F990EZ-128-01: Gross receipts of $200,000 or more need Form 990

What this rejection means

Form 990-EZ is only for organizations with gross receipts of less than $200,000 and end-of-year total assets of less than $500,000. Your return shows gross receipts of $200,000 or more, so the IRS will not accept it on Form 990-EZ.

IRS business rule F990EZ-128-01: If Form 990-EZ, the sum of Part I Line 5b, Line 6c, Line 7b, and Line 9 is greater than or equal to 200,000, then Form 990 must be filed instead of Form 990-EZ. If a value is not provided for any of the lines involved in this rule, treat that line as having the value zero.

The severity is "Reject and Stop." The IRS stopped processing the whole submission at this error. Other problems in the return, if any, may only show up after this one is resolved.

Why it happens

The IRS adds four lines from Part I:

• line 9, total revenue;
• line 5b, the cost or other basis and sales expenses of assets you sold;
• line 6c, direct expenses of gaming and fundraising events;
• line 7b, cost of goods sold.

The instructions use this same sum for Item L at the top of the form. Lines 5b, 6c and 7b are costs that were subtracted to reach line 9, so they are added back. For example, the instructions describe an organization with $50,000 of total revenue and $4,000 on those three lines. Its gross receipts were $54,000.

Common causes of this rejection:

• Your gross receipts really are $200,000 or more, even though line 9 is lower.
• An amount is on the wrong line. For example, the full sale price of an asset entered on line 5b instead of its cost.
• A typo, such as an extra digit.

How to fix it

1. Add up lines 5b, 6c, 7b and 9 yourself. Compare the total with $200,000.
2. Check each of those lines. Line 5b should be cost or other basis plus sales expenses. Line 6c should be direct expenses of gaming and fundraising events. Line 7b should be cost of goods sold. If something was misplaced, correct it, check that line 9 still adds up, and send the return again.
3. If the figures are right, you must file Form 990 for this year. Do not reduce the amounts to get under the limit. The return must report what the organization actually received and spent.
4. Watch the deadline. Form 990 is due on the same date as Form 990-EZ, the 15th day of the 5th month after your year ends. If that date has not passed, Form 8868 gives an automatic 6-month extension.

When to contact the IRS

If you are unsure which form applies, the Form 990-EZ instructions say you can call 877-829-5500 for help completing Form 990 or 990-EZ. This is the IRS Tax Exempt and Government Entities Customer Account Services line. The instructions say it is open Monday through Friday.

Related codes

• F990EZ-127-01: end-of-year total assets of $500,000 or more require Form 990.
• F990EZ-122-01: line 9 must equal the sum of lines 1 through 8, using the net lines 5c, 6d and 7c.
• F990EZ-121-01: line 6d must equal line 6a plus line 6b minus line 6c.