Form 990

The IRS vision over tax exempt organizations is growing. Form 990 has increased the amount of information that must be provided to the IRS and the public. There are 16 schedules that must be filled that total 76 pages. There are 113 pages of instructions that accompany those pages. This is in addition to normal filing requirements. Despite the length, the IRS assures tax exempt organizations that they will not have to fill out every schedule in a given year.
There are still some organizations that are still exempt from having to fill out the full form. Churches, conventions, and associations of churches and some church organizations are completely exempt. Private foundations must file a Form 990-PF instead of the Form 990. Organizations with gross receipts of less than $1,000,000 and total assets less than $2,500,000 can file a Form 990-EZ although in the upcoming years these numbers are going to become even more restrictive. Most organizations having gross receipts less than $25,000 are allowed to file a substantially shorter version called a Form 990-N.
The new form requires more details to be disclosed by the organization. One of these changes is the organization must disclose who governs it. This includes listing the number of voting members, which of these members are independent and listing the information on the directors, officers and key employees.
Organizations must also disclose the organizations policies for identifying and dealing with conflicts of interest, the amount of compensation given to employees, how to respond to whistleblowers, how records are handled and how interactions with taxable entities are to be handled.
Conflicts or potential conflicts of interest must also be disclosed. These include the organization dealing with other entities that an officer, director or key employee has an interest in. This is to prevent the use of the tax exempt organization to funnel money to the person with an interest.
Organizations will also have to closely report the amount of fundraising they do and how much donated property they receive. The new form asks for specific details on these activities. One possible discomfort is organizations must report how much they spend on specific events and how much they receive for hosting such events. If the event results in a loss this might be quite embarrassing for the organization.
There are other things that now must be reported for organizations that deal with certain things such as those that receive tax-exempt bonds or those that deal in healthcare. These are specific to only those organizations and others do not need to bother with this type of reporting.
It is important for multiple members of the organization to review the return prior to its submission. Not only will the IRS go over it but it will also be available for the public to view. This can affect potential donors’ decisions to donate or not. It is important for an organization to act morally all year long in order to avoid any appearance or wrong doing. Not only can they lose their tax exempt status but they can also lose funding because it would appear to an unsavory charity to associate with.