IRS Instruction 990 (Schedule E) – As a tax-exempt school under Section 501(c)(3), maintaining compliance with IRS nondiscrimination policies is crucial for preserving your organization’s exempt status. IRS Schedule E (Form 990) serves as the key reporting tool for private schools filing Form 990 or 990-EZ, ensuring transparency on racial nondiscrimination practices. This comprehensive guide breaks down the IRS Schedule E Form 990 instructions for schools, drawing from the latest 2024 instructions (applicable for 2026 filings), to help you navigate completion, avoid pitfalls, and uphold your non-discrimination policy for schools. Whether you’re a K-12 institution, university, or nonprofit educational entity, understanding these requirements can streamline your tax filing process.
What Is Schedule E (Form 990) and Why Does It Matter for Schools?
Schedule E (Form 990) is a supplemental schedule attached to Form 990 or 990-EZ, specifically designed for organizations operating as schools to report their adherence to racially nondiscriminatory policies toward students. Rooted in Revenue Procedure 75-50 (modified by Rev. Proc. 2019-22), it verifies that your school does not discriminate based on race, color, or national/ethnic origin in admissions, programs, scholarships, or facilities.
Why is it essential? Noncompliance can jeopardize your tax-exempt status, trigger IRS audits, or lead to penalties under perjury laws. For 2026 filers, this schedule promotes accountability, especially amid increasing scrutiny on educational equity. Schools must certify annually that they’ve met these standards, making accurate reporting a cornerstone of Form 990 schools compliance.
Who Must File Schedule E (Form 990)?
Not every nonprofit school needs to complete Schedule E, but most do if they qualify as a school under IRS guidelines. Here’s a quick breakdown:
- Mandatory Filers: Organizations answering “Yes” to Form 990, Part IV, line 13, or Form 990-EZ, Part VI, line 48. This typically includes schools that checked the “school” box on Schedule A (Form 990), Part I, line 2.
- Voluntary Filers: If your organization isn’t required to file Form 990/990-EZ but chooses to, you must provide complete information, including Schedule E.
- Exemptions: Purely public schools (government-operated) or non-501(c)(3) entities may not need it, but private tax-exempt schools generally do.
Pro Tip: Review your prior-year filings to confirm. For 2026, the deadline aligns with your Form 990 due date—typically the 15th day of the 5th month after your fiscal year-end (e.g., May 15 for calendar-year filers), with automatic 6-month extensions available.
General Requirements for Tax-Exempt Schools Under Schedule E
To qualify as a tax-exempt school, you must embed nondiscrimination into your core operations. The IRS outlines seven foundational requirements in Rev. Proc. 75-50, which Schedule E directly assesses:
| Requirement | Key Details |
|---|---|
| Governing Documents (4.01) | Include a nondiscrimination statement in your charter, bylaws, or a board resolution. Example: “The school admits students of any race, color, and national or ethnic origin.” |
| Printed Materials (4.02) | Feature the policy in all brochures, catalogs, and ads for admissions, programs, or scholarships. A reference like “non-discriminatory admissions” suffices for general ads. |
| Publicity (4.03) | Broadcast the policy to the community via newspaper, media, or website (more on this below). |
| Operations (4.04) | Run all facilities and programs without racial bias. |
| Scholarships/Loans (4.05) | Offer aid nondiscriminatorily; minority-targeted programs are okay if they advance equity. |
| Annual Certification (4.06) | Affirm compliance under perjury on Schedule E, line 2. |
| Faculty/Staff Policies (4.07) | Discriminatory hiring signals potential student bias—avoid it. |
These ensure your Schedule E for schools reflects genuine equity practices.
Step-by-Step Guide: Completing Part I of Schedule E
Part I is the heart of Schedule E, mirroring Rev. Proc. 75-50’s sections. Answer “Yes” or “No” to each line, providing evidence where required. Here’s how to tackle it:
Lines 1–2: Governing Documents and Printed Materials
- Line 1: Confirm your charter/bylaws include the nondiscrimination statement. If amended post-1975, attach the resolution.
- Line 2: Verify policy inclusion in all student-facing materials. “Yes” if compliant; explain variances in Part II.
Line 3: Publicity of Nondiscrimination Policy
This is a common sticking point. You must publicize using one of three methods annually during recruitment periods:
- Newspaper Ad: At least 3 column inches in a general-circulation paper serving all racial groups.
- Broadcast Media: Radio/TV spots, with audience data proving reach.
- Website Notice (per 2019 update): Prominently display on your primary homepage—visible without scrolling far, in contrasting colors, and not buried in links.
Sample Notice: “The [School Name] admits students of any race, color, national and ethnic origin to all… It does not discriminate… in administration of its educational policies…” Answer “Yes” if your site meets visibility factors.
Exceptions:
- Parochial schools (75%+ enrollment from sponsoring denomination).
- National/international recruiters (e.g., 50%+ out-of-state students).
- Local schools in diverse areas (document demographics).
Lines 4–6: Operations, Scholarships, and Records
- Line 4: Detail racial composition of students, faculty, and staff (estimates OK if methodology documented).
- Line 5: Confirm scholarships are offered equitably.
- Line 6: Maintain 3-year records of compositions, ads, and solicitations—no personal data release without FERPA consent.
Line 7: Certification
Sign under penalties of perjury: “I certify… the school has satisfied the… requirements.” This is non-negotiable for exemption.
Handling Part II: Supplemental Information
Use Part II for narratives supporting Part I responses (e.g., Line 3 publicity method or Line 4d racial data). Label each entry by line number. Duplicate pages if needed—clarity prevents IRS queries.
Parts III–V are reserved for future use or specific disclosures; leave blank unless instructed otherwise in updates.
Recordkeeping Essentials and Public Notice Best Practices
Retain records for 3 years from compilation: student demographics (by race/ethnicity), scholarship criteria, ad copies, and recruitment materials. Use government census data if current (within 1 year). Failure to produce records presumes noncompliance.
For public notice, prioritize the website method for cost-efficiency in 2026—ensure it’s “reasonably expected to be noticed” (e.g., above-the-fold placement). Track exceptions with enrollment stats for audits.
Common Mistakes, Tips, and Recent Changes
Avoid these pitfalls:
- Vague website notices (must be homepage-direct).
- Incomplete records (e.g., no demographic methodology).
- Ignoring post-1975 discriminatory statements—publicly disavow them.
2026 Tips:
- Leverage Rev. Proc. 2019-22’s website option for digital-first schools.
- Use accounting software for demographic tracking.
- Consult a tax pro for complex scholarships.
Recent Change: The 2024 instructions (continuous use) emphasize website visibility factors, simplifying compliance for online-savvy institutions.
Penalties for Non-Compliance with Schedule E
False certification invites perjury penalties (up to $250,000 fine or 3 years imprisonment). Broader violations risk revocation of 501(c)(3) status, back taxes, and public disclosure of failures. The IRS presumes discrimination without records—proactive compliance is your best defense.
Final Thoughts: Stay Compliant and Excel in 2026 Filings
Mastering IRS Schedule E (Form 990) instructions for schools safeguards your mission while fostering true inclusivity. Download the latest PDF from the IRS site and review annually. For personalized advice, partner with a CPA or nonprofit attorney. Ready to file? Head to IRS.gov for Form 990 resources and ensure your non-discrimination policy for schools shines.
This guide is for informational purposes only and not tax advice. Always verify with official IRS sources.