Elizabeth M. Mills
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Even hard-core tax mavens don't usually get excited when the IRS releases instructions for tax forms. An exception this year is the release of instructions for the 2009 Form 990, the form to be filed by tax-exempt organizations (other than private foundations) for calendar year 2009 and tax years starting in 2009.
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The IRS completely redesigned Form 990, the Return of Organization Exempt from Income Tax, to be filed for calendar year 2008 and subsequent periods. This form is filed by most tax-exempt organizations and is open to public inspection. One stated purpose of the makeover was to increase transparency and disclosure of exempt organization operations, thereby improving governance and highlighting conflicts of interest and insider dealings. One major change in the form is that it requires extensive reporting concerning the organization's governance and management policies, the independence of its board, and board members' and key employees' family and business relationships with each other and with the reporting organization.
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Section 9007 of the health reform bill passed by the Senate on December 24, 2009 contains specific requirements for Section 501(c)(3) hospitals wishing to retain their tax exemption. This development is of interest to all exempt organizations, not just hospitals, because it is another example of Congressional action imposing specific standards on particular types of exempt organizations.
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Over the past few years, the IRS has become increasingly interested in monitoring the governance practices of tax-exempt organizations, particularly public charities. This interest has been shown through public statements of IRS officials, the addition of questions about board makeup and policies to the Form 990, an explanation of why the IRS considers governance important, and the development of training materials on governance for IRS personnel. Not all members of the exempt organizations community agree that the IRS should focus on governance. However, the IRS rationale is that a well-governed organization is a tax-compliant organization.
The IRS has now developed and released a governance issues checklist (the Governance Check Sheet) to be completed in each audit of an exempt organization. The checklist provides a very specific roadmap for exempt organizations to compare their practices and policies with what the IRS wants to see and to make adjustments where necessary.
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Form 990 Makeover, Version 2.0
By Elizabeth M. Mills on Posted in IRS Filings
With the New Form 990, Directors and Trustees Must Complete a Complicated Disclosure Form
By Elizabeth M. Mills on Posted in Governance, IRS Filings
Tax Exemption Changes Possible for Hospitals as Part of Health Reform
By Elizabeth M. Mills on Posted in Healthcare Organizations
IRS Issues Audit Checklist for Exempt Organization Governance
By Elizabeth M. Mills on Posted in Governance
