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As promised, IRS Form 990 - Part VI: Section B – Policies, and Section C – Disclosures. It is not enough to just answer “yes” or “no”, as some of the answers must be explained in Schedule O. Remember that although many of these items are not required under the Internal Revenue Code, their presence is generally considered by the IRS to lead to improved tax compliance.
Visit our website www.dbbllc.com for many policy samples to help you get started.
Policies
Line 12a – Does the organization have a written conflict of interest policy? This policy would define conflicts of interest, identify the various individuals within the organization covered by the policy, facilitate disclosure of information that may help identify conflicts of interest, and specify the procedures to be followed in managing conflicts of interest. A conflict of interest arises when a person in a position of authority over an organization (officer, director, manager) may benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated.
Line 12b – Answer “yes” if officers, directors, trustees, and key employees, and those of family members, are required to disclose or update annually their interests that could give rise to conflicts of interest, such as a list of family members, substantial business or investment holdings, and other transactions or affiliations with businesses and organizations and those of family members.
Line 12c – Answer “yes” and describe on Schedule O the organization’s practices for monitoring proposed or ongoing transactions for conflicts of interest and dealing with potential or actual conflicts, whether discovered before or after the conflict has occurred.
Line 13 and 14 – Answer “yes” if you have a written whistleblower policy and document retention and destruction policy. (Check out our website for samples of each.)
Line 15a – Answer “yes” if your organization’s process for determining compensation of the CEO or executive director included all of the following elements:
1. Review and approval by a governing body or compensation committee, provided that persons with a conflict of interest with respect to the compensation arrangement at issue were not involved.
2. Use of data to comparable compensation for similarly qualified persons in functionally comparable positions at similarly situated organizations.
3. Contemporaneous documentation and recordkeeping with respect to deliberations and decisions regarding the compensation arrangement.
Line 15b – Answer “yes” if the process for determining compensation of one or more officers or key employees other than the top management official included all of the elements listed above.
If you answered “yes” on line 15a or 15b, describe the process on Schedule O.
Line 16a – “Did the organization invest in, contribute assets to, or participate in a joint venture or similar arrangement with a taxable entity during the year?” This question relates to a joint ownership or contractual arrangement to jointly undertake a specific business enterprise, investment or exempt-purpose activity. If you think the answer may be “yes”, please read the Form 990 instructions in detail.
Line 16b – Needs to be answered if Line 16a was “yes”.
Disclosures
Line 17 – List the states with which a copy of the Form 990 is required to be filed.
Line 18 – Check the boxes that apply for the ways in which your organization makes its IRS filings available for public inspection.
Line 19 – Describe in Schedule O how the organization makes its governing documents, conflict of interest policy and financial statements available to the public. Remember, only Forms 1023, 1024 (applications for exemption), 990, and 990-T (for 501(c)(3) must be made available for public inspection. Federal law does not require the other documents to be made publicly available, unless they were included on a form that was publicly available.
Click here for the link to the Actual IRS Form 990.
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