IRS Issues Revised Tax Return Form 990 for Non-Profits and Tax Exempt Organizations; Changes Effective for 2008 Tax Year

The Internal Revenue Service (IRS) has released a new version of Tax Return Form 990 for public charities and other tax exempt organizations that must be used in tax filings, beginning in the 2008 tax year.

Form 990 has not had a major revision since 1979 and has failed to keep pace with the changes in the law and the size, diversity of the tax exempt sector. As a result, the current form doesn’t meet the IRS tax compliance standards or the transparency needs of the states, public, and communities served by these organizations.

The new form requires detailed information about executive compensation, related group organizations filing together and foreign activities as well as modified schedules for hospitals, non-cash contributions, tax exempt bonds and financial statements. The return itself contains an 11-page core form with 16 supplemental schedules.

Because of the transparency now required of all tax exempt organizations, some groups may need to modify their organizations in order to meet the enhanced compliance standards.

The IRS is allowing some phase-in filing for small organizations over the next three years (2008-2010) to ease the transition to the new. In addition, the IRS is allowing a one-year phase in for organizations filing Schedule H (hospitals) and Schedule K (tax exempt bonds) as long as certain information about hospitals facilities and bond issues are included in the 2008 tax return.

With the complexity of the new Form 990 and its accompanying schedules, we advise non-profits and tax exempt organizations to prepare now to meet the new reporting requirements. Our non-profit group professionals are already working with tax exempt organizations to help them make the necessary modifications.

For more information about the Form 990 redesign, contact Robert Hienz at 504-837-5434 or rhienz@hienzmacaluso.com.