Alerts and Updates
IRS Revises Form 990
October 21, 2005
Almost every year the IRS modifies and updates its return forms. For non-profit hospitals, changes to the Form 990, the annual federal tax return filed by non-profits, merit particular attention.
On October 7, 2005, the IRS released its most recent draft Form 990 for public review and comment. (A draft revised Form 990-EZ was also made public; revised Schedules A and B, with no particularly notable changes, were released on August 5.) No revised instructions accompanied the draft Form 990, presumably because instructions are not presented for public comment. Comments on draft Form 990 must be submitted to the IRS by November 7.
The following are the highlights of changes from the prior Form 990.
- Filing organizations must indicate (Part II, line 22, on page 2) whether any of the "grants or allocations" identified in their itemized expenses include foreign grants.
- Line 75 (now in Part V-A on page 6), which currently asks whether any officer, director, trustee or key employee received aggregate compensation of more than $100,000 from the filing organization and all related organizations (of which more than $10,000 was provided by the related organizations), would ask for the following information:
- the total number of officers, directors and trustees permitted to vote on the organization's business at board meetings;
- whether (1) any officers, directors, trustees or key employees listed in Part V-A, (2) any of the five highest paid employees listed in Part I of Schedule A, and/or (3) any of the five highest-paid professional services independent contractors or other independent contractors listed in Parts II-A or II-B of Schedule A are "related to each other through family or business relationships" (and, if so, an attached statement identifying the individuals and explaining the relationship(s) is required);
- whether any of the officers, directors, trustees or key employees (or any of five highest-paid employees, or professional services independent contractors or other independent contractors described in the previous bullet point) received compensation from any other organization, tax-exempt or taxable, related to the filing organization through "common supervision or common control" (and, if so, an attached statement identifying the individuals, explaining the relationship(s) between the organizations, and describing the compensation arrangements, including amounts paid to each individual by each related organization, is required);
- whether the filing organization has a written conflict of interest policy.
- A new Part V-B provides a schedule for reporting loans and advances, compensation, employee benefits and deferred compensation contributions and expense allowances to former officers, directors, trustees or key employees. This seeks to prevent any avoidance of reporting of any deferred compensation, severance pay, consulting pay and any other benefits provided to former officers, directors and key employees.
- A new line 91b asks whether during the reporting year the organization had an interest in, or authority over, a financial account in a foreign country (and if so, where); and a new line 91c asks whether the organization maintained an office outside of the U.S. (and if so, where).
Although the IRS has published these relatively minor changes for 2005, a major revision of the Form 990 is planned. The date of publication of those more significant changes is uncertain, but will not impact 2005 filings.
For Further Information
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