Updated Form 990 Instructions

This IRS has announced the release of the updated and presumably final instructions for the redesigned form 990. The link takes you to a page to download the instructions to the various sections in PDF. The IRS has not yet compiled them all into the usual three column format, I think that they are easier to read at the moment. From the press release:

“We were gratified by the amount of help the IRS received from the tax-exempt community through public comments to redesign the Form 990 and revise its instructions,” said Steven T. Miller, Commissioner of the Tax Exempt and Government Entities Division. “This input helped us achieve our goal of improving compliance while minimizing burden. We will now begin working with the tax-exempt sector to help organizations complete the form and prepare for the 2009 filing season."

The IRS expects to release instructions to the 2008 Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, in the next few weeks.

Happy reading! I'm going to start through these this week.

Updates From the Nonprofit Risk Management Center

Need a Refresher on Maintaining Tax-Exempt Status and Other IRS Obligations?

The IRS recently updated Publication 557 (a PDF). The updated publication provides helpful guidance on what information needs to be provided to donors to acknowledge donations, the rules regarding public disclosure of annual returns to the IRS, including the 990-T form, as well as examples of what constitutes the all-important public support needed to maintain tax-exempt status.

Frequently Asked Questions Now Available On the Center’s Web Site

Every day the Center responds to questions about risk, liability and insurance. The Center is pleased to announce that the “Advice” tab of the Center’s Web site now provides an easy link to the Center’s responses to these Frequently Asked Questions.

Why Your Financial Systems Matter

Thanks to the Independent Sector for the heads-up: From the Los Angeles Times comes a story about a local chapter of the Service Employees International Union. This story has everything -- everything that can give the public a reason to think nonprofits are poorly run or are run solely as a scam to make money for the founders: undisclosed payments made to businesses owned by family members, poor financial record keeping, lavish spending and possible misstatements of fundraising expenses.

Even if all the issues mentioned in the story are found to be justified, it is still almost a perfect example of everything you should not do. And just because something is legal doesn't mean it is ethical. Taking the time to think, "How will this look?" to the media, regulators, other nonprofits and especially the community you serve can only help your decision making, financial or otherwise. Having a strong financial system in place and people knowledgeable about those systems, as well as other nonprofit accountability measures, are key for all organizations regardless of mission or size.

990-EZ Update

Thanks to GuideStar for this bit of news. Yesterday I mentioned the 990-EZ and said that is was unchanged. Not so, at least officially. It does not look like the form itself will change but the IRS proposes to allow filers of the 990-EZ to file six of the new schedules developed for the updated 990:

1. Schedule A, Public Charity Status and Public Support
2. Schedule C, Political Campaign and Lobbying Activities
3. Schedule E, Schools
4. Schedule G, Supplemental Information Regarding Fundraising or Gaming Activities
5. Schedule L, Transactions with Interested Persons
6. Schedule N, Liquidation, Termination, Dissolution, or Significant Disposition of Assets

Details on these schedules can be found here.

Got comments about these changes? Here are the details:

Send written comments on or before September 8, 2008, to:

R. Joseph Durbala
Internal Revenue Service, Room 6129
1111 Constitution Avenue, NW
Washington, DC 20224

All comments will become part of the public record and will be
summarized or included in the IRS request for OMB approval of the
changes to the 990-EZ.

IRS Round Up

News from the Internal Revenue Service's Exempt Organizations Division:

1. 2008 Form 990 Instructions
   Public commenting on the new form's draft instructions closed in June and the IRS is getting ready to release the final version by August 15. You can click here to get a preview of what changes have been made the instructions.


2. Political Activity
   A friendly reminder from the IRS about what is allowed and not allowed during this exciting political season. The top two links are probably the most useful, including the link to the handy StayExempt.org website.
   
   
3. Form 990 Filing Phase-In
   Another reminder about the phase-in of filing the new form 990. The IRS came up with this as a way to mitigate the filing burden on smaller nonprofits. Click here to see what the schedule is. It is conceivable that organizations that filed a form 990 for 2007 may only have to file the (unchanged) form 990-EZ for 2008.
   

And now your reward for reading about the IRS updates. Kitties!