New Form 990 Extreme Makeover

							New Form 990: Extreme Makeover


        Fern N. Zappala, M.P.H, J.D.
              General Counsel
                   ASHP
               March 3, 2008
Disclaimer

 Any views or comments offered today are those of the presenter and should
 not be construed as the position of the ASHP.

 This presentation is designed to provide accurate information in regard to
 the topic covered. It is provided with the understanding that we are not
 providing legal services or advice. If legal services or other assistance is
 required the services of a professional person in your area should be sought.
Objectives for Today’s Webinar

 Raise awareness about the redesigned Form 990
 Discuss implementation dates
 Impact on Form 990EZ and 990-N
 Provide an Overview and Identify key areas in the
 new Form 990
 Suggestions for next steps
What is the Form 990?


   Informational return to the IRS for 501(c) tax
    exempt organizations
   Reports income, expenses, assets, liabilities and
    other information.
   First redesign in over 30 years.
Why a redesigned Form?

Fall out from Sarbanes-Oxley (for-profit sector)

    Scandals in the Tax-Exempt Community
    Changes in the activities of EOs
    Congressional Inquiry on governance
    Justification for tax-exempt status
IRS Principles behind a revised
Form 990

  Enhance transparency for IRS and the Public
   Realistic picture of exempt organization
   Basis for comparing the organization to similar organizations

  Promote tax compliance
   Staying within exempt purpose
   Appropriate Use of assets

  Minimize burden on filing (??)
Implementation and effective dates

 Revised Form 990 issued 12/20/07 by IRS
 Revised Form 990 is for 2008 tax year
                       (2009 filing season)

 IRS Instructions in Spring 2008 (pending)
 Form 990EZ and Form 990-N: relief for
 smaller organizations
3 Year-Transition schedule for smaller
exempt organizations that use Form 990-EZ

2008 tax year:
   - Gross receipts > $25,000 & < $1mil, and
   - Total assets at year end < $2.5 mil.
2009 tax year:
  - Gross receipts > $25,000 & <$500,000,
  - Total assets <$1.5 mil.
2010 and later:
  - Gross receipts >$50,000 &< $200,000, and
  - Total assets < $500,000
E-Postcard: Form 990-N

 Gross receipts < $25,000
        (2010 : threshold increases to < $50,000)

 Simply identifies organization
 Indicates justification for not filing a return
 Electronic filing
 Applies to tax years after 12/31/06
 Available to the public
Overview of Redesigned Form 990

 “Core Form” is 11 pages

 16 Schedules for specific activities

 Expanded opportunity to provide descriptions and
 explanations, tell your story

 Much of the new information is nonfinancial

 Enforcement: $200,000 and/or 5 years in jail
Core Form: Parts I - X

 Part I and II: Summary information and Signature
 block
 Part III: Statement of Program Service
 Accomplishments (describe and explain)
 Part IV: Checklist of Required Schedules
 Part V: Other IRS Filings & Tax Compliance
Core Form con’t: Part VI
Governance, Management and Disclosure

  Organization’s board composition
  Level of Independence
  Governance and management structure
  Changes to governing documents
  Documentation of board and key committees
  Policies
    e.g. whistleblower, document retention, COI, etc.

  Board review of the Form 990
Core form: Part VII:
Compensation of Officers, Directors, Trustees, key
employees and Other HCEs and Independent Contractors
  Current officers, directors, trustees and key employees
  (regardless of compensation)
  Organization’s 5 current highest paid employees with
  >$100,000
  Current compensation to:
    Former officers, key employees, or highest paid employees receiving
     >$100,000 in compensation
    Former directors receiving > $10,000 of compensation
  Top 5 Independent Contractors who received >$100,000
Core Form (con’t)


Parts VIII, IX, X, XI ( financial information is largely
  unchanged)


  Revenue
  Functional Expenses
  Balance Sheet
  Financial Statements
16 Supplemental Schedules

 Designed to gather specific information about
 organization’s activities
 Complete only relevant ones to your
 organization
List of 16 Schedules
A – Public Charity Support        J- Compensation Information

B – Schedule of Contributors      K- Supplemental Info on Tax Exempt Bonds

C – Lobbying Activities           L – Transactions with Interested
                                  Persons
D – Supplemental Financial Info
                                  M – Non-cash Contributions
E - Schools
                                  N – Significant Disposition of Assets
F – Activities outside US
                                  O – Supplemental Info to Form 990
G – Fundraising/Gaming
                                  R – Related organizations
H – Hospitals

I- Supplemental Info on Grants
Possible Next Steps
 Review and become familiar with the
 redesigned form and its reporting
 requirements.
 Review your existing written policies and
 procedures. An opportunity to improve Board
 governance and management practices.
 Be prepared to “tell your story” and describe
 your activities in more scope and detail.
 Consider doing a draft return.
References

 IRS. Available at http://www.irs.gov/eo
 Panel on the Nonprofit Sector. Principles for good
 governance and ethical practice. Available at http://
 www.nonprofitpanel.org. 2007, October.
 Hauge, JC, Herman, ML. Engaging boards in risk
 management: 990 reform may be just what we need.
 Association Law and Policy - ASAE and the Center. 2007,
 August.
 Tenenbaum, J, Hiller, A. Telling the IRS a better story:
 Unveiling of the 2008 form 990. ASAE and the Center.
 2007, December.
Questions/Comments