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Significant Changes For 2009 Form 990
Lior Temkin, CPA - Senior Manager, Tax Practice
Now that we all survived the first year’s filing of the new Form 990, we have to think about the 2009 tax filing. The IRS has issued the final 2009 versions of Forms 990 and 990-EZ, as well as their instructions. The IRS has also provided a detailed explanation of significant changes to the forms. As you will note below, these changes were issued mostly to clarify some questions that arose due to confusion over the 2008 instructions. As we all know, Form 990, Return of Organization Exempt From Income Tax, was extensively revised for 2008. The new Form 990 is designed to promote more uniform reporting by exempt organizations, and it uses questions and answers to offer assistance and clarification. Some of the new features include a glossary of terms, a sequencing list, a compensation table and many illustrative examples. Based on the IRS’s website, the changes to the 2009 form include • The filer must report significant changes in program services in Part III of the form (Statement of Program Service Accomplishments), rather than in a letter to the IRS’ Exempt Organizations Determinations office.
• Part IV of the form includes more-detailed trigger questions to help the filer determine whether it needs to complete various parts of Schedule D, Supplemental Financial Statements. Part IV also explains how revenues or expenses from foreign investments affect whether the filer meets the $10,000 filing threshold for Schedule F, Statement of Activities Outside the United States. • The form clarifies that the filer must report the number of its employees reported on Forms 1099, 1098, 5498, W-2G and W-3 by its reporting agents. It also clarifies that, if two officers, directors, trustees or key employees of the filer serve in similar positions with another taxexempt organization, that involvement does not create a reportable business relationship between the two. • The filer must report significant changes to its organizational documents on its Form 990, Part VI, and in Schedule O, Supplemental Information to Form 990, rather than in a letter to EO Determinations. • Part VI of the form describes the conditions the filer must meet to answer Yes when it emails board members a link to its Form 990 and also explains when a filer may check the box for Another’s website. The current five highest compensated employees that must be reported do not include officers, directors, trustees or key employees. • Part VII of the form clarifies that the key employee responsibility test may be met at any time during the tax year and that if a person is a key employee for only part of the tax year, the filer must report that person’s entire compensation for the calendar year ending with or within the tax year. Part VII also explains how compensation paid by common paymasters and other reporting and payroll agents should be reported on the form. • Schedule A, Public Charity Status and Public Support, explains that the IRS does not update records on a filer’s public charity status based on a change made on Schedule A. The filer may submit a request for a determination letter on its new public charity status to the EO Determinations office. • Schedule B, Schedule of Contributors, explains that the filer should specifically identify a donor, rather than reporting the donor as anonymous, if the filer knows the donor’s identity. • Schedule D, Supplemental Financial Statements Parts XI-XIII, clarifies that if the filer was included in consolidated financial statements (not in separate financial statements), completing Parts XI-XIII is optional. • Schedule K, Supplemental Information on Tax-Exempt Bonds, as previously announced, organizations required to file Schedule K must complete all parts of Schedule K for the 2009 tax year. Most tax-exempt organizations must file an annual information return with the IRS. Form 990 must be filed by any organization that is exempt from tax under IRC § 501(a) that has total assets of $1.25 million or more at the end of the tax year or has gross receipts of $500,000 or more. Organizations with smaller gross receipts and assets can still choose to file Form 990-EZ, but we recommend that these organizations start looking into the requirements in filing the new form as they will sooner or later be required to file the much larger and more extensive form.
As a reminder, in 2010 (filed in 2011 or 2012) if an organization has total assets of $500,000 or more at the end of the tax year or has gross receipts of $200,000 or more, they will be required to file the new form. If your organization will be required to file the new form in the next couple of years, this is a good time for you to start getting ready for the change. Lastly, organizations with gross receipts under $25,000 can still choose to file Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. An organization that fails to file an annual return or notice for three consecutive years, as required by federal law, will lose its tax-exempt status. For more information, or if we can be of assistance to you, please do not hesitate contact one of SingerLewak’s Nonprofit Partners:
Stephen P. Carter - Silicon Valley SCarter@singerlewak.com Jeff Holt - Los Angeles JHolt@singerlewak.com
Lewis Sharpstone - Los Angeles LSharpstone@singerlewak.com Rob Schlener - Orange County RSchlener@singerlewak.com