IRS information returns (the Form 990 series) are one of the most important ways charities share information about their organizations. The revised Form 990 is much more than a financial document -- it’s the primary source of information about your governance, operations, and programs available to government regulators, the press, and the public.
- Updates for tax year 2012
- On July 9 the IRS posted an early release draft of Form 990 for tax year 2012. Changes to the Form 990 include instructions to list fees for service paid to non-employees if the amounts exceeds 10% of total expenses and an option to provide further explanation in Schedule O about how an organization makes its forms available for public disclosure. Part XI, “Reconciliation of Net Asset,” has also been expanded to include net unrealized gains or losses on investments, donated services and use of facilities, investment expenses and prior period adjustments.
- The IRS also posted an early release draft of Schedule A
“Public Charity Status and Public Support” for use with Forms 990 for
tax years beginning in 2012. The IRS also released early drafts of Schedule F “Statement of Activities Outside the United States” and Schedule J
“Compensation Information.” Draft Schedule F has removed the
requirement to complete Part II, “Grants and other Assistance to
Organizations Outside the United States” if the organization did not
provide more than $5,000 in grants or other assistance to organizations
outside of the United States. Draft schedules A and J do not contain any
changes from the 2011 schedules.
- The IRS requests comments on the draft schedules to be submitted on the “Comments on Forms and Publications” page of the IRS website, or via email to firstname.lastname@example.org.
- The IRS seeks solicited public
comments concerning Form 990 and its schedules, asking how to minimize
the burden of collecting the information for respondents, and enhance
the quality and clarity of the information being provided, among other
issues. The comment period closed on May 16, 2012. Read the announcement.
- The Treasury Inspector General for Tax Administration (TIGTA) released on May 3, 2012 a report on the IRS’ procedures for identifying and notifying organizations that are facing revocation of their tax exempt status for failure to file a Form 990 for three consecutive years, as mandated by the Pension Protection Act.
- The IRS has updated its FAQs regarding the automatic revocation program. As a result of the Pension Protection Act, nonprofit organizations who fail to file a Form 990 for three consecutive years will have their tax-exempt status automatically revoked and must apply with the IRS for reinstatement.
Form 990 Final Regulations
The IRS released final regulations (T.D. 9549) implementing the redesigned Form 990, “Return of Organization Exempt From Income Tax,"on September 7, 2011. The final rules are effective Sept. 8, and among other things, allow for new threshold amounts for reporting compensation, modify the scope of organizations subject to information reporting requirements upon a substantial contraction, and eliminate the advance ruling process for new organizations.
Form 990-N filers must report changes in writing
The Internal Revenue Service (IRS) released a letter (2011-0078) on December 30, 2011 stating that if a tax-exempt organization files the Form 990-N e-postcard, the organization must report any changes to its name, structure, or operations in writing to the Exempt Organizations Determination office in Cincinnati, Ohio.
Learn more about the Form 990 filing requirements.
Failure to file
Beginning with tax filings for 2007, any organization that fails to file the required information return for three consecutive years faces automatic revocation of its tax-exempt status. The IRS released on June 8, 2011, a list of organizations whose tax-exempt status has been revoked for failure to meet the filing threshold.
In connection with the announcement and publication of revocations of exempt status, the IRS issued the following guidance:
The Chronicle on Philanthropy has created a searchable revocation list database.
Revocation of Tax-Exempt Status
- Organizations on the revocation list are no longer exempt from federal tax and must pay corporate income tax on annual revenue.
- Contributions made to revoked exempt organizations are no longer tax-deductible.
- Grants made by private foundations to nonprofits that have lost their exempt status are subject to an excise tax.