IRS Form 990 Changes – How do they affect you?

Posted on October 22, 2009 by  
Filed under Board Governance · Tagged: ,

Recent and projected changes to the IRS Form 990 will decrease the minimum size of nonprofit organization that must use the form and will require answers to questions that directly focus on board governance.  Below is a summary of the projected changes in reporting requirements over the next few years and the areas of board governance that will be included on the new form.

IRS FORM 990

The chart below shows who needs to file an IRS Form 990 in the next three years :

Tax Year

Filing Year

 Gross Receipts     (OR)    Total Assets

2008

2009

> $1 million

> $2.5 million

2009

2010

> $500 K

> $1.25 million

2010

2011

> $200 K

> $500 K

 

In Form 990, Part VI, you will be reporting about the following good governance issues:

  1. Number of Voting Board members and Number of Independent Board Members
  2. Do you record minutes for board and committee meetings?
  3. Describe how the board reviewed the Form 990 before it was filed.
  4. Do you have a written conflict of interest statement?  (How do you comply?)
  5. Do you have a written whistleblower statement?
  6. Do you have a written document retention and destruction policy?
  7. Does your CEO compensation have external substantiation?
  8. Are you in a joint venture?  If yes, do you have a written policy to evaluate the joint venture agreement to ensure you’re complying with Federal tax law?
  9. Describe how you make your Form 1023 (original nonprofit application to the Fed government), Articles of Incorporation, By-laws, Conflict of Interest Policy, and Financial Statements available to the public.

In Form 990, Part VII – Show compensation for current board members, top 5 employees, former board members and employees (over $100K).  Show independent contractors (payments over $100K).

IRS FORM 990-EZ

This chart shows who can file Form 990-EZ over the next three years :

Tax Year

Filing Year

   Gross Receipts    (OR)   Total Assets

2008

2009

< $1 million

< $2.5 million

2009

2010

< $500 K

< $1.25 million

2010

2011

< $200 K

< $500 K

 

In Form 990-EZ, Part IV, list Board Members and Key Employees (show compensation, if any).

In Form 990-EZ, Part VI – List 5 highest paid independent contractors.

IRS Form 990-N

File Form 990-N if your Gross Receipts are < $25K. 

Starting in Tax Year 2010, you can file Form 990-N if your Gross Receipts are < $50 K.

RESOURCES

Here is the IRS web site for additional details on these new forms:  www.irs.gov/eo

 DISCLAIMER:  This write-up is meant to be for general information only.  Please continue to consult your CPA for accounting, tax and Form 990 filing advice.

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