IRS Finalizes Tax-Exempt Form 990 Instructions

The Internal Revenue Service has released its revised instructions for the redesigned Form 990 that tax-exempt organizations must submit.

The latest version reflects a greater level of detailed reporting than the IRS has been requesting. Some organizations, such as the National Football League, have balked at the increased level of reporting on compensation, which requires them to report the salaries of executives earning more than $150,000 (see NFL Requests Exception to Tax Disclosures). The IRS received comments and requests for changes in a draft version of the instructions from a number of organizations, including the American Institute of CPAs (see AICPA Suggests Changes to Tax-Exempt Form Instructions).

The IRS made some changes to the draft version, altering the definition of "key employee" to restrict the range of executives whose salaries must be reported and decreasing the instances in which organizations must report transactions with the relatives of major contributors, but the instructions remain largely the same as in the draft.

"These instructions are the final step in a tremendous effort to bring the Form 990 up to date and to reflect the diversity and complexity of the tax-exempt community," said IRS Commissioner Doug Shulman in a statement. "The revised form will give the IRS and the public a much better view of how exempt organizations operate. The improved transparency provided by these changes will also benefit the tax-exempt community."

Form 990 had previously not seen major revisions since 1979. The IRS also expects to release instructions for the short form, 990-EZ. As part of the phase-in of the redesigned Form 990 over a three-year transition period, many organizations not eligible to file the Form 990-EZ for 2007 will be eligible to file Form 990-EZ or Form 990 for 2008.