Fall 2009 issue of Horizons

Raise Your Expectations CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Tips for Filing 2008 Form 990

time to prepare for the longer form. Form 990-EZ is much shorter and should take much less time to complete in many cases. As early as May this year, the IRS noted that a significant number of organizations that were eligible to file Form 990- EZ were instead filing Form 990. 3. The IRS also has noticed that a significant number of the 2008 Forms 990 that have been filed are incomplete. Most notably, many organizations are not disclosing the name of the principal officer on page 1 of the return. In addition, many returns are being filed with unanswered questions, especially in Part IV (Checklist of Required Schedules), Part V (Statements Regarding Other IRS Filings and Tax Compliance) and Part VI (Governance). Finally, many organizations are not providing explanations of transactions, policies, procedures, etc., on ScheduleOas required bymany questions listed throughout the form. The IRS can treat an incomplete return as a late filed return, assessing penalties on both the organization and the officer responsible for filing the return, so care should be taken to be sure the return that is filed is complete in all respects.

By James R. Ritts, CPA

2008 is the initial year for the redesigned Form 990, Return of Organization Exempt from Tax. The IRS has performed the first major overhaul of this form in almost 30 years, so the changes are significant. The goals of the redesign were to promote tax compliance by NFPs, enhance transparency and minimize the burden on the filing organizations. Many organizations have begun the process of completing the 2008 Form 990 (or gathering the information requested by their accountants to prepare the form), and some have completed the process. While the experience is still limited at this point, there are a few trends that RubinBrown, the IRS and others have noticed: 1. It is taking longer to gather the information and prepare the return. To begin with, the IRS’ estimate of the time required to prepare the 2007 Form 990 and its related schedules was approximately 260 hours. For 2008, this estimate is approximately 650 hours. With all of the additional information required, the IRS may have minimized the burden; it simply did not reduce the burden. 2. Before spending many hours gathering the data needed for the new Form 990, do not forget about Form 990-EZ. For 2008, the number of organizations that are allowed to fulfill their filing requirement using this simplified form are greatly increased since the maximum gross receipts level was raised to $1 million and the total asset limit was raised to $2.5 million (from $100,000 and $250,000, respectively, in 2007). While these limits will decrease in 2009 and 2010, taking advantage of the higher limits for a year or two can reduce the filing burden on the organization and give management of smaller organizations additional

Questions? Contact:

Judy Murphy, CPA Partner-in-Charge Not-for-Profit Services Group 314.290.3496 judy.murphy@rubinbrown.com James R. Ritts, CPA Partner Not-for-Profit Services Group 314.290.3268 jim.ritts@rubinbrown.com

44 u fall 2009 issue