Monday, November 26, 2007

The Changing 990... How Does This Impact Your Organization?

With the enactment of the Pension Protection Act of 2006 (PPA), the majority of small tax-exempt organizations (those under $25,000 in revenues) are now required to submit a 990-N, called the e-Postcard, for the fiscal year-end 2007. Previously, only tax-exempt organizations with gross receipts of more than $25,000 were required to file Form 990, 990-EZ or 990-PF.

Any organization that fails to meet its annual reporting requirement for three consecutive years, automatically loses its tax-exempt status under the new law. An organization that wants to regain its exempt status will then have to reapply for recognition as a tax exempt organization. The e-Postcard requires small organizations to provide a legal name and mailing address, any other names used, a Web address if one exists, the name and address of a principal officer and a statement confirming the organization's annual gross receipts are typically $25,000 or less.

The Pension Protection Act also includes other provisions that affect the Form 990 in general. Accuracy of this public document is critical to your organization’s public relations and regulatory issues that could result in penalties.

While Bremer Nonprofit Resource Specialists are not experts in the field of 990 reporting, we do realize the importance of sharing information and resources with our nonprofit colleagues. To that end, this article will inform you of some reporting changes and refer to the IRS Web site ( for further details and/or an auditor for explanations and assistance.

Some key provisions in the Pension Protection Act legislation, in addition to small nonprofits needing to file, include the following:

• Donors are required to have written acknowledgement or bank record.
• Form 990-T (unrelated business income tax returns) are now open for public inspection.
• Controlling organizations must report transactions between controlled and controlling organizations and disclosures.
• Several changes pertaining to supporting organizations.
• Recapture of tax benefit of certain deductions (IRA, ESOP, etc.)
• Donor advised fund, reporting, disclosures and defined provisions where penalties may apply.
• Reporting of all compensation for current officers, directors, trustees and key employees including former officers, directors, trustees and key employees.

In addition, there are changes being made to the 990 form and it is targeted to be used for the 2008 returns with an effort to enhance transparency and provide a realistic picture of the organization.

Kathy Grochow, NRS, St. Cloud

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