IRS Instruction 990-T – IRS Forms, Instructions, Pubs 2026 – As tax-exempt organizations navigate the complexities of compliance, understanding IRS Form 990-T is crucial. This form, officially titled the Exempt Organization Business Income Tax Return, helps report and pay taxes on unrelated business taxable income (UBTI). Whether you’re a nonprofit, trust, or other exempt entity, these instructions ensure you meet your obligations under section 511 of the Internal Revenue Code. In this SEO-optimized guide, we’ll break down the purpose, filing requirements, key sections, recent updates for tax year 2025, and more. Stay compliant and avoid penalties by following these detailed IRS guidelines.
What Is IRS Form 990-T and Its Purpose?
IRS Form 990-T serves as the primary tool for tax-exempt organizations to report income from activities not directly related to their exempt purpose. This includes unrelated trade or business income that’s regularly conducted and generates gross income of $1,000 or more. The form also handles proxy tax under section 6033(e) for nondeductible lobbying or political expenditures, claims for refunds on undistributed capital gains from regulated investment companies (RICs) or real estate investment trusts (REITs), credits for federal excise taxes or small employer health insurance premiums, and elective payment elections under sections 48D or 6417.
The core focus is on UBTI, which is calculated separately for each unrelated trade or business per section 512(a)(6)—no aggregation allowed. This prevents losses from one activity from offsetting gains in another. For organizations like section 501(c)(7), (9), or (17) entities, UBTI includes nonmember income with specific modifications. State colleges, universities, or their wholly owned corporations under section 511(a)(2)(B) report income not tied to educational purposes.
Exemptions from UBTI reporting include activities without a profit motive, volunteer-run operations, member convenience services, gifted merchandise sales, qualified public entertainment, hospital services under section 501(e), pole rentals, low-cost article distributions, donor list exchanges, certain bingo games, North Dakota games of chance, and qualified sponsorship payments after 1997.
To access the full instructions, download the official IRS PDF here: IRS Instructions for Form 990-T (PDF).
Who Must File Form 990-T?
Not every exempt organization needs to file, but if your entity has unrelated business gross income exceeding $1,000, submission is mandatory. Key filers include:
- Organizations exempt under sections 501(a), 529(a), or 529A(a), including domestic and foreign entities.
- Colleges, universities, or governmental units.
- Qualified tuition programs (section 529) and ABLE programs (section 529A).
- Trustees of IRAs, SEPs, SIMPLEs, Roth IRAs, Coverdell ESAs, Archer MSAs, or HSAs—each treated as a separate trust with its own EIN.
- Disregarded entities as branches of a parent organization.
- Applicable entities making elective payment elections for credits (e.g., tax-exempts, governments, Indian tribal governments, rural electric cooperatives).
- Organizations solely reporting proxy tax, other taxes (sections 1291, 1294), refunds, or elective payments.
Exceptions apply to section 501(c)(1) instrumentalities exempt by Congress or individual retirement annuities. Mutual or cooperative electric companies under section 501(c)(12) may exclude certain income treated as member contributions, and qualifying shipping activities can elect taxation under section 1354.
If your organization has multiple unrelated trades, use Schedule A for each, identified by a 6-digit NAICS code (e.g., 450000 for retail) or non-NAICS codes for investments like 901101.
Filing Requirements and Deadlines for Form 990-T
Filing is required if UBTI reaches $1,000, computed per trade or business. Attach Schedule A for each activity and complete it first. Consolidated returns are allowed for section 501(c)(2) title-holding companies or affiliated exempt groups meeting section 1504 criteria—include Form 851 and Form 1122.
Electronic filing is mandatory for section 511 organizations and trusts; encouraged for elective payment filers. Use Form 8868 for extensions, but elective payments must be on a timely filed return (including extensions). Amended returns can be submitted within three years, marking the “Amended return” box and explaining changes in Part V.
Deadlines vary:
- 15th day of the 4th month after tax year end for employees’ trusts (section 401(a)), IRAs, etc. (e.g., April 15 for calendar year).
- 15th day of the 5th month for others (e.g., May 15).
- Shift to the next business day if on a weekend or holiday.
Estimated tax payments are due if expected tax is $500 or more (excluding proxy tax), via EFTPS. Late filing penalties start at 5% per month (max 25%), with minimums for delays over 60 days.
Public inspection is required for section 501(c)(3) organizations under section 6104(d)—make Form 990-T available for three years, including via website posting. Penalties for noncompliance can reach $10,000.
Step-by-Step Guide to Completing Form 990-T Sections
Filling out Form 990-T involves detailed sections. Here’s a breakdown:
Heading (Items A-L)
Update name, address, EIN, exemption type (e.g., 501(c)(3)), organization type, group exemptions, amendments, consolidated status, number of Schedules A, and foreign account info in Part IV.
Part I: Unrelated Business Taxable Income
- Line 1: Sum positive amounts from Schedules A, Part II, line 18.
- Line 4: Charitable contributions (limits: 10% UBTI for corporations, 50%/30% for trusts; carryover excess five years).
- Line 6: Pre-2018 NOL deduction.
- Line 8: Specific deduction ($1,000).
- Line 9: Taxable income for qualified business income (QBI) deduction (trusts only).
Part II: Tax Computation
- Corporations: 21% tax rate.
- Trusts: Use rate schedule or Schedule D (Form 1041).
- Line 3: Proxy tax (21% on unnoted expenditures).
- Line 4: Other taxes (e.g., Form 4255).
- Line 5: Alternative minimum tax (Form 4626 for corporations, Schedule I for trusts).
- Line 6: Noncompliant hospital facility tax.
- Line 7: Total tax.
Part III: Tax and Payments
- Credits (foreign, general business, etc.).
- Other amounts due (recaptures).
- Payments (estimated, withheld, elective via Form 3800, etc.).
- Calculate tax due or overpayment; use Form 8050 for direct deposit refunds.
Part IV: Statements Regarding Activities
Report foreign accounts (FinCEN Form 114), trusts (Form 3520), tax-exempt interest, and NOL carryovers (pre-2018 aggregate; post-2017 siloed).
Part V: Supplemental Information
Explain amendments, proxy computations, NOL changes, etc.
Schedule A Details
For each trade:
- Part I: Gross receipts, capital gains, partnership income, rents, etc.
- Part II: Deductions (salaries, repairs, depreciation, NOLs limited to 80% of taxable income).
- Parts III-XI: Cost of goods sold, rent income, debt-financed income, controlled org income, investment income, exploited activities, advertising, compensation, and supplemental info.
Allocate expenses reasonably between exempt and unrelated activities. Passive activity losses (section 469) and at-risk rules (section 465) may apply.
Sign by an authorized officer; facsimile OK for IRA trustees.
Understanding Proxy Tax Under Section 6033(e)
Proxy tax targets exempt organizations (excluding 501(c)(3)) for nondeductible lobbying or political expenditures not disclosed in member notices. The rate is 21% on the aggregate unnoted amount, with no deductions. Compute by multiplying expenditures by 21%. If filing solely for proxy tax, complete minimal sections and attach a computation statement. Provide member notices for allocable dues to avoid the tax.
Recent Changes and Updates for Tax Year 2025
As of early 2026, key updates include:
- Section 1062: Elect to defer tax on gains from qualified farmland sales to farmers; pay in four installments (report on Part III, line 6k; attach Form 1062).
- Estimated Tax Penalty Relief: Waiver for underpayments on section 1062 elections per Notice 2026-3.
- Domestic Research Expenditures: Deduct or amortize under section 174A (min. 60 months); transition via Rev. Proc. 2025-28.
- Corporate AMT (CAMT): Based on adjusted financial statement income; use Form 4626.
- Elective Payments: For credits like advanced manufacturing (section 48D); requires pre-filing registration and Form 3800.
- Burden estimates: 212,300 filings, average 42 hours/$2,300 per return.
These reflect statutory changes as of October 1, 2025.
Tips for Compliance and Avoiding Penalties
- Use permissible accounting methods (cash/accrual); change via Form 3115.
- Round to whole dollars.
- Retain records, including Form 1099-K for payments.
- E-file if required; pay via EFTPS.
- For refunds/credits only (e.g., Form 2439, 8941), complete minimal sections.
Download the latest instructions to ensure accuracy: IRS Instructions for Form 990-T (PDF).
Frequently Asked Questions About Form 990-T
1. What if my organization has under $1,000 in UBTI?
No filing required, but monitor activities.
2. Can losses carry over?
Yes, pre-2018 aggregate; post-2017 siloed, limited to 80% of taxable income.
3. Is electronic filing mandatory?
Yes for most; check IRS guidelines.
By staying informed with these IRS Form 990-T instructions, exempt organizations can efficiently manage UBTI reporting and proxy tax obligations. Consult a tax professional for personalized advice.