The New 990 and Changes for 2009

By Mattie Conkwright, CPA AMR Controller

The redesign of IRS Form 990 for 2008 made a significant impact on the tax-exempt community. As a result of a complete overhaul by the IRS, the newly designed Form 990 was transformed into a public disclosure document which was intended to enhance transparency, strengthen disclosures required to promote accountability, and encourage what the IRS perceives as good governance practices. While the IRS has allowed a phasing in by organizations based on filing thresholds, those thresholds are lessening so that by the end of 2010, many more organizations who previously qualified for filing Form 990-EZ will now be required to file Form 990. The summary of the 2008-2010 filing amounts are below.

With the focus of the 2008 Form 990 on more disclosure, the adoption of new policies and practices in order to be able to answer “Yes” to as many questions as possible became important for tax compliance. For example, a written conflict of interest policy, a written whistleblower policy, a written document and destruction policy, the establishment of an audit committee, and review by the governing body of Form 990 prior to filing with the IRS are considered good governance practices. It is important to note that in order to maintain compliance, the conflict of interest policy should involve an annual questionnaire. In addition, policies should be monitored and enforced by the organization.

Now that the new 990 has been out for a year, the IRS has made many changes and updated the forms and instructions for the 2009 tax year. The focus was on adding clarification, definitions and more instructions. For example, Line 11 of Part VI, Governance, Management and Disclosure, now confirms that posting the Form 990 to a board-restricted website prior to filing satisfies the requirements of review by the governing body in order to answer “Yes”. A procedural change contained in Part VI, Line 4 explains that the filer must report significant changes to its organizational documents on its Form 990, Part VI and in Schedule O, rather than in a letter to EO Determinations. To see a summary of the significant changes to the 2009 Form 990, the IRS has prepared a chart -- click here to view.