Firms claim redesigned form for nonprofits is time- and labor-intensive

Aside from the headaches of having to fundraise during a time when more donors are keeping their checkbooks closed, now not-for-profits have to contend with a new Form 990 - one that many say is tedious, time-intensive and generally more challenging.

CPAs who work with nonprofit clients have been doing some handholding and prep work with them - especially the larger organizations - on how to handle the revised version of the form, which was first issued in 2007. Smaller organizations - those with gross receipts of between $500,000 and $1 million - will be required to file the new 990 beginning next tax year.

According to the Internal Revenue Service, the form had not been revised since 1979, and was created to be consistent with their guiding principles of "transparency, compliance and burden minimization." The old form failed to recognize changes in tax law and the increasing size, diversity and complexity of the nonprofit sector.

While most CPAs will agree that transparency and compliance have been increased with the issuing of the new form, the burden has not been minimized.

"With all due respect to the IRS, they should not make those statements with a straight face, because there is no group of nonprofit executives in America they could say that to without being laughed out of the room," said Michael Batts, founder and managing shareholder of Orlando, Fla.-based Batts, Morrison, Wales & Lee, a firm specializing in nonprofit clients. "There might be some very valid reasons for the expansion of the new 990, but to say it has streamlined or minimized the burden on the organization that's filing is a preposterous statement."

WORK = TRANSPARENCY

However, minimizing doesn't mean reducing, according to Lois Lerner, director of exempt organizations for the IRS. "It means, in the context of what we're developing, let's figure out a way to create the least amount of burden to still meet the transparency and promote compliance goals that we have."

Lerner recognized that the change will have some organizations doing more under this form than others, yet points out that there is a three-part phase-in period - according to size - to help these groups transition. In this first year, only the largest organizations are responsible for the form.

"I'm not surprised that people are saying, 'Boy this first go-around is really a lot of work we didn't have to do before,'" Lerner said. "But I think once they've done that, next year for the next organizations, it will be simpler because they will have the systems in place."

The new version includes a core form of 11 pages and up to 16 schedules, or additional questionnaires to fill out depending on how a previous answer is addressed. Organizations complete only the schedules that apply to them.

"The 990 was overhauled tremendously," echoed Tene Thomas, a CPA and principal at McConnell & Jones LLP in Houston. "To me, this can be viewed as a tool to promote the organization's mission, their accomplishments, their programs, so that's good. But minimizing the burden, that's where the controversy is. My question is, minimizing the burden to whom?"

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