IRS Wants Your Feedback on New 990 Draft Instructions
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| Story highlights |
- The IRS issued draft instructions for the redesigned Form 990
- They are collecting public comments through June 1, 2008
- Reviewing the instructions is an opportunity to get ready for the new form
- Pay close attention to the sections on governance, hospitals, executive compensation, tax-exempt bonds, non-cash contributions, and charity
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The IRS issued draft instructions for the redesigned 990 and they are requesting input from the nonprofit field. The new form will require extensive preparation and goes into effect for the 2008 tax year (returns due May 15, 2009 or after). The deadline to submit comments to the IRS is June 1, 2008.
Reviewing the 990 draft instructions is an opportunity for nonprofits to make sure the IRS’s directions are clear, and it’s a step towards getting ready for the first major revisions to the form since 1979.
Many organizations will have to build accounting systems and practices to gather the information now required. Therefore, it is important tax-exempt organizations become familiar with the new form and the draft instructions.
“Even in draft form, the instructions offer valuable guidance on how to prepare for the significantly increased reporting requirements,” explains Karen Gries, nonprofit tax manager with LarsonAllen.
Summary of draft instructions
The draft instructions are organized to match the new 11-page core form and the 16 schedules. They include descriptions on what types of organizations should fill out each schedule and line-by-line guidance on how to answer every question in the form and schedules.
In addition to the 990 draft instructions, the IRS also released tools to simplify filling out the form and schedules. They put together these 990 tools in response to public comments compiled in 2007:
- Glossary of terms
- Sequencing list to help organizations figure out the best order to fill out the form
- Compensation table
- Many examples
Pay special attention to certain areas
We recommend nonprofits look closely at the following sections of the draft instructions and new form: governance, hospitals, executive compensation, tax-exempt bonds, non-cash contributions, and charity.
For example, organizations receiving non-cash contributions should address how the documentation will be accumulated and reported. And although the schedules required for hospitals and outstanding tax-exempt bond issuances don’t go into effect in their entirety until 2009, it’s time to start building the accounting systems and practices you’ll need to comply with the new reporting requirements.
What do you think?
“This is your chance to provide input to the IRS on their 990 draft instructions. I recommend you get involved, especially if you feel the IRS needs to clarify or add further guidance to a specific area,” urges Reed Seabright, health care tax manager with LarsonAllen.
The public comment period is open until June 1, 2008. Send your comments to Form990Revision@irs.gov or you can mail your feedback to:
IRS
Draft 2008 Form 990 Instructions, SE:T:EO
1111 Constitution Ave., NW.
Washington, DC 20224
Comments sent via email will be posted on the IRS Web site.
Background
The revised 990 greatly increases the transparency of tax-exempt organizations. The new form was finalized in December 2007.
In our story titled “Redesigned 990 Requires Extensive Preparation,” learn about:
- The key changes to the revised Form 990
- Why the form changed
- How the changes will impact your organization
- What you can do to prepare
- How we can help
Helpful IRS links
For more information, contact Karen Gries, nonprofit tax manager, or Reed Seabright, health care tax manager, at 1-888-529-2648.
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