If your nonprofit was approved for 501(c)(3) status using Form 1023-EZ and has now exceeded the $50,000 annual revenue threshold—congratulations! Growth is a sign of success. But do you need to proactively inform the IRS?
The simple answer is no—there’s no need to notify the IRS separately. Instead, you report your revenue properly through your annual Form 990 filings.
Why No Immediate Notification is Required
When you originally applied using Form 1023-EZ, you made a good faith application, stating that your organization expected to remain below $50,000 in annual gross receipts. However, the IRS does not penalize nonprofits for exceeding this estimate.
Rather than requiring a separate alert, the IRS expects organizations to report their actual financial activity each year on the appropriate Form 990:
Form 990-N – If gross receipts remain under $50,000.
Form 990-EZ – If annual revenue is between $50,000 and $200,000.
Full Form 990 – If annual revenue exceeds $200,000 or total assets exceed $500,000.
Focus on Ongoing Compliance, Not Retroactive Fixes
Instead of worrying about whether your initial Form 1023-EZ underestimated your growth, focus on staying compliant moving forward:
File the correct Form 990 each year based on your revenue level.
Keep accurate financial records to support your tax filings.
Ensure your nonprofit continues to operate within IRS regulations and fulfills its charitable mission.
As long as your organization remains in compliance, there’s no risk of penalties simply for growing beyond the initial revenue projection.
Need Help Managing Compliance?
If you have questions about 990 filing, nonprofit compliance, or tax-exempt operations, InstantNonprofit’s support team is here to help! Ensuring you meet annual reporting requirements is key to maintaining your nonprofit’s tax-exempt status.