AAHSA: Legal

Draft Form 990 Highlights

The IRS has released for comment a discussion of a redesigned Form 990, the annual return filed by tax-exempt organizations. It is the first comprehensive reform of the Form 990 in over 25 years. The new Form 990 includes a 10-page Core Form and 15 associated Schedules triggered by specific responses. The deadline for submission of comments to the IRS is September 14, 2007. Below are the highlights of deliberation on the redesign.

Overview

First comprehensive update in 25 years.
IRS accepting comments until September 14, 2007.
Goal is to have it ready for use by the 2008 filing year (returns filed in 2009).
The move from attachments to schedules will facilitate electronic filing of returns.
IRS Guiding principles of redesign:

Enhance transparency to provide IRS and public with realistic picture of organization;
Promote compliance by accurately reflecting the organization's operations so IRS can assess the risk of noncompliance; and
Minimize burden on filing organizations.

Core Form is 10 pages, with 15 associated Schedules triggered by specific responses.
Summary page is designed to give a "snapshot" of key info about organization.

Mission, significant activities, number of board members, number of employees, compensation information, unrelated business revenues and income, and whether the organization has ceased operations.

Governance section underscore IRS belief that good governance and accountability practices provide safeguards that the organization's assets will be used consistently with its exempt purposes.
Compensation section based on W-2 or 1099 information and inquires whether board reviewed and approved CEO and other officer salaries using comparability data - to provide "rebuttable presumption" that they are reasonable under "intermediate sanctions" provisions of tax code.

15 Schedules, include:

Public Charity Status
Contributors
Political & Lobbying
Supplemental Financial Info
Foreign Activities
Hospitals
Grants/Loans
Compensation
Tax Exempt Bonds
Noncash Contributions
Related Organization
Termination

Political and Lobbying Activity (Schedule C) - asks for considerably more information on political activities than prior form.
Supplemental Financial Statement Detail (Schedule D) - required of all organizations and compiles several sections of prior attachments.
Hospitals (Schedule H) - includes skilled nursing facilities. Designed to capture information on community benefit, collection and billing, and how organization furthers its exempt purpose. Uses Catholic Health Association's model for reporting community benefit, but asks for comments and alternative models.
Compensation (Schedule J) - asks for detailed breakdown of compensation, deferred compensation, non-taxable benefits and non-taxable expense reimbursement for key employees and officers and directors. Also includes questions to determine compliance with excess benefit restrictions.

Last Updated : 7/25/2007 4:20:09 PM