“Tax-exempt organizations need to become familiar with the redesigned 990 now. Many organizations do not currently have the accounting systems and practices in place needed to gather the information that will be required on the 2008 form,” stresses Terry O’Reilly, CPA, health care tax principal with LarsonAllen. “It will be much easier to compile this information during 2008, than to go back and re-create it after year-end in a rushed attempt to complete the 990,” he explains.

The current draft of the redesigned form contains certain questions that might encourage organizations to adopt certain policies. For example, a new question asks, “Did the organization have a written whistleblower policy?” Another asks, “Did the organization’s governing body review this Form 990 before it was filled out?” While nothing in the law requires organizations adopt such policies, it is clear the IRS views them as indicators of good governance.  

Background
On June 14, 2007, the IRS issued a draft of the redesigned Form 990. The proposed changes are intended to increase the transparency of tax-exempt organizations and present the IRS and stakeholders with a realistic picture of entities and their operations. More