In 2009, tax-exempt organizations will have a new Form 990 to complete for tax year 2008 and subsequent tax years. Many tax-exempt organizations already file a yearly informational tax return with the Internal Revenue Service (IRS) to maintain their tax-exempt status. The informational return is the Form 990. Form 990 has not been substantially revised since the late 1970s. Information reported on the Form 990 is available to the public.
The new Form 990 is designed to make the operations of tax-exempt organizations much more transparent than in past years. It is intended to offer the IRS and the public a much clearer picture of how tax-exempt entities operate.
The IRS has also issued revised instructions for the new 2008 Form 990. The revised instructions are supposed to make it easier for tax-exempt entities to complete the new form. The revised instructions are also supposed to promote uniform reporting practices by tax-exempt organizations.
The new Form 990 consists of an eleven-part base form. Tax-exempt organizations are required to report information regarding their mission, current and prior year’s financial results, new, ongoing and discontinued exempt achievements, as well as other information. Some of the most noteworthy changes to the new Form 990 involve organizational governance and the compensation of officers, directors, trustees and key employees. Part VI of the new Form 990 requires certain disclosures about an entity’s governance policies and disclosure practices. Part VII of the new Form 990 requires broader disclosure of compensation paid to the five highest compensated employees of a tax-exempt organization. Beginning with tax year 2008, all organizations that file the new form must disclose such information.
The new Form 990 also contains sixteen schedules. Each entity filing the new form must determine in Part IV of the base form, which of the sixteen schedules it must complete. The schedules require disclosure of information relating to an entity’s public charity status, contributions reported as revenue, political campaign activities, supplemental balance sheet information and activities conducted outside the United States. Other schedules require disclosure of information relating to compensation for current and former officers, directors, trustees and certain key employees as well as transactions with interested persons.
Form 990-EZ, the Short Form Return of Organization Exempt from Income Tax, can still be used by certain tax-exempt entities. The IRS did not redesign the Form 990-EZ for 2008, but there are some changes as to how certain information is reported on the Form 990-EZ. Tax-exempt entities that file the Form 990-EZ will now have to review the instructions for the 2008 990 Schedules A, B, C, E, G, L and N to determine whether they must report information on such schedules. Organizations using the Form 990-EZ will not be required to complete any other 2008 Form 990 schedules other than those identified in the preceding sentence.
Revised instructions for the 990-EZ will be available from the IRS in the near future. The new Form 990, its instructions and schedules, as well as the Form 990-EZ are available at www.irs.gov.
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