IRS Releases Tax Form 990
In 2007, the IRS released the final draft of the new Tax form 990. To be used during the 2008 tax year(returns filed in 2009), the new 990 will be used primarily to keep a closer eye on how tax-exempt organizations operate financially. Charities, credit unions, social clubs, and trade associations will be required to disclose details including: compensation information for any employee that makes more than $150,000 and the process used to set compensation levels, personal and business relationships between board members, and the description of how the organization makes its public disclosure documents available. This will be the first time the bill has been revised since 1979.
Major changes to the form include: A new "core form," eleven pages of basic financial information about the company, supplemented by 16 schedules for details(not every company will have to fill out all 16), a new cover page, providing the company's mission statement and a two year history of revenue and expenses.
There will be new Governance questions as well. Major issues, such as conflicts of interests, a whistleblower policy, joint ventures, and auditing procedures will be addressed.
Along with the Governance questions, there will be a special section for employees called "Key persons" who make more than $150,000. The new Form 990 will inquire mostly on the relationship between these people and the non-profit organization, specifically the amount of the company's money that goes to personal expenses such as first-class flights, travel companions, housing allowances, personal services, and spending accounts.
Though these changes could see tax preparation amongst tax exempt organizations double or triple in time and costs, the IRS has issued a gradual transition period for smaller companies. Businesses that meet the requirements will be allowed to file the Form 990-EZ. However, as time progresses, the number of businesses that can use the Form 990-EZ will grow smaller, as the IRS hopes to have all tax-exempt organizations with at least $200,000 gross receipts and $500,000 total assets using the Form 990 by the 2010 tax year.
The yearly schedule is as follows:
2008 tax year (2009 returns)-organizations with gross receipts over $1.0 million or total assets over $2.5 million will have to file the Form 990. For the 2009 tax year (2010 returns), organizations with gross receipts over $500,000 or total assets over $1.25 million will also have to file the Form 990. As mentioned before, the IRS will then expect one from any company with more than $200,000 in gross receipts and $500,000 in total assets.
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