Changes in IRS Form 990:
What Every Nonprofit
Should Know
The Nonprofit Center at LaSalle University
May 28, 2009
Elizabeth F. Pilacik, CPA
Chair, Non-Profit & Tax-Exempt Services
Senior Manager, Accounting & Auditing
Asher & Company, Ltd.
epilacik@asherco.com
Direct Dial: (215) 940-7853
What we will cover
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Purpose of Form 990
Form 990: Past and Present
Key Aspects of the Redesign
Phase-In Period
Reporting Impact
Operational Impact
Handout
Purpose of Form 990
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Promote tax compliance
Accountability
Enhance transparency
Marketing tool
Form 990:
Past and Present
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Form 990 History
– First 990 filed in 1942 – Consisted of a two
page form with three yes/no questions, an
income statement, a balance sheet, and
certain schedules (if applicable)
– By 1976, Form 990 was still two pages,
Schedule A consisted of four pages, and
instructions were covered in seven and
one-half pages
Form 990:
Past and Present
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Form 990 History (continued)
– By 2000, Form 990 and Schedule A were
each six pages, at least two pages for
Schedule B (including instructions) and a
separate forty-two page instruction booklet
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Form 990 – Pre-Redesign (2007 returns
filed in 2008)
– Consisted of a nine page form, six pages for
Schedule A, and one or more pages for
Schedule B
Key Aspects
of the Redesign
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Increased focus – activities, not just
numbers
Summary page – snapshot
Checklist of schedules
Enhanced reporting – related
organizations, joint ventures, UBI
Targeted information – endowments,
bonds, hospitals, major transactions,
FIN 48
Phase-In Period
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Revised Form 990 effective for the
2008 tax year (returns filed in 2009)
Phase-in period over three years for
smaller organizations
– For the 2008 tax year, organizations
with gross receipts less than $1M and
total assets less than $2.5M may file
Form 990-EZ
– Thresholds decrease for 2009 and 2010
tax years ($500K/$1.25M and
$200K/$500K, respectively)
Reporting Impact
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Governance
Programmatic
Financial Information
Tax Compliance
Reporting Impact:
Governance
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Year of formation
State of domicile
Number of voting members of governing
body
Number of independent voting members
Total number of volunteers
Board interrelationships
Documentation of meetings (includes
committees authorized to act)
Reporting Impact:
Governance
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Fraud disclosure
Written policies and procedures
Conflict of interest policy
Review of Form 990 by the Board
Policy/Process for determining and
reviewing compensation
Policies over financial statements and
financial reporting
Reporting Impact:
Programmatic
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Prominence of description of
organization’s mission and significant
activities
Programs disclosed by expenses,
grants and revenues – identification of
achievements
Enhanced disclosure of international
activities
Reporting Impact:
Financial Information
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Two year presentation of revenue and
expenses
Enhanced reporting of compensation of
officers, directors, trustees, key employees
Donor advised funds
Endowment funds (five year presentation)
Fundraising activities
Enhanced reporting of non-cash
contributions
Reporting Impact:
Tax Compliance
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Employment tax filings
Donor acknowledgement filings
Enhanced reporting of political and
lobbying activities
Support schedule (facts &
circumstances test)
Compliance with state filing and
registration requirements
Operational Impact
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How best to prepare
– Review existing policies and procedures
related to governance, public disclosure,
compensation, relationships
– Expand documentation
– Evaluate information currently provided
– Take a trial run of the new Form 990
Handout
Questions/Discussion
Concluding Remarks
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What should you know?
– Develop a pro-active approach
– Enlist Board involvement
– See the opportunities – growth,
marketability
– Enhance perception and accountability –
to the public, to your peers