Changing Your Non-Profit Organization’s Accounting Period: A Complete Guide

Stephanie Glanville | December 28, 2023 | Reading time: 11 minute(s) | Form 990, how to, Nonprofits | No Comments

When an organization receives tax-exempt status, the IRS determination letter indicates the tax year-end date. This date is the last day of the operating tax year for the organization. An organization’s tax year is a 12-month time frame in which the organization operates and reports financial information.

An organization can have either a calendar tax year from January 1st – December 31st, or a Fiscal tax year that could be any 12-month time frame other than January 1st – December 31st.

The most common fiscal Tax year is July 1st – June 30th.

Certain circumstances require an organization to change its accounting period. In this blog, we will cover how to determine your organization’s accounting period and the IRS requirements for changing it. Just like the annual reporting of financial information, the IRS requires this process to be completed using a 990 series return.

Determining the Organization’s Tax Year

Check out the list below to help determine your organization’s tax year based on the ending date listed on your IR determination letter.

January 1st – December 31st
February 1st – January 31st
March 1st – February 28th
April 1st – March 31st
May 1st – April 30th
June 1st – May 31st
July 1st – June 30th
August 1st – July 31st
September 1st – August 31st
October 1st – September 30th
November 1st – October 31st
December 1st – November 30th

Why Would a Nonprofit Change its Tax Period?

Under certain circumstances, an organization will choose to change its tax period. This typically occurs when the organization starts operations, has modifications to the accounting period, or is closing the organization.

How Does an Organization Change its Accounting Period?

Changing the accounting period can be completed when filing your 990 series returns. If an organization chooses to change its accounting period, it must file a short tax period return. A short tax period return reports a tax period of less than 12 months.

Here’s an Example:

If an organization initially followed a calendar tax year of January 1st – December 31st and chose to change their tax period to a Fiscal tax period of July 1st – June 30th, the organization would submit a short tax period return with the dates of January 1st – June 30th. The organization would also need to check the box on the 990 series return header to indicate the change in the tax period. The organization would then file a return the following year with a tax period of July 1st – June 30th.

Requirements for a Short-year Return

If you are changing the tax period and filing a short-year return, the deadline to file the return would be the 15th day, of the 5th month, following the end of the short tax period.

Here’s an Example:

If you are filing a short tax period of January 1st – June 30th as mentioned above, the form would need to be filed by November 15th. November is five months after June, and the deadline is always the 15th day of the month.

When an organization decides to make a change to their accounting period, the IRS requires a Form 990, or 990-EZ form regardless of financial status. A short-year return for a change of tax period cannot be reported on a 990-N form. If the organization is a private foundation, it will still file a 990-PF.

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