All tax-exempt organizations are required to file an annual IRS information return (Form 990, 990-EZ, 990-PF, 990-N, etc.) on the 15th day of the fifth month following the end of their fiscal year. These information returns are one of the most important ways charities share information about their organizations. Much more than just a financial document, the Form 990 is the primary source of information about an organization's governance, operations, and programs available to government regulators, the press, donors and supporters, and the public at large.
Public input on Form 990 improvements sought by IRS committee
In early 2015, the Exempt Organizations Subcommittee of the IRS Advisory Committee on Tax Exempt and Government Entities (ACT) sought public input on how the IRS can improve the Form 990. The Subcommittee’s current project focuses on improving and enhancing the effectiveness of the redesigned Form 990, which the nonprofit community has been using since the 2008 filing year. After compiling and reviewing responses received to their most recent public survey, the group plans to hold a public hearing on the results in mid-June 2015.
President's FY2016 budget would require all groups to e-file
President Obama's budget proposal for fiscal year 2016, released on February 2, 2015, would once again require all tax-exempt organizations who must file Form 990 series returns (including the Form 990-T or Form 8872) to do so electronically or be subject to a $5,000 penalty. The proposal would grant transition relief of up to three additional years for smaller organizations and for organizations to whom e-filing presents an undue hardship. The proposal also would give the IRS authority to delay the effective date for Form 990-T filers for up to three tax years. It is unclear whether Congress will adopt this proposal.
Uses of the Form 990
The Form 990 provides the public with financial information about a nonprofit organization, and it is often the only public source of such information. The form is also used by government regulators to prevent organizations from abusing their tax-exempt status. Further, organizations are required to provide copies of its three most recent Form 990s to anyone who requests them, whether in person, or by mail, fax, or e-mail. Additionally, requests may be made via the IRS itself.
Changes to the Form 990 series
In June 2007, as part of a change passed by Congress, the IRS revised the Form 990 to require significant disclosures on corporate governance and boards of directors. These new disclosures became required for all nonprofit filers beginning in the 2009 tax year, with more significant reporting requirements for nonprofits with over $1 million in revenues or $2.5 million in assets. In addition, certain nonprofits are subject to more comprehensive reporting requirements, such as hospitals and other health care organizations (Schedule H). The Form 990 disclosures do not require, but strongly encourage, nonprofit boards to adopt a variety of board policies regarding governance practices. The new regulations also mandate that a nonprofit organization that does not file annual returns or notices for three consecutive years will have its tax-exempt status revoked as of the due date of the third return or notice. There is a streamlined process to reinstate organizations that have lost their tax-exempt status.
2011 Revised Regulations to Form 990
On September 8, 2011, new IRS regulations (T.D. 9549) implementing another redesigned Form 990 went into effect. Among other things, these regulations 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.
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