With tax season coming up, the IRS is reaching out to tax-exempt organizations and preparers to spread the word about the revised Form 990 and the extra information it will require.
The IRS has redesigned the Form 990 to reflect significant changes that have taken place in the tax law and the nonprofit sector.
The result is an entirely new form for tax-exempt organizations to use to communicate with the IRS and the public.
Specifically, the new 990 offers tax-exempt organizations the opportunity to explain their work in detail and can be a positive asset in reaching out to the public. To properly fill out the new form, organizations need to start planning now for the 2008 tax filing.
Far More Than Finance
Extensive input from the tax-exempt community helped to ensure that the new 990 reflects the diversity and complexity of their operations today. In addition to financial reporting, the new form requires organizations to provide more information about operations, internal policies and practices than ever before, including foreign activities, executive compensation, governance and fundraising. These new sections offer organizations the chance to provide better information about mission, programs and goals.
The new 990 comprises a core form, plus 16 schedules. Organizations complete only the schedules that apply to them. But to fill out the form completely, accurately and on time, organizations may need or desire input from program staff and board members in ways they didn't before. Organizations may also want to re-assess if their internal systems need to be updated to reflect the new reporting requirements.
Improved Compliance and Transparency
The new 990 uses standardized schedules and enhanced reporting to provide critical information about tax compliance. As a result of this standardization, information on organizational activities, such as fundraising or grant-making, can be more easily compared across organizations.The new form provides more opportunities to explain activities and provide context for financial and operational information.
The new 990 also makes it easier for the public to find specific information about an organization-a key advantage in today's increasingly transparent world. By providing a more complete, logical picture of activities, organizations will be able to use the form to demonstrate to the public, donors and other key stakeholders how they support their mission and goals.
The Time Is Now
Tax-exempt organizations must file the new 990 for the 2008 tax year if they have either gross receipts of $1,000,000 or more, or total assets of $2,500,000 or more. There is a three-year phase-in period for most smaller organizations.
The new form may require additional or different support from outside preparers, so it is important for organizations to talk to their preparers now to determine what they will need to do to file the new 990.
Specifically, many organizations that wish to change internal procedures related to the new 990 have until Dec. 31, 2008, to do so for the 2008 tax year.
The IRS wants every tax-exempt organization to get the information they need to file completely, accurately, and on-time. To help with the transition, the IRS created tools and resources that are available at www.IRS.gov/charities and www.stayexempt.org. Tax-exempt organizations and preparers also can stay informed of the latest news by subscribing to the "EO Update" newsletter, available on the IRS Web site.
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