Exempt Organizations Advisory - IRS Publishes Drafts of Revised 990 Forms and Schedules

The Internal Revenue has posted to its website four draft schedules for Form 990, the Return of Organization Exempt from Income Tax. The IRS has invited the public to review the draft forms and send comments by September 4, 2005. Revised forms include Schedule A; Schedule B; Form 990-C, Farmers’ Cooperative Association Income Tax Return; and Form 990-EZ.

Changes in the draft forms are aimed at areas that have been the subject of recent attention by the Senate Finance Committee and the IRS. Among the changes are questions regarding compensation of independent contractors, contributions of qualified real property interests under section 170(h) (i.e., donations of conservation easements), and foreign grants or other involvement with foreign accounts or offices.

Moreover, there may be more substantial changes in the future. Steven Miller, Commissioner of the IRS’ Tax Exempt and Government Entities Division, said in written responses to questions from the Senate Finance Committee on June 8, 2005 that the IRS is "considering ideas for a complete overhaul of the form [990] to make it a better enforcement tool as well as to provide the public and the states with information more relevant to their concerns."

For more information on this topic, please contact Catherine W. Wilkinson or Suzanne Ross McDowell.

The Exempt Organization Advisory is a general summary of the law and is not intended as specific legal advice for any organization.

Internal Revenue Service - Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

For more information on this topic, please contact the authors or the attorneys with whom you usually work at Steptoe.

Questions and comments about the Exempt Organizations Advisory are always welcome and should be sent to bstone@steptoe.com.