Overview
The IRS announced that it is revoking Announcement 2001-33, which had provided penalty relief if tax-exempt organizations reported compensation on their annual information returns in the manner described in the announcement instead of in accordance with the Form 990 series instructions. Announcement 2001-33 allowed tax-exempt organizations that pay a management company for services provided by officers, directors, trustees, or key employees to report in the compensation section of the Form 990 series the amount paid to the management company, rather than directly reporting the compensation paid to each person who performed the services to the organization.
Yesterday's announcement explains that since issuing Announcement 2001-33, the IRS has refined the instructions to Form 990 for reporting independent contractors and payments made through management companies. The IRS reasoned that it is appropriate to now revoke Announcement 2001-33 because tax-exempt organizations have had sufficient opportunity to comment on the Form 990 instructions over the years, and it will improve transparency and compliance to have all tax-exempt organizations following the instructions when filing Forms 990. Effective January 1, 2022, tax-exempt organizations must follow the specific instructions to Form 990, Form 990-EZ, and Form 990-PF for reporting compensation.
