Annual Compliance for Public Charities

In its continuing effort to better police and monitor tax exempts, the IRS in August issued the instructions to the newly revised Form 990. For the first time since 1979, the IRS changed Form 990, which is the compliance return public charities file each year. The Form 990, as well as a charity’s organizational documents, are public documents available to anyone who desires to review them.

Charities will begin using the new Form 990 for the 2008 year. The form was released in December 2007, and can be found at the IRS web site, www.IRS.gov/eo.com. It consists of 11core pages and 16 schedules. According to the IRS, the initial draft garnered 3,000 pages of written comments that were considered before the final draft.

From the IRS’ perspective, "the revised form will give the IRS and the public a much better view of how exempt organizations operate." IRS Commissioner Doug Shulman continued, "the improved transparency provided by these changes will also benefit the tax-exempt community."

From the charitable community’s perspective as well as its return preparers, new Form 990 adds detail and complexity to an already thorough return. However, this is the price to pay in response to abuses that had developed in the charitable area after a period of relative IRS neglect. The IRS is now devoting more resources and greater attention to tax exempts, and the revised Form 990 is one illustration of that new policy.