For the sake of transparency, the IRS has released for discussion a new and improved Form 990, the annual return required to be filed by tax-exempt organizations. Once approved, the IRS expects the redesigned form to be ready for 2008 returns filed in 2009.
Who can expect major filing changes?
Tax-exempt organizations with complex compensation arrangements, related party entities, and activities that raise compliance concerns.
New Form 990 revision highlights:
A Summary section which provides a financial snapshot of the organization.
A Key Financial and Compensation section highlighting the type and amount of compensation paid to highly compensated individuals and between related parties. It also consolidates information in one place as opposed to the old form.
Detail on independent contractors paid in excess of $100,000
The Governance section highlights the organization’s evidence of formal policies including conflict of interest, whistleblower, audit committees, and the organization’s accountability to the public
15 Schedules focusing on fundraising, non-cash contributions, compensation, tax-exempt bonds, and other areas of public interest. Schedules are only to be completed by organizations engaged in those activities.
The current Form 990 is (9) pages long and includes Schedules A, B, and 36 possible attachments. The revised Form is (10) pages long and includes (15) attachments which will not have to be completed by every organization.
It’s not over until Sept. 14, 2007.
Nonprofit organizations have until Sept. 14 to comment on the proposed form. Comments should be e-mailed to Form990Revision@irs.gov. The form can be found on www.irs.gov/charities.
In addition to enhancing transparency, the IRS is also attempting to minimize the filing burden on tax exempt organizations. All nonprofit organizations owe it to themselves to at least review the proposed changes to see how their organization will be impacted. As the saying goes, see me now or see me later, but you will see me. Wait too late and you might not like what you see.
Andrea Morrow is the president of Nonprofit Resource Group, Inc., a consulting firm specializing in providing accounting and organizational management solutions to nonprofit organizations. For financial reporting or board training services, contact her by e-mail at Morrowac@comcast.net.
