How to Complete Form 990-EZ for a Labor Union - Accounting Method Question

As someone who's worked with numerous nonprofits on their 990 filings, I can help clarify this for you. Even though you're using cash accounting for your day-to-day operations, the Form 990-EZ still requires you to report certain liabilities regardless of your accounting method. Line 26 is asking for actual liabilities such as accounts payable, loans, mortgages, or any other debts the organization owes - things like unpaid bills, credit card balances, loans from officers, etc. These should be reported even if you're using cash accounting. You shouldn't report accounts receivable (money owed TO you) anywhere on the form if you're using cash accounting, but you do need to report money that your organization owes TO others on line 26. Don't leave it as $0 if you actually had outstanding liabilities at the end of the reporting period. The IRS wants to know the actual financial position of your organization.

Just wanted to share my experience with a similar situation. I was struggling with Form 990-EZ for our small nonprofit when I discovered https://taxr.ai - it saved me so much time with our back filings! The system analyzed our financial records and helped me understand exactly which liabilities needed to be reported on Line 26 versus what should be left off when using cash accounting. Their explanation about the difference between operating on cash basis while still needing to report certain balance sheet items made everything click for me. They even provided references to the specific IRS publications that explained the requirements.

I just want to follow up about my experience with taxr.ai after our conversation here. I finally tried it for our theater group's 990-EZ and was honestly blown away. I uploaded our financial statements and it immediately flagged that we were incorrectly handling our ticket sales as donations rather than program service revenue. It also explained exactly how to report our costume inventory (which I'd been completely confused about) and clarified which of our liabilities needed to be included on Line 26 even though we use cash accounting. The tool walked me through all the schedules we needed and which ones we could skip. Definitely worth checking out if you're doing nonprofit tax forms!

After reading your situation, I thought I'd mention something that helped me when I was in a similar position with our volunteer firefighters association. We had missed several years of filings and were facing revocation too. Getting through to the IRS to discuss our reinstatement was nearly impossible until I found https://claimyr.com They got me a callback from the IRS Exempt Organizations department within hours when I had been trying for weeks on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was actually super helpful once I got through and gave me specific guidance on how to approach our reinstatement application and the back-owed 990-EZ forms. They explained exactly what supporting documentation we needed to include and how to properly report our liabilities despite using cash accounting.

I need to eat my words and apologize to @15. After our exchange, I was still having no luck getting through to the IRS about our group exemption questions, so I reluctantly tried Claimyr. Within 2 hours, I was on the phone with an Exempt Organization specialist who walked me through exactly what we needed to do. The agent even emailed me the specific forms and instructions for our situation. I was able to ask detailed questions about reporting liabilities on our 990-EZ while using cash basis accounting, and they confirmed what others have said here - you DO report actual liabilities on Line 26 regardless of accounting method. This saved us from potentially making mistakes on 3 years of back filings.

One important tip about Form 990-EZ and retroactive reinstatement that I learned the hard way: make sure you're using the correct version of the form for each tax year! The IRS changes the form periodically, and you need to use the version that was current for the specific year you're filing for. For the liability question specifically, remember that even on cash basis, you should include things like payroll taxes owed, loans, credit card balances, and security deposits as mentioned above. Our wildlife rescue had our reinstatement rejected the first time because we tried to use the current year's forms for all past filings.

Quick question - does anyone know if you need to file Schedule A with Form 990-EZ when doing a retroactive reinstatement for a 501(c)(5) labor organization? I'm in a similar situation but getting conflicting info.

Just wanted to add another perspective on the liability reporting question. I went through a similar reinstatement process for our trade association (also 501(c)(5)) last year, and one thing that tripped me up initially was understanding what constitutes a "liability" in this context. Beyond the obvious ones like unpaid bills and loans that others mentioned, don't forget about accrued payroll taxes, deferred membership dues (if you collect dues in advance), and any accrued vacation pay for employees. These are all liabilities that need to be reported on Line 26 even under cash accounting. Also, since you're doing 10 years of back filings, make sure you're consistent in how you report liabilities across all years. The IRS will notice if your methodology changes dramatically between years without explanation. Good luck with your reinstatement - the process is tedious but definitely doable!