The IRS substantially redesigned Form 990, Return of Organization Exempt from Income Tax, beginning with tax year 2008. After the 2008 filing season, the IRS has expanded and clarified the instructions and reporting requirements.
Here are a few highlights of the most common changes nonprofits should know for tax year 2009. Keep in mind November 15 is a significant deadline for not-for-profit organizations, including those with fiscal years ended June 30. The upcoming November 15 is the deadline for fiscal year-end nonprofits to either file their 2009 tax year returns or an application for extension of time to file. It is also the final filing deadline for nonprofits with calendar year-ends who have previously applied for extensions.
Governance – The IRS is asking for information concerning whether and how all members of the governing body reviewed the Form 990 prior to filing. In order to mark "Yes" to this question, a copy of the Form 990 must be provided to each voting member of the organization's governing body, in either paper or electronic form. The IRS also wants to know about the review process (including who, when and how the Form 990 was reviewed).
Statement of Revenue – All program service and miscellaneous revenues should identify a business activity code from a designated list. The code should relate to the activity producing the income, not the activities of the organization. Please note: The use of these codes does not imply that the activity is unrelated to the organization's exempt purpose.
Special Events – The IRS has asked for more detail concerning the types of expenses for special events, such as fundraisers and gaming activities. Expenses should be summarized as they relate to the following categories: facility and rental costs, food and beverage (catering), entertainment and other direct expenses.
There are some things nonprofits can do to prepare for the upcoming 2009 filing season:
Review the Form 990-EZ filing amounts to determine whether the simplified form can be filed instead of the revised Form 990 for the 2009 tax year.
Become familiar with the form, schedules and instructions by reviewing the IRS's website.
Identify those schedules you may be required to complete, and their related organizations, officers, directors, trustee and key employees, which require special reporting.
Review Part VI, Governance, Management and Disclosure, to become familiar with changes and clarifications on governance reporting.
For tax years beginning on or after Jan. 1, 2010, a small business health care tax credit is available. The credit is worth up to 35 percent of a small business' premium costs and helps small businesses, including tax-exempt organizations, afford the cost of health coverage for their employees.
The credit is available for employers who pay at least half of the cost of single coverage for their employees and is subject to phase-outs. Tax-exempt organizations will claim the credit on a revised Form 990-T, even if the organization does not owe tax on unrelated business income.
For more information, including forms, instructions, publications and FAQs, go to www.irs.gov or the IRS micro site www.stayexempt.org.
Alicia Cerruti, CPA, is a member of Pisenti & Brinker LLP's not-for-profit service team. In addition to providing tax services for individuals and businesses, she provides extended advisory and compliance services for a variety of not-for-profit organizations. She can be reached at 707-559-7328 or firstname.lastname@example.org.