Exempt Organizations Advisory - IRS Published Frequently Asked Questions for Redesigned Form 990

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com)

On November 19, the IRS posted a new list of frequently asked questions and answers regarding the Form 990 revision (effective for 2008 tax returns).

The new Form 990 is a significant redesign in format and content, including the inclusion of a front page summary that provides a snapshot of key financial, governance and operating information, a governance section, and revised compensation and related organization reporting.  The new form replaces existing “unstructured attachments” with sixteen formal schedules.  Additional schedules were added for reporting by hospitals and for organizations which have foreign activities, non-cash contributions, and tax-exempt bonds.   

According to the IRS, organizations should consider taking steps before the end of its 2008 tax year in order to be fully prepared for the new form’s changes.  These steps include reviewing the new Form 990-EZ filing thresholds to determine whether the organization may file the short form instead of the new Form 990 for the 2008 tax year. Other steps include reviewing the draft form, schedules and instructions available on the IRS web site to become familiar with the new form, schedules and instructions. Organizations may want to begin identifying those schedules they may be required to complete, and their related organizations, officers, directors, trustees, and key employees, which require special reporting. The organization's management and governing body should consider reviewing Part VI, Governance, Management, and Disclosure, in order to become familiar with that part's new governance reporting, and to determine whether the organization wishes to make any changes to its existing governance policies and practices before the end of its 2008 tax year.