Spring 2008 issue of Horizons

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Major Changes to Form 990 In December 2007, the IRS released a redesigned version of the Form 990. This is the first major revision of the Form 990 since 1979. For most organizations, this new form and related schedules must be used for the 2008 tax year, i.e., returns filed in 2009. However, the IRS has established a graduated transition period for organizations with gross receipts under $1 million as well as new schedules for tax-exempt bonds and hospitals. This revision has been expected. As discussed in the fall 2007 issue of Horizons, the IRS issued a draft of the proposed revision on June 14, 2007, with a 90-day comment period. The IRS received nearly 3,000 pages of comments related to the draft. Based on these comments and input from numerous nonprofit experts and state regulators, the IRS changed some of the proposed revisions to the form. The IRS believes this input helped create a final form that achieves its guiding principles of transparency, compliance and burden minimization. For additional details, our most recent “Focus on Not-for-Profits” e-newsletter, and a copy of the revised Form 990, visit our Web site, www.rubinbrown.com.

exemption, clearly an entity that has profits that greatly exceed the value of its charitable acts may not represent a charitable organization. Similarly, a limitation that restricts the general public from using the property creates the circumstance under which an assessor could determine a property is not of benefit to the general public. If an assessor requests operational data regarding the business that owns or operates exempt property, it is imperative that the request be promptly reviewed and the appropriate response submitted. Exemption from taxation requires the entity requesting the exemption to prove that it qualifies for the exemption. Failure to respond in a timely manner may cause the exemption to be revoked pending proof of qualification for the exemption. It is far easier to convince the assessor before there is a revocation than to undo the revocation before a review panel. As the legal requirements for exemption from property taxation vary by state, it is recommended that the laws of each state be reviewed with a tax professional rather than assuming the organization automatically qualifies for the exemption.

Questions? Contact:

Judy Murphy, CPA Partner-in-Charge Not-for-Profit Services Group 314-290-3496 judy.muphy@rubinbrown.com

32 u spring 2008 issue