IRS Releases Dramatically Redesigned Form 990 for Public Comment

July 9, 2007 — 1,415 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

On June 14, the IRS released a substantially revised draft Form 990, Return for Exempt Organizations, which will likely be the basis for the Form 990 used by organizations beginning with the 2008 tax year (that is, for returns filed in 2009). The form’s revisions reflect the IRS’s continued focus on issues of transparency, governance and the public accountability of tax-exempt organizations.

Unlike its predecessor, the revised form includes a summary page that provides a snapshot of key operational information about the organization, including key financial, compensation, governance, operational and identifying information. The remainder of the 10-page core form, which must be completed by all filers, concentrates on the general financial, operational and governance issues generally applicable to most tax-exempt organizations. The revised form relies more heavily on activity specific schedules - there are 15 of them - that are required to be completed only to the extent that an organization engages in the subject activity. These include schedules that focus on public charity status, political and lobbying activity, fundraising and gaming, foreign activities, compensation, tax-exempt bonds, noncash contributions and related organizations.

According to the IRS’s news release, the revised form is intended to enhance transparency, promote tax compliance and minimize the burden on the filing organization (i.e., make it easier to complete). Noting that the form has not been significantly revised since 1979, IRS Exempt Organizations Division Director Lois Lerner commented that the old form was “illogical, inconsistent, difficult to fill out and difficult to understand” and compared the 15 draft schedules with 36 potential attachments under the current version.

The IRS has asked for comments on the draft form by September 14, 2007. In particular, it is seeking comments and suggestions on a number of specific issues, including (1) whether the current filing thresholds should be raised for certain organizations (e.g., from $25,000 to $50,000); (2) whether the IRS should preclude group rulings; (3) whether adequate care has been given to privacy concerns; (4) additional items regarding governance and management best practices; and (5) defining relatedness for compensation and other purposes, including arrangements in joint ventures and with for-profit subsidiaries.

The revised Form 990, schedules, instructions and additional background information are available at: http://www.irs.gov/charities/article/0,,id=171216,00.html.

If you have any question about the issues raised in this publication, please contact any of the following attorneys from our Tax-Exempt Organizations Practice:

Celia Roady 202.739.5279 [email protected]
Tomer J. Inbar 202.739.5843 [email protected]
Carolyn O. Ward 202.739.5988 [email protected]
Ann K. Batlle 202.739.3718 [email protected]
Drew Porter 202.739.5611 [email protected]

About Morgan, Lewis & Bockius LLP
Morgan Lewis is a global law firm with more than 1,300 lawyers in 22 offices located in Beijing, Boston, Brussels, Chicago, Dallas, Frankfurt, Harrisburg, Houston, Irvine, London, Los Angeles, Miami, Minneapolis, New York, Palo Alto, Paris, Philadelphia, Pittsburgh, Princeton, San Francisco, Tokyo, and Washington, D.C. For more information about Morgan Lewis or its practices, please visit us online at www.morganlewis.com.

IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. For information about why we are required to include this legend in emails, please see http://www.morganlewis.com/circular230.

Morgan, Lewis & Bockius LLP