Yesterday, I was privileged to attend a telephonic press briefing as IRS introduced their new proposed format for the Form 990, Return of Organizations Exempt from Income Tax, the form filed by many
public charities and other exempt organizations.
As I say, it’s just a discussion draft, open for public comment. The draft form and instructions, as well as other key information, are available for you to view on the IRS Web site.
For the details on who to contact with your suggestions and opinions, please visit this page:
IRS’ redesign of Form 990, the first since 1979, is based on three guiding principles:
- Enhancing transparency to provide the IRS and the public with a realistic picture of the organization, along with the basis for comparison to other organizations.
- Promoting compliance by accurately reflecting the organization’s operations so the IRS may efficiently assess the risk of noncompliance
- Minimizing the burden on filing organizations.
You’ll notice a big section of the new form is devoted to reporting the compensation of the most highly paid officers and employees, requiring them to disclose all the hidden compensation, like loans from the charity, etc.
Since all Form 990 reports are public record, this
will really put the charity under public scrutiny.
Before you make your donations, you’ll be able to
look up their Form 990 filings and see more than
how they’re spending your money on their good works
and administration. You’ll also see just how much
of your money is going towards supporting the key
executives’ lifestyles, who may be living well
beyond the style you’d like to become accustomed
to living.
This, and some of the other detail IRS wants to see
may require some organizations to change their
accounting and recordkeeping in order to track
certain data.
Since this report will not be required for at least
another year, this is a good time for all exempt
orgs to start looking at your systems. You will
want all your recordkeeping improvements in place
by January 1, 2008. Or the beginning of your next
fiscal year.
Incidentally, another piece of good news.
Smaller organizations presently don’t need to
file if their gross revenues are $25,000 or less.
IRS has proposed increasing that limit to $50,000.
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