)(3)s, you generally still report donor names and addresses to the IRS on Schedule B.

  • But contributor names/addresses generally aren’t required to be publicly disclosed on the publicly available Form 990 copy (with special rules for certain org types).

Red flag: Posting donor names publicly by mistake (or including identifying info in attachments).

9) Did we include anything we shouldn’t include?

Because exemption applications and information returns are subject to disclosure, the IRS warns organizations not to include Social Security numbers on these forms (including attachments and correspondence). IRS

Red flag: Any SSN showing up anywhere. That’s a mess you don’t want.

10) Public disclosure compliance (yes, it matters)

The IRS requires organizations to make annual returns available for public inspection for a three-year period (timing rules apply).
If you post the 990 online, you may not have to provide a copy on request—but you still must allow in-person inspection.

Red flag: “We don’t have to share it.” You probably do.

Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does.

The most common Form 990 mistakes we see (and how to prevent them)

Mistake 1: Late filing + hoping the IRS “doesn’t care”

The Form 990 instructions describe failure-to-file penalties (including daily penalties, maximums, and higher rates for larger orgs).
If you’re late, the IRS notes you may need a reasonable-cause explanation and that penalty abatement is evaluated case-by-case.

Prevention: Put the due date on the org calendar; start drafting before the audit is finished (you can update Schedule O explanations as numbers finalize).

Mistake 2: Filing the wrong form type (990 vs EZ vs N)

This is a credibility killer because it looks like you don’t know your own size. The filing thresholds and eligibility rules are in the instructions.

Prevention: Confirm gross receipts + assets early (and document the “gross receipts normally” test if filing 990-N).

Mistake 3: Forgetting a required schedule (or leaving it half-done)

The Form 990 instructions warn penalties can apply for an incomplete return and give practical “complete every applicable line” guidance.

Prevention: Treat Part IV (required schedules checklist) like a control step—then verify every schedule is actually attached and complete.

Mistake 4: E-filing problems (or paper-filing when e-file is required)

IRS guidance explains e-filing requirements for many orgs.
The Form 990 instructions also state failing to e-file when required is treated as failure to file.

Prevention: Do a test run early, confirm authorized signer access, and don’t wait until deadline week.

Mistake 5: Using Form 8868 incorrectly (or assuming it covers 990-N)

IRS guidance: extensions are generally allowed up to 6 months, and Form 8868 can’t be used to extend Form 990-N.

Prevention: File 8868 on or before the original due date if needed, but don’t let the extension become procrastination cosplay.

“Make it boring” best practices (the goal is boring)

Add a board-level review step

Have a finance committee member (or treasurer) review:

  • Part I (summary)

  • Part III (program narrative)

  • Part VI (governance)

  • Part VII (key compensation)

  • Schedule O (explanations)

Reason: Form 990 is widely used by the public, and perception can be shaped by what’s on it.

Write Schedule O like a human, not a robot

Schedule O is where you prevent misunderstandings. If something looks “weird,” explain it—clearly and briefly.

Control your public disclosure process

Returns must be available for public inspection, and certain contributor info generally isn’t required to be disclosed.
If you post online, you may avoid providing copies on request, but you still must allow in-person inspection.

Board-ready Form 990 review checklist

  • Correct form type (990 vs 990-EZ vs 990-N) based on receipts/assets

  • Due date confirmed (15th day of 5th month after year-end)

  • E-file requirement confirmed; not paper-filing when e-file is required

  • No 3-year non-filing risk (automatic revocation)

  • Part I summary matches financial statements

  • Program accomplishments (Part III) match reality and major spending

  • Governance answers are consistent and defensible

  • Compensation looks reasonable and has context where needed

  • Schedule O explains anything unusual, clearly

  • No SSNs or sensitive personal info anywhere

  • Public disclosure process in place (posting + inspection readiness)

FAQ

Is Form 990 public?

Generally yes—completed 990/990-EZ returns are subject to public inspection rules.

When is Form 990 due?

By the 15th day of the 5th month after year-end (May 15 for calendar-year filers).

Can we get an extension?

Yes—IRS guidance states you can generally extend up to 6 months, but Form 8868 can’t extend Form 990-N.

What happens if we don’t file for 3 years?

Automatic revocation of tax-exempt status.

Are penalties real for late filing?

Yes. The Form 990 instructions describe daily penalties and maximums and note higher rates for larger orgs.

Do we have to e-file?

Many orgs do. IRS guidance explains mandatory electronic filing for the 990 series for many organizations (with exceptions).

Do we disclose donor names publicly on Schedule B?

For many orgs, contributor names/addresses generally aren’t required to be publicly disclosed (though reporting rules to the IRS still apply).

Should SSNs ever appear on Form 990 or attachments?

No. IRS guidance warns exempt organizations not to include Social Security numbers on publicly disclosed forms (including attachments/correspondence).

One blunt takeaway

If your Form 990 is messy, outsiders assume your operations are messy. And they might be right. Your goal is a filing that’s accurate, consistent, and boring. Because boring is what a “well-governed nonprofit” looks like.

If you want a second set of eyes on your Form 990 before it becomes public (or you’re worried you’re filing late, filing the wrong version, or walking into a “three-year” problem), we can help. We’ll review your draft for the issues that trigger IRS risk, donor/funder confusion, and board anxiety, then give you a clear punch list of fixes and what to prioritize first.

Ready to make your 990 accurate, consistent, and boring (the good kind)?

Head to our Contact Us page and tell us your fiscal year-end, which 990 you file (990/990-EZ/990-N), and whether you need a pre-filing review or full preparation..

Eric Dembinski