IRS Has Issued the Redesigned 2008 Form 990

In December 2007 the IRS released the redesigned 2008 Forms 990 and 990-EZ to be filed in 2009. The current form length for a 990 is 9 pages plus Schedule A and B for 501(c)(3) groups there are 18 possible pages. The 2008 Form 990 is 11 pages plus schedules A through R added as needed for more detailed disclosure for a total of 48 possible pages.

One positive development for smaller groups is that the new 990 implementation will be phased in and the 990-EZ filing threshold will be raised. During the graduated transition period smaller organizations will be allowed to file the Form 990-EZ instead of the Form 990. For the 2008 tax year (returns filed in 2009), organizations with gross receipts over $1.0 million or total assets over $2.5 million will be required to file the Form 990. For the 2009 tax year (returns filed in 2010), organizations with gross receipts over $500,000 or total assets over $1.25 million will be required to file the Form 990. The long-term Form 990 filing thresholds will be $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 the 2010 Form 990-EZ the filing range will be gross receipts of $50,000 to $200,000. The Form 990-EZ will not be allowed for any organization that maintains any donor advised funds or which has a controlled for-profit subsidiary.

In some cases the thresholds for disclosure of information have increased. Disclosure of individual compensation, outside of key employees, will now only be required for employees or independent contractors over $100,000 instead of $50,000 under the current rules. But this is complemented with far more detailed disclosure for all listed employees compensated $150,000 or more.

There are many more governance related questions including if there is a written whistleblower policy, document retention and destruction policy, and annual conflict of interest disclosure for officers, directors and key employees. Disclosure is required describing the process for determining compensation of the top management person. A disclosure is required on public availability of Forms 1023 (or 1024), 990, 990-T, governing documents, conflict of interest policy and financial statements. If the organization is audited it must disclose if it has a committee that oversees the process. There is also a disclosure of the process used to review the Form 990 prior to filing including a question asking whether the governing body was provided a copy of the form 990 prior to filing. For many of the questions mentioned above the IRS requests a narrative describing how the policy is, or is not, implemented.

There are also new numbers required such as the estimated number of volunteers, number of volunteer hours devoted to lobbying, number of 1099s filed, number of W-2s filed, and the number of independent voting members of the governing body.

Many of the above areas have been the subject of Wegner LLP management letter comments and suggestions in the past three years. We have sample policies and descriptions giving background available on some of these new 990 disclosures.

We recommend that all organizations that will be filing Form 990 take time to review the form in detail so that they can consider adopting policies and gathering information as needed to file a complete and accurate return. We estimate that our preparation time and the cost to you may as much as double depending on how many of the new disclosures are applicable to your organization. The more prepared you are to provide information the less time will be required of us, reducing your cost and likely improving the quality of the Form 990. The draft 990 is available at www.irs.ustreas.gov under the charities and non-profits tab.

If you have questions please contact your relationship manager, or Bruce Mayer at (608) 442-1939 or bruce.mayer@wegnercpas.com.