IRS releases draft of major revision of Form 990 for comment
On Thursday, June 14, the IRS released a draft of a major revision of the Form 990, the annual filing for tax-exempt nonprofit organizations that have more than $25,000 in annual revenue. The draft proposes significant changes to the ways in which public charities and other exempt organizations would report information on finances, fundraising activities, governance, executive and board compensation, and program services.
"The discussion draft constitutes a significant redesign of the form, which has been revised only on a piecemeal basis since 1979," the Internal Revenue Service states on the web page announcing the draft and requesting public comment. "The redesign of Form 990 is based on three guiding principles: enhancing transparency, promoting tax compliance, and minimizing the burden on the filing organization," the IRS says.
The IRS is asking for comments on the form by Sept. 14. It aims to complete its revisions before the end of this year and have a new form available for use in Fiscal Year 2008. No changes to the Form 990-PF, the filing for private foundations or other forms in the IRS Form 990 series have been proposed.
The proposed new Form 990 requires summary information about an organization’s mission, finances and fundraising expenses. There are also new questions on governance, compensation and expenses. Questions on the form direct organizations to fill out more detailed schedules, of which there are now 15. Some include familiar questions or attachments from the old Form 990 that have been moved or rearranged, while other schedules are completely new.
Most charitable organizations would complete Schedule A, which now includes more detailed questions about how the filing organization qualifies as a public charity. Schedule B still covers contributors. The other schedules are:
- Political campaign and lobbying activities (Schedule C)
- Supplemental financial statements previously disclosed through attachments (Schedule D)
- Private schools (Schedule E)
- Activities outside of the U.S. (Schedule F)
- Fundraising activities (Schedule G)
- Hospitals (Schedule H)
- Grants and other assistance (Schedule I)
- Supplemental compensation information (Schedule J)
- Tax-exempt bonds (Schedule K)
- Loans (Schedule L)
- Noncash contributions (Schedule M)
- Information on liquidation, termination or dissolution (Schedule N)
- Related organizations (Schedule R).
"It is critical that organizations provide constructive feedback on the draft to ensure that any new form is useful and relevant for the nonprofit sector, especially small and midsize nonprofit organizations," said Audrey Alvarado, executive director of the National Council of Nonprofit Organizations, HANO's national affiliate.
HANO and the NCNA network of state associations will get the word out about the proposed changes and seek input from our members, particularly those representing smaller nonprofits. NCNA will be participating in discussions with the Independent Sector and other national organizations and coordinating with member associations as responses begin to emerge.
