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F990EZ-127-01: Total assets of $500,000 or more need Form 990

Form 990-EZReject and Stop

Incorrect Data. Rule text from IRS MeF Business Rules, Form 990-EZ, TY2026v3.0. Last reviewed .

What this rejection means

Form 990-EZ is only for organizations with total assets at the end of the year of less than $500,000, and gross receipts of less than $200,000. Your return shows end-of-year total assets of $500,000 or more on Part II, line 25, column (B). The IRS will not accept it on Form 990-EZ.

IRS business rule F990EZ-127-01: If Form 990-EZ, Part II Line 25(B) is greater than or equal to $500,000, then Form 990 must be filed instead of Form 990-EZ.

The severity is "Reject and Stop." The IRS stopped processing the whole submission at this error. Other problems in the return, if any, may only show up after this one is resolved.

Why it happens

  • Your total assets really are $500,000 or more. Investments, a building, land or a large reserve can push you over the limit.
  • You are looking at net assets instead of total assets. The instructions define total assets as the balance sheet amount "without reduction for liabilities." A building with a mortgage counts at its full value on line 25.
  • A data entry error. An extra digit, cents entered as dollars, or a beginning-of-year amount in the end-of-year column.

How to fix it

  1. Check line 25, column (B). It should be your total assets at the end of the year, from your balance sheet.
  2. If the amount was wrong, correct it and make sure Part II still balances. Total liabilities on line 26 are subtracted from total assets on line 25 to give net assets on line 27. Then send the return again.
  3. If the amount is right, you must file Form 990 for this year. You cannot fix this by changing the number. The instructions say an organization with total assets of $500,000 or more at the end of the year must file Form 990, not 990-EZ.
  4. Mind the deadline. Form 990 has the same due date as Form 990-EZ, the 15th day of the 5th month after your year ends. If that date has not passed and you need more time to prepare Form 990, you can file Form 8868 for an automatic 6-month extension.

When to contact the IRS

If you are unsure which form you must file, the Form 990-EZ instructions say you can call 877-829-5500 for help completing Form 990 or 990-EZ. This is the IRS Tax Exempt and Government Entities Customer Account Services line. The instructions say it is open Monday through Friday.

Related codes

  • F990EZ-128-01: gross receipts of $200,000 or more require Form 990 instead of 990-EZ.
  • F990EZ-117-01: if Part V, line 44a is answered "Yes," Form 990 must be filed instead.
  • F990EZ-118-01: if Part V, line 44b is answered "Yes," Form 990 must be filed instead.
  • F990EZ-123-02: if Part V, line 45b is answered "Yes," Form 990 must be filed instead.

Questions

Our net assets are under $500,000. Why must we file Form 990?

The test uses total assets, not net assets. The Form 990-EZ instructions say total assets is the balance sheet amount at the end of the year without reduction for liabilities. An organization with a mortgage or other debts can have net assets well under $500,000 and still be over the limit.

Does switching to Form 990 change our due date?

No. Form 990 and Form 990-EZ have the same due date, the 15th day of the 5th month after the year ends. If that date has not passed, you can file Form 8868 for an automatic 6-month extension.

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