The Internal Revenue Service has issued an updated version of Form 990, which charities are required to file annually to retain their tax-exempt status, and is giving small tax-exempt organizations time to adjust.

The IRS released a draft of the redesigned form in June and received about 700 public comments that led to the final redesign. The final version includes a core form and a series of schedules. The organization filing the form can describe its accomplishments and mission upfront. There are places throughout the form where the organization can explain its activities.

The IRS has made changes to the summary page, governance section and various schedules, including those relating to executive compensation, related organizations, foreign activities, hospitals, non-cash contributions and tax-exempt bonds.  A checklist of schedules was added. The new form will be used for the 2008 tax year (returns filed in 2009). The IRS plans to release instructions in early 2008.

Smaller organizations will be allowed to file the Form 990-EZ instead of the Form 990. For the 2008 tax year, organizations with gross receipts over $1 million or total assets over $2.5 million will be required to file the Form 990. For the 2009 tax year, organizations with gross receipts over $500,000 or total assets over $1.25 million will be required to file the Form 990. The filing thresholds will be set permanently at $200,000 gross receipts and $500,000 total assets beginning with the 2010 tax year.

Also, starting with the 2010 tax year, the IRS will increase the filing threshold for organizations required to file Form 990-N (the e-postcard) from $25,000 to $50,000. For more information, go to http://irs.gov/eo.

 

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