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Nonprofit in CA filed 990EZ Form with accounting anomaly. What can they do?

Los Angeles, CA |
Filed under: Tax law

On a CA nonprofit's 990EZ Form for 2011, in the net assets section, they didn't add the beginning assets with the excess for that year. They instead subtracted the amounts. It's like walking in the door with $100, working to make $60, but instead of reporting they have $160 at the end of the day, they reported they only had $40. The amount that vanished is just over $50,000. What can they do? I want to let them know their options, before the IRS takes notice.

Attorney Answers 3


File an amended Form 990EZ and check to see if the the difference in assets affects the nonprofit's gross revenues for the year. As a management matter, consider determining why the error on the net assets section occurred in the first place and why its was not detected prior to being filed. At first glance the misstatement of the net assets may not appear to be a big deal until you determine why it occurred and what else on the return it reflects.

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Oscar Javier Ornelas

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Best bet is to consult a CPA

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The response from Mr. Ornelas was superb. I could not have written it better.

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