IRS releases redesigned Form 990.

• Author: Caplan, Robert M.

The IRS has released a redesigned Form 990, Return of Organization Exempt from Income Tax, for use with 2008 tax returns. The Service sought public comments on the form in 2007 and on the form instructions in the spring of 2008. The final revised Form 990 has been rearranged from the draft form and contains several changes.

According to the IRS, the old Form 990 was no longer compatible with changes in the law and did not reflect the growing size, diversity, and complexity of exempt organizations. This is the form's first redesign since 1979.

The new Form 990 contains tools designed to promote more uniform reporting, and it uses questions and answers to offer assistance and clarification. Some of the new features include a glossary of terms, a sequencing list, a compensation table, and many illustrative examples.

The new Form 990 is effective for 2008 tax years. However, organizations with gross receipts less than $1 million and total assets less than $2.5 million can choose to use either the new 990 or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, for the 2008 tax year. Beginning with the 2010 tax year, the 990-EZ thresholds will be permanently set at less than $200,000 gross receipts and less than $500,000 of assets.

Organizations using the new return must complete all portions of the core form (Parts I-XI). Part IV, a checklist of Form 990 schedules, allows an organization to determine which schedules, if any, are required.

Although much of the information requested on the new Form 990 is not required by federal law, the Service's position is that "good governance and accountability practices provide safeguards to help ensure that the organization's assets will be used consistently with its exempt purposes" (IRS, "Form 990 Redesign for Tax Year 2008 (Filed in 2009): Governance Schedule," www.irs.gov/ charities/article/0,,id=176674,00.html).

The Core Form

Part I of the form presents the organization's key data. It includes questions on the organization's mission, its most significant activities, the number of voting members and independent voting members of the governing body, the number of employees and volunteers, and unrelated business income and tax.

Part V is a statement on other IRS filings and tax compliance. It covers:

* Information returns and withholding;

* Foreign accounts;

* Prohibited tax shelter transactions;

* Contributions received;

* Initiation fees and income from members;

* Personal benefit...