Form 990 is an essential document for tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations. Filed annually, this form provides the IRS with the detailed information required by Section 6033 of the Internal Revenue Code. Below, we explore the key aspects of Form 990, including its schedules and recent developments.
Purpose of Form 990
Tax-exempt entities use Form 990 to ensure compliance with IRS regulations and provide transparency about their operations. The form requires details on the organization’s mission, financial activities, governance, and more.
Organizations that fail to file this form risk penalties or the loss of their tax-exempt status, making it crucial for maintaining eligibility under federal tax laws.
Recent developments
1. IRS Stops Providing Copies on DVDs: As of February 24, 2023, the IRS no longer distributes exempt organization returns on DVDs, shifting entirely to digital access.
2. COVID-19 Tax Relief: Tax-related deadlines were adjusted during the pandemic, offering relief to affected organizations as announced on April 14, 2020.
Key schedules of Form 990
To enhance transparency, Form 990 includes several schedules that address specific aspects of an organization’s operations. Here’s an overview of the most commonly used schedules:
- Schedule A: Public Charity Status and Support
This schedule is used by organizations filing Form 990 or 990-EZ to document their public charity status and sources of public support.
- Schedule B: Schedule of Contributors
Organizations report contributions received during the tax year on this schedule. It applies to:
- Form 990
- Form 990-EZ
- Form 990-PF (Private Foundations)
- Schedule C: Political and Lobbying Activities
- Schedule D: Supplemental Financial Statements
Organizations report specific financial details such as:
- Donor-advised funds
- Conservation easements
- Art and museum collections
- Endowment funds
- Schedule E: Private Schools
This schedule focuses on the operations and activities of private schools filing Form 990 or 990-EZ.
- Schedule F: International Activities
Organizations use this schedule to detail activities conducted outside the U.S., including partnerships, offices, or grants made abroad.
- Schedule G: Fundraising and Gaming Activities
Organizations disclose information about professional fundraising services, events, and gaming activities.
- Schedule H: Hospitals
Hospitals must complete this schedule to report community benefits, healthcare activities, and operational policies.
Other important schedules
- Schedule I: Grants and Assistance
Organizations provide information about grants or assistance offered to U.S.-based entities, governments, or individuals.
- Schedule J: Compensation Information
Details about compensation for top executives and employees are disclosed in this schedule, along with organizational practices related to pay.
- Schedule K: Tax-Exempt Bonds
This schedule focuses on liabilities associated with tax-exempt bonds issued by the organization.
- Schedule L: Transactions with Interested Persons
Disclosures are required for financial transactions with disqualified or interested persons.
- Schedule M: Noncash Contributions
Organizations list noncash donations received during the tax year, such as property or goods.
- Schedule N: Liquidation or Dissolution
This schedule is used when an organization liquidates, dissolves, or disposes of a significant portion of its assets.
- Schedule O: Supplemental Information
Organizations use this schedule to provide detailed explanations and responses for specific Form 990 or 990-EZ questions.
- Schedule R: Related Organizations and Partnerships
This schedule reports relationships with related organizations or unrelated partnerships conducting significant activities.
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Additional resources
The IRS provides extensive instructions and resources for Form 990 and its schedules, ensuring organizations can navigate their filing obligations effectively. Helpful publications include:
- Publication 4303: A guide for vehicle donations.
- Publication 4386: Compliance check guidelines.
For more specific applications, organizations can explore other forms, such as Form 1023 for 501(c)(3) recognition or Form 2848 for authorizing representatives.
Final thoughts
Form 990 plays a pivotal role in maintaining transparency and compliance for tax-exempt organizations. By understanding its schedules and staying updated with IRS guidelines, organizations can efficiently fulfill their reporting obligations while reinforcing public trust.
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