Are You Ready for the New 990?

by Jeffrey J. Fanger

The 2008 tax year is the first year that all nonprofits will be required to file IRS Form 990. Are you ready?

Even if you have been filing this form for years, you should be aware that the IRS has revised Form 990 to expand the data collected, with an eye toward developing new compliance initiatives. There is even discussion of increasing penalties for filing incomplete and inaccurate forms.

While the revised Form 990 has been available since late 2007, the IRS only released the revised instructions in August, and then only in draft form. Click here for a pdf of the instructions.

There is some good news, if only for one year. More nonprofits will qualify to file Form 990-EZ in 2009 (for 2008 tax year), because the IRS raised the limits for gross receipts and total assets. These limits are set to drop by 50% again in 2010, and even more the following year. While Form 990-EZ is mostly unchanged, some schedules from the new 990 will replace previous attachments. Instructions for Form 990-EZ were released on September 10 and can be found here: 990-EZ Instructions

If you are unsure of which form your organization will be required to file, you should contact your accountant or adviser, or call Fanger & Davidson, LLC, well in advance of tax time. Our firm advises non-profits and works to resolve issues with the IRS as well as to form non-profit organizations and prepare 1023 applications. It is our general policy to work cooperatively with accountants and financial advisors. Although we do not prepare 990 filings or other annual tax filings, we will be happy to assist you in locating an accountant that is experienced in non-profit 990 filings. Our office is happy to provide you legal representation with respect to non-profit tax issues and other general non-profit and business legal needs. If you would like to learn more about our corporate counsel programs for your business please contact us.

next month – Avoid Setting Off IRS Red Flags