IRS wants comments on proposed Form 990 changes

The Internal Revenue Service sent HANO an email recently. “As someone who works with nonprofit organizations, “ it read, “we thought you’d be interested in knowing that we are requesting public comments on a discussion draft of a redesigned Form 990, Return of Organization Exempt from Income Tax, filed by many public charities and other tax-exempt organizations.”

The note reassuringly continued: “The redesign of Form 990 is based on three guiding principles: enhancing transparency, promoting tax compliance, and minimizing the burden on the filing organization. Comments are due no later than Sept. 14.”

The draft of the new Form 990 and instructions for submitting comments are available online – click here.  The proposed form provides summary information about an organization’s mission, finances and fundraising expenses, and includes sections with new questions on governance, compensation and expenses.

The new form was released just weeks after leaders of the Senate Finance Committee sent a letter to U.S. Treasury Secretary Henry Paulson detailing the changes they'd like to see in the Form 990 to improve nonprofit openness and transparency.

HANO’s national affiliate, the National Council of Nonprofit Associations, met in June with the IRS to discuss the proposed changes and the comment period and reports that the IRS is very interested in hearing from small nonprofits and request that NCNA members submit comments.

In the upcoming weeks, the Independent Sector and other national organizations will share their concerns and suggestions. NCNA plans a conference call with NCNA members during July to review the draft form from the perspective of small and midsize nonprofits and compile a response. If you would like to contribute your ideas, please send them to jflanagan@hano-hawaii.org.

The IRS also called attention to its electronic newsletter, Exempt Organization Updates, with information for tax-exempt organizations and tax practitioners – attorneys, accounts and others – who work with nonprofits.