Tuesday, January 19, 2010

Is this the first year your organization has to file the revised Form 990?

Tuesday, January 19, 2010
I know what you’re thinking. You’ve already heard enough about the revised Form 990. But was your organization required to file it last year? I have had the opportunity of helping several organizations complete the revised Form 990. One thing I’ve learned is that the preparation of the revised Form 990 can certainly be a daunting task, especially if the organization did not take the time to familiarize itself with the form and the additional information that is needed. Time has come and gone. For the 2009 tax year more organizations may be required to file the revised Form 990. This year organizations will be only able to file the Form 990-EZ if their gross receipts are under $500,000 and their total assets are under $1,250,000. If this is the first year filing the revised Form 990, hopefully you have become familiar with it and you have done some planning. If not, you still have some time, but you should start now! Whether it is your first year or second year filing the revised Form 990, I hope the following tips help you:
  • Review your organization’s mission and program service accomplishments. Do your organization’s program service accomplishments truly convey the organization’s mission? Can you be more descriptive? Remember the federal and state governmental agencies are not the only ones looking at your Form 990; it will be posted on Guidestar, The Wise Giving Alliance of the Better Business Bureau, and Charity Navigator. Organizations and individuals can review the Form 990 in order to make decisions on whether or not to support your organization, so make sure your Form 990 is not only accurate, but look at it as a marketing tool for your organization.
  • Identify which of the sixteen schedules your organization will need to complete by answering the questions on Part IV of the Form 990. Unfortunately these questions will sometimes take you in a circular pattern by referring you to the following pages of the Form 990 where financial information is reported. Therefore, be prepared with your financial information in order to complete these questions.
  • Answer the questions on Page 6, Part VI Governance, Management, and Disclosure. Based on the answers to these questions decide which policies and procedures your organization should consider adopting or revising. You may notice the top of page 6 acknowledges that this section “requests information about policies not required by the Internal Revenue Code.” So you may ask yourself, do I really need to address these questions? You certainly do need to answer them, but you do not have to answer them “yes”. However, be sure to review your state laws, because state law might require such policies. Also, the IRS believes adopting some of these policies and procedures will help safeguard the organization’s assets.
  • Become familiar with the financial reporting requirements. There is much more detailed financial information required on the revised Form 990. If possible, make changes to your chart of accounts to efficiently capture the required financial information.
  • I know we all like hanging out with SALY (same as last year), but don’t get too comfortable hanging out. There are numerous questions and many of the definitions related to these questions have changed or have been rewritten to be clearer, so don’t assume all of your answers will be the same as prior years. Review the definitions at the very end of the 990 instructions to be sure you understand the question being asked.
  • Last of all, don’t hesitate to ask for help. The Form 990 requires a lot of information, so it might save you time and aggravation by asking for assistance. The IRS website has a lot of information to help preparers of the Form 990. In addition, attorneys and accountants can be a very helpful resource. Therefore, don’t hesitate to pick up the phone and call your CPA or the Elko & Asssociates non-profit team.


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