Independent Sector will be helping nonprofits do this work. We have posted on our website a guide, What Nonprofits Need to Know About the New Form 990 (PDF), that outlines some of the issues your organization should address before your tax year ends. For additional ideas, join a member conference call on the revised form on Thursday, July 17, from 2:00 to 3:00 p.m. ET. Julie Floch, director of not-for-profit services at Eisner LLP; Frank H. Smith, senior tax manager with RAFFA, P.C.; and Pat Read, IS’s senior vice president of public policy, will share insights about what nonprofits should be thinking about to prepare for the new 990 and 990-EZ. This call is open only to Independent Sector members. Contact the Public Policy Department to participate.

What Forms Should You File?
Your Organization Must File the New 990 in 2009 (for fiscal years beginning in 2008) if:

• You have annual receipts of $1 million or more, or total assets of $2.5 million or more.
• You maintain any donor advised funds.
• You are recognized as a tax-exempt organization under section 512(b)(13) (controlling organizations) or section 509(a)(3) (supporting organizations) .
• You are NOT recognized as a private foundation (as described under section 509(a) of the tax code).  There have not been any changes to the Form 990-PF filed by private foundations.

If your annual receipts are between $25,000 and $1,000,000, you may file the Form 990-EZ in 2009, although some states in which you are required to file a copy of your federal return may require that you file the full Form 990. 

If your annual receipts are under $25,000, you must file the new electronic postcard (Form 990-N).

These thresholds will change for returns filed in 2010 for fiscal years beginning in 2009.  At that time, public charities with annual receipts of $500,000 or more, or total assets of $1.25 million will be required to file the new 990.  The following year (2011), these thresholds drop to receipts of $200,000 and assets of $500,000.

IS Files Comments on Draft Instructions to Form 990
Independent Sector filed detailed comments on June 2 with the Internal Revenue Service on draft instructions for the redesigned Form 990, the primary annual information return for many tax-exempt organizations. IS commended the IRS for its effort to bring greater clarity to the revised Form 990 and to address concerns expressed by the nonprofit community in response to the initial draft Form.The IS comments offered suggestions for clarifying definitions and highlighted opportunities where the IRS can use the instructions to continue its commitment to educating the nonprofit sector. The comments also made specific recommendations on such issues as defining the term “key employees” based on positions, board or committee review of the Form 990 prior to filing, the need for a reasonable delay in applying a new standard on indirect political activities of partners in joint ventures, and the inapplicability of unrelated business activity codes to exempt programs.The IRS released the draft instructions to the revised Form 990 on April 7 and requested comments from the nonprofit community by June 1. The Service will study all comments they receive and incorporate changes into the final instructions that will be released later this year.

Preparing for the New Form 990: Insights from the IRS
IRS officials explained the draft instructions and the redesigned Form 990 during an IS member conference call on April 8. Learn More

IRS Releases Redesigned Form 990
The revised Form 990 includes many of the elements that appeared in the draft version, including a core form and a series of schedules. However, in response to widespread comments from the charitable community and its advisors, the IRS has substantially changed the design and many elements of the Form and the schedules.

Beginning in May, 2009, organizations with gross annual receipts over $1 million or total assets over $2.5 million will be required to file the new Form 990 for fiscal year 2008 activities.

Independent Sector is pleased that the revised Form allows organizations to describe their exempt purpose and accomplishments on the first two pages of the Form, and that the IRS has made many of the improvements we requested in financial, compensation, and governance information, as well as in other specific schedules. We believe the revised Form will facilitate accurate, complete, and consistent reporting by exempt organizations, will be easier for most entities to complete, and improve public understanding of how organizations operate. Independent Sector considers the new Form 990 a major step forward in accomplishing the nonprofit community’s goals of accountability and transparency.

Core Form
The core form provides summary information about an organization’s mission, finances and fundraising expenses, and includes sections with new questions on governance, compensation, and expenses. Several current requests for attachment of additional information have been deleted and others have been standardized on the new schedules. Trigger questions on the core form direct organizations to fill out more detailed schedules.

16 Schedules
A few schedules include familiar questions or attachments from the old Form 990 that have been moved or rearranged, while other schedules are completely new. Most charitable organizations would complete Schedule A, which now includes more detailed questions about how the filing organization qualifies as a public charity. Schedule B still covers contributors. The other schedules are: political campaign and lobbying activities (Schedule C); supplemental financial statements previously disclosed through attachments (Schedule D); private schools (Schedule E); activities outside of the U.S. (Schedule F); fundraising activities (Schedule G); hospitals (Schedule H); grants and other assistance (Schedule I); supplemental compensation information (Schedule J); tax-exempt bonds (Schedule K); loans and transactions with interested persons (Schedule L); noncash contributions (Schedule M); information on liquidation, termination or dissolution (Schedule N); supplemental information for responses (Schedule 0); and related organizations (Schedule R).

Background on Draft Form 990
In June, the IRS released a draft of a major revision of the Form 990. Independent Sector filed detailed comments (PDF) on the draft form that support the goals of the IRS, but which make many recommendations for improving the implementation and substance of this informational return. IS conducted seven conference calls for members this summer to hear concerns and obtain suggestions on the draft form. We then posted draft comments for member review and response in early August, which were incorporated in final comments filed on September 14.The IRS has not proposed changes to the Form 990-PF.

Last updated: July 2, 2008