Swider CPA

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Not-for-Profits should be aware, and take note. The IRS has drastically overhauled the Not-for-Profit reporting requirements. In their first major renovation since 1979, they have completely re-vamped the 990 and supporting schedules. Emphasizing the newer, more complex entity structures now prevalent in the Not-for-Profit realm, they have made an attempt to provide for more accurate and consistent reporting guidelines for all entities. The stated goals of the changes were (1) Increased Transparency – providing the IRS and all stakeholders a clear view; (2) Increased Compliance – formalizing the previously unstructured attachments; and (3) Minimization of the Record-keeping and Filing Burden. Don’t count on that last one! Not-for-Profits should investigate now how these new requirements might affect them, and the additional documentation and record-keeping needed. There will still be thresholds, for which the 990-N and 990-EZ will apply. The 990-N, the electronic postcard, must be filed for those entities whose gross receipts are less than $25,000 (averaged over 3 years). Don’t disregard this. If you do not file this for 3 consecutive years, you could jeopardize your not-for-profit status. The 990-N is not available in paper form. It is only available over the internet, at http://epostcard.form990.org. The 990-EZ has not changed much. There will also be a phase-in for the requirements of the long Form 990. In 2008 the long form is required for those organizations $1 million or more in gross receipts and $2.5 million or more in total assets. For 2009, the long form is required for gross receipts of $500,000 and more than $1.2 million in total assets. Then for 2010, a long form will be required for gross receipts of $200,000 or more and $500,000 or more in total assets. If you have assets of between the $25,000 and the thresholds for the phase-ins, then you will have the option to file the Form 990-EZ. The new Form 990 is redesigned into a more meaningful layout. It now consists of a “Core” form-consisting of an 11-page form, and then 16 separate schedules-”A” thru “R” (no “P”s or “Q”s, interestingly) to be used as applicable. A new Checklist is included in Part IV of the core, to assist users in implementing the newly required schedules. Based on your answers to the questions, the checklist will guide you in determining which of the 16 schedules to use. Pretty neat and straightforward, actually. In a period of corporate failures and fraud, more heightened awareness should only be expected in the Not-for-Profit sector, just as in the “For-Profit” counter-part. Realizing the additional risk of poor stewardship and lack of controls potentially in Not-for-Profits, the new reporting requirements should enhance a Not-for-Profit’s credibility, in the long run. The new sections require detailed reporting on Governance, Compensation, and more streamlined Compliance. Though you may not be subject to the additional requirements, you should be knowledgeable of the themes underlying the changes. The new themes promote “best-in-class” policies.

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