In a development noteworthy for all but the smallest tax-exempt organizations, the Internal Revenue Service (IRS) today released for public comment a draft of the overhauled Form 990 annual tax return, complete with initial schedules and instructions. The IRS intends that the form will be used for fiscal years beginning in 2008 (rather than for later years, as has been expected). With the release today begins a 90-day public comment period that will end on September 14, 2007.
Exempt organizations should review the revised Form 990 during the remainder of 2007 to understand the implications of the reporting requirements for their management and governance practices and policies, and should make appropriate changes in anticipation of the 2008 effective date (pending changes as the result of public comment).
The revised Form 990 consists of a core 10-page form, and as many as 15 separate schedules, which apply depending on the size, nature and complexity of the filing organization. While many of the schedules would not apply to smaller and less complex organizations, larger and more complex organizations are likely to face significantly increased reporting requirements.
Among the additions to the reporting requirements are a new form for hospitals on community benefit and charity care practices; a revised compensation reporting schedule that requires greater detail on hot-button issues such as loans, deferred compensation, fringe benefits and retirement supplements (including a question on whether the organization has paid for first-class travel or club dues); a new schedule requiring information on related organizations and the flow of funds and transactions involving those organizations; and many targeted questions on specific governance practices and policies.
The revised Form 990, schedules and instructions are available at http://www.irs.gov/charities/index.html.