Public Comment Sought On 990

June 6, 2011       Samuel Fanburg      

The Internal Revenue Service (IRS) is inviting public comment on issues and frequently asked questions regarding Form 990. Issues for comment include a consideration to eliminate a section asking to report activity codes, reporting compensation to management companies and leasing companies owned by an organization’s leadership, and thresholds for reporting compensation to key employees.

The revised Form 990 was extensively redesigned in 2008 to “promote tax compliance and increase transparency,” and once again is coming under public comment as in 2009 and 2010 to make the form “easier to understand and complete.”

The IRS is seeking public comment on whether or not activity codes that signify certain program service activities need to be identified, given that the current systems do not reflect the ranging program services supplied by nonprofits.

In addition, the IRS aims to introduce debate surrounding reporting compensation to management companies and leasing companies owned and controlled by an organization’s leadership. There have been concerns raised to the agency that the new rules protect organizations from reporting compensation to highly paid executives, by paying these figures indirectly through management companies.

Also being reviewed is reporting revenue from governmental units. Currently, the rules have an organization reporting payment from the government unit if its primary purpose is to help the organization provide a service or maintain a facility for the direct benefit of the public. Now, the IRS is asking the public to comment on how requirements should change in the area, reflecting even more transparency.

Other aspects of the Form 990 open for public comment are: thresholds for reporting compensation to employees and leadership of an organization; net asset reconciliation; reporting on audited financial statements; names and EINs of foreign grantees; indirect foreign expenditures; reporting bank deposits as loans or business transactions on Schedule L; report of component parts of community trusts, and scope of related organization reporting on Schedule R.

Comments must be submitted by Aug. 1, 2011. The public can comment by mail to the IRS’ Washington D.C. office:

Internal Revenue Service
Attn: Stephen Clarke (Announcement 2011-36)
SE:T:EO (3C1)
1111 Constitution Avenue, N.W.
Washington, D.C. 20224

Comments can be hand-delivered between the hours of 8 a.m. to 4 p.m. to:

Internal Revenue Service Courier’s Desk
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Attn: Stephen Clarke (Announcement 2011-36)
SE:T:EO (3C1)

Comments also can be sent electronically, using “Announcement 2011-36” in the subject line, to: Form990Revision@irs.gov

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