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The final version of the new IRS Form 990 (Return of Organization Exempt From Income Tax) has made its debut, and as exempt organizations begin to prepare for the filing of this revamped informational return, it has become clear that a significant investment of time will be necessary by both the organizations’ management (paid and volunteer) and paid preparers. The previous Form 990 had experienced only minor changes since 1979 and was more of a composite of dollars and cents with some questions thrown in. The new one seems to be mostly questions and answers with some dollars and cents thrown in. And with all the public, IRS and congressional attention paid to tax exempt organizations in recent years, this new Form 990 seeks to ensure that various stakeholders have a line of sight into organizations’ activities. These stakeholders can include the IRS and other regulators, charity watch dogs and other journalists, researchers, donors and potential donors, employees and potential employees, grant recipients and potential grant recipients, and Congress.
According to the IRS, The Form 990 was in need of a major overhaul. It had failed to reflect the changes in the law and the increasing size, diversity, and complexity of the exempt sector. The form no longer adequately served the IRS’ tax compliance interests or met the transparency and accountability needs of the states, the public, and communities served by the organizations.
The IRS was seeking to minimize the burden and enhance transparency while promoting greater compliance and accountability. And although some might argue that “minimizing the burden” doesn’t appear to have been accomplished, the other objectives seem feasible.
Another objective of the IRS relates to its increasing insistence that the directors or trustees of an exempt organization need to assume the ultimate responsibility for the organization’s compliance with applicable tax rules and regulations. They hope to help accomplish this by asking questions about whether a copy of the Form 990 was provided to the organization’s governing body before it was filed and describing the return review process, including who conducted the review, when they conducted it (i.e., before or after it was filed) and the extent of any such review. Additional sections relating to governance, management, policies and disclosures will help accomplish this objective as well.
As you can see from the link below of the actual Form 990, the “core” of the 2008 Form 990 consists of eleven pages of questions and data that all filers must complete. Based on your answers to those questions, there may be several more pages of required schedules to be completed. And although the questions may seem nebulous to some, the 250 pages of instructions including line-by-line guidance and an extensive glossary of key terms with 176 definitions, provide excellent assistance.
Our next weekly email will explain Parts I and II of Page 1 of the Form 990.
Click here for the link to the Actual IRS Form 990. |