Irs Form 990 N - DOC by hxw64911


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									 Community Economic Development Law Project
                                  100 N. LaSalle St., Suite 600, Chicago, IL 60602

CEDLP provides pro bono legal services and education to community-based
organizations and entrepreneurs who meet our eligibility requirements. To help our
clients stay informed, we are distributing this information alert. Occasionally, we will
issue these alerts on topics of interest to our clients. If you have topics you would like us
to address, let us know. Contact us at or 312.939.3638.

Organizations with gross revenues not exceeding $25,000, file the 990-N, information
return. All others file Form 990 or 990EZ. The IRS has completely redesigned Form
990 for the first time since 1979. There is now a 37-question checklist that determines
which of 16 supplemental schedules the organization will have to file in addition to the
main form.

In this NFP ALERT we provide a summary of some of the changes that will affect
exempt organizations and identify when an organization has to begin using the new

Regardless of the organization’s gross receipts, the policies and procedures explained in
this ALERT will help your organization comply with the best practices expected by the
government, donors and funders.


Part VI of the new Form 990 requires the organization to provide the following

     1. A description of the composition of the board of directors (for example- the
        number of voting members of the board, the number of voting members who are
        uncompensated, whether any directors or officers have a family or business
        relationship with any director, officer or key employee, etc.).
     2. Identify whether the organization has the following policies;

                    a.       Conflicts of interest and how compliance is monitored and enforced.

                    b.      Whistleblower protection,

                    c.       Document retention and destruction.

The Community Economic Development Law Project is a project of the Chicago Lawyers’ Committee for Civil Rights Under Law, Inc.
               d.   Compensation policy

   3. Are there any family or business relationships that exist between the organization
      and its officers, directors, trustees or key employees?
   4. Did it make any significant changes to its organizational documents (e.g., articles
      of incorporation, bylaws) since it last filed Form 990?
   5. Are minutes taken during meetings of its board of directors that document actions
   6. Do members of the board of directors review the filled-out Form 990 prior to it
      being submitted to the IRS?
   7. Does the organization provide copies of the following documents, if requested?

               a.    Form 1023

               b.    Form 990

Although, most of these questions are not required by federal tax laws, the IRS believes
that the existence of an independent board of directors with well-defined policies and
procedures increases the likelihood that an organization is operating in compliance with
federal tax law.

CEDLP recommends that all organizations adopt these policies and procedures before
December 31, 2008.


The new form requires the organization to describe how it determines staff compensation
and report the number of people receiving more than $100,000 in compensation. The
IRS will look to see if compensation decisions are approved by independent members of
the board of directors, if the organization compared its compensation practices and pay to
other similarly sized organizations, and if the organization documented (in writing) its

The organization has to list all current officers, directors, trustees and key employees on
the new Form 990 regardless of compensation and identify the number of independent
members on the board. It must identify all individuals, including independent
contractors, who receive more than $100,000 in total compensation.


Schedule M requires a detailed reporting of any non-cash charitable contributions. The
new form requires non-cash contributions to be listed by type. For example: Art, Books,
Clothing and Household Goods, Cars, Stocks, Real Estate, etc. The organization must
explain how it determined the value of the contribution for inclusion in its revenues.
 Schedule M requires the organization to describe its gift acceptance and gift tracking
policies. Finally, the organization has to report any contribution that is subject to an
agreement not to dispose of it for at least 3 years and which is not used for exempt
purposes by the organization.

4. EFFECTIVE DATES AND FILING RELIEF - There is a graduated transition
period for using the new 990.

2008 returns filed in 2009

       If the organization has gross revenue under $25,000, it must file the new IRS
Form 990-N.

         If the organization has gross annual receipts between $25,000 and $1 million, and
total assets below $2.5 million they may file the 990 EZ or the new 990

        All other organizations must file the new 990.


2009 returns filed in 2010

      If the organization has gross revenue under $25,000, it must file the new IRS
Form 990-N

        If the organization has gross receipts between $25,000 and $500,000, and assets

$1.25 million, they may file the 990 EZ or the new 990

        All other organizations must file the new 990.


Filing thresholds are pe rmanently set for 2010 returns filed in 2011.

        Organizations with assets under $50,000 must file the 990-N.

       The 990 EZ is available for organizations with gross receipts between $50,000
and $200,000, and assets below $500,000, but they may file the new 990.
       All other organizations must file the new 990 form.


The information contained in this ALERT is not a comprehensive guide to the changes
and should not be construed as legal or tax advice. For additional information or legal
guidance, please contact CEDLP or the attorney or tax advisor you normally consult.

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