Changes to the Form 990

The IRS finalized changes to the Form 990 with an effective date of September 8, 2011, applying to tax years beginning January 1, 2008. These revisions affect all Form 990 filers. Here are the highlights of what you need to know about the revised form:

–         Compensation reporting has new threshold amounts – Generally, compensation of $100,000 or more must be disclosed, but there is no minimum threshold for current officers, director or trustees.  The threshold for top management and financial officials (regardless of formal title) is also zero – so they must also report all compensation.  Former officers, directors or trustees must disclose compensation of $10,000 or more.

–         Compensation and benefits must be reported on a calendar year basis – If your organization has a fiscal year end, certain parts of the return require compensation and benefits to be reported on a fiscal basis as well.

–         Scope of organizations subject to information reporting is modified regarding substantial contraction (liquidation, termination, dissolution, or  disposition of over 25% of the organization’s assets).

–         Advance ruling process eliminated for new organizations’ determination of public charity vs. private foundation.

–         Public charity test calculations extended to a five year period (formerly a four year period).

–         Publicly supported organizations who fail to meet the 33 1/3 public support test for two consecutive are treated as private foundations at the beginning of the second year.

 Accounting method for determining public support must be the same as the method used to prepare tax return.

Most of these final modifications are adoption of temporary and proposed rules that were initiated in 2008. So, the changes should not cause great concern for compliance.