[E-file Error Code F990PF-902-01] How do I resolve it?
3.0k views | Last modified 6/8/2020 6:28:22 AM EST | Added by ExpressTaxExempt Team

Applicable To
990-PF 990-N 990-EZ 990 8868 1120-POL

IRS Error Code [F990PF-902-01]:

If Form 990-PF, Part VI, Line 1a checkbox is checked, then the organization must have a foundation code "02" in the e-file database. Refer this link https://www.irs.gov/pub/irs-tege/p4838.pdf (Page No. 6)

Rejection Message:

The organization doesn't qualify for an exemption from paying excise taxes on investment income. In order to qualify, the organization should be an "Exempt Operating Foundation described in Section 4940(d)(2)" and must have registered with the IRS under foundation code "02". This code classifies a private operating foundation as an organization exempted from paying excise taxes or investment income.

What does it mean:

The IRS has rejected the return since the organization hasn't been designated as an exempt operating foundation under section 4940(d)(2). There's a possibility that the organization might have submitted the ‘Determination Letter’ to the IRS which is pending for approval or the organization would have mistakenly chosen the option to claim an exemption.

To be classified as an exempt operating foundation, an organization must meet the below criteria

  1. Must be a private operating foundation.
  2. Should have been publicly supported for at least ten tax years. 
  3. The organization's governing body at any given tax year should have been made of individuals amongst which less than 25% are disqualified individuals.
  4. The organization didn’t ever have an officer who is a disqualified individual at any given tax year.
  5. The organization must have obtained the determination letter confirming its exempt operating foundation status. This determination letter can be obtained by submitting Form 8940.

Resolution:

If the organization has submitted its Determination Letter to IRS, they check with the IRS on its status before claiming an exception on excise tax. They can reach out to the e-help Desk Toll-Free Number 1-866-255-0654. If the option to claim an exception was opted by mistake, then the other option "NO" can be chosen, and the form is re-transmitted to the IRS again.

Here's how you correct the organization's choice on exempt status:

  1. Log in to your ExpressTaxExempt account.
  2. Identify the rejected return either from the Dashboard or Form History.
  3. To identify it from the Dashboard, keep a note of the Return ID of the rejected return that you find in the rejection email. 
  4. To identify it from the Form History page, click the Tax Returns on the menu and you'll land in the Form History page where you'll find the rejected return listed. 
  5. In both options, you need to click on the Rejected by the IRS button found against the rejected return to find the list of errors. Then, click the Fix Me button against the error code F990PF-902-01.
  6. You'll land on the Type of Organization page. Under "Domestic Exempt Operating Foundations Described in Section 4940(d)(2)", select NO. 
  7. Follow the subsequent steps as prompted. 
  8. Review the details, and click the Transmit button to re-transmit your return to the IRS at no additional cost.

We'll keep you informed on the status of the return once we hear back from the IRS.

For any further assistance, we recommend contacting the IRS e-Help Desk Toll-Free Number 1-866-255-0654.

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