Author: Matthew O. McDonald, CPA/CFF, CFE
A review of the changes to the Form 990 may be appropriate as tax practitioners move their focus on to exempt organization tax returns. The 990 only has two changes to the form itself:
- Part IX – Statement of Functional Expenses – A breakdown of fees paid to non-employees is now required. These fees would include management, legal, accounting, lobbying, professional fundraising, investment management, and other fees. If other fees exceed 10% of total functional expenses, that amount will need to be further clarified in Schedule O.
- Part XI – Asset Reconciliation – The return provides spaces for net unrealized gains (losses) on investments, donated services and facilities, investment expenses, and prior period adjustments. These amounts in prior years would have been required to be documented in Schedule O.
That was the good news about the changes to the Form 990. Unfortunately, the Internal Revenue Service was a little more prolific in clarifying the instructions to the Form 990 and related schedules along with some minor changes to parts of the related schedules. If any of the following circumstances fit your organization (and most likely, not all of them will), consider reviewing the instructions and the schedules for the latest clarifications and nuances from the IRS:
- Foreign Grants
- IRS Filings and Tax Compliance
- Independent Board Members
- Delegation of Management Duties
- Clarification of monetary support for Part 1, line 11h, column (vii)
- Emphasis on reporting of contributions
- Removal of the Reconciliation of Net Assets from Form 990 to Audited Financial Statements (now on the Form 990)
- Reporting of aggregate grants from donor advised or other similar funds
- Requirement of providing text of any disclosure for uncertain tax positions included in financial statements
- Changes in Definitions
- Changes in reporting of grants/assistance to foreign organizations
- Ability to report as a facility reporting group
- Reporting on the community health needs assessment (and paying the $50,000 excise tax if required)
- Clarification of reporting of grants or other assistance to any government or organization in the U.S.
- Expansion of instructions for reporting of retirement and other deferred compensation for persons listed in Schedule J
- New questions on use of bond proceeds for private business purposes and clarification of instructions related to this matter
- Part I & II now requires the disclosure of the nature of the relationship involved in these interested party transactions
- Instruction clarifications for qualified conservation contributions
- Instruction clarifications for organizations winding up affairs
- Added explanations for how voluntary employees’ beneficiary associations should complete this form.
For more information regarding the Form 990, please contact Matt McDonald at firstname.lastname@example.org or your Keiter engagement team.
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.