Dear Daddio,
I would check with the IRS about the reporting threshold. I know it to be 25,000. Call the IRS and check it for yourself. Don't take someone else's word for your PTO's financial responsibilities. The penalties are too high to goof up.
Is it $50,000? I thought the threshhold was different. But regardless, yes - we file a 990EZ informational return each year, regardless of our income. And our income has been below the required amount the last few years.
Seems like there were some good reasons to go ahead and file. One might have been to stay active with the IRS. Another - for us - is that it makes us keep the IRS formats in mind when we do our own accounting. If the need arises, we already are used to categorizing things they way they like.
It probably took a little longer the first year, but subsequently it seems like it takes us about 2 hours to fill out the return and doublecheck the numbers.
But note there are risks. One of the times I did it, I wasn't paying attention and forgot to check the box about fiscal (rather than calendar) year. Our year ends in May or June (I forget which), so we must file by October 15.
Calendar year returns are due in the Spring. Anyway, because I forgot this little box, it looked like we filed several months late and owed a late penalty. Something like $20 per day to the tune of $1500 or so. It was just clerical error, so I wasn't worried. But nothing gets fixed quickly with the IRS. It took about 6 months to get it resolved. (And the "penalty" division is not nearly as nice as the "tax exempt division" to work with.)
