Exempt Organizations Advisory - IRS Releases Redesigned Form 990

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com)
Randal T. Evans (revans@steptoe.com)

On December 20, 2007, the IRS released an updated and redesigned version of Form 990, the return filed by tax-exempt organizations. The new form incorporates many of the recommendations that the IRS received after releasing a Discussion Draft of the Form 990 for public comment in June 2007.  Exempt organizations will begin using the new form for the 2008 tax year (returns filed in 2009).  The IRS has announced a phase-in of the filing requirement that allows smaller exempt organizations to file a Form 990-EZ instead of the Form 990 for up to three years.  The IRS also announced a phase-in of the form’s new hospital and tax exempt bond schedules.

The final version of the redesigned Form 990 includes the following changes from the Discussion Draft:

• A revised summary page that:
• eliminates the ratios, percentages, and other metrics included in the draft, and
• incorporates a two-year summary of financial information comparing the current and prior years;

• A reordered core form that moves the organization’s description of its program service accomplishments to page 2, immediately after the summary;

• A new checklist of schedules that shows which schedules the filing organization must complete;

• More opportunity throughout the form to provide supplemental information;

• Retention of group return filings for organizations with a group exemption ruling;

• Revised governance and compensation sections;

• Modified schedules for hospitals, tax-exempt bonds, non-cash contributions, and supplemental financial statements; and

• Reduced burden throughout the form and schedules, including increased or new reporting thresholds for several of the schedules.

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.