September 30, 2015

Form 990 Issues

Kirsten HoughtonBy Kirsten Houghton - SVA Certified Public Accountants

The revised Form 990 continues to confuse and perplex both nonprofit organizations and tax preparers.  To address this issue, the IRS Advisory Committee on Tax Exempt and Governmental Entities (the ACT) recently issued a General Report, based on 1,900 responses to surveys issued to the exempt organization community that considers the following:

  • Identification of the users of the Form 990 and how they use it
  • Why electronic filing should be required for all organizations
  • The examination selection process used by the IRS
  • A review of the most difficult parts and schedules of the current Form 990 and recommendations for improvement

Recommendations

Based on the survey results, the ACT report concluded with three recommendations relative to the Form 990:

  • Electronic Filing:  A mandate that all forms included in the Form 990 series should be electronically filed and the $10 million threshold for electronic filing should be eliminated.
  • Enhancement:  Formation of a task force to review the parts and schedules of the Form 990 and update the instructions to enhance understanding, consistency and accuracy of reporting.
  • Form 990-N Filers:  The IRS should request more information from Form 990-N, e-postcard, filers.

Exempt organizations and tax preparers should anticipate more changes in the future and further discussion regarding the Form 990 as the IRS continues to focus on transparency in reporting within the sector; the overarching goal being to provide usable information to individuals, corporations and governmental entities. 

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