Summary of Federal Laws
Miscellaneous Tax Issues
Form 990 and Public Disclosure Requirements
Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under IRC section 501(a). The Taxpayer Bill of Rights requires public disclosure of certain tax documents filed by tax-exempt organizations. See section 6104(e) of the Code. What follows is a summary of the highlights of the regulations. In addition, the Pension Protection Act of 2006 requires the public disclosure of Form 990-T by 501(c)(3) organizations. This requirement, for the 990-T, applies to those tax returns filed after the date of the enactment of the law. (August 17, 2006) Form 990-T is used to report unrelated business income tax.
The documents that must be made available to the public are:
copies of the application for tax exemption (for those organizations which filed before July 15, 1987, this requirement only applies if the organization has a copy of the application on July 15, 1987); and
copies of the organization's three most recent annual information returns.
Each annual information return must be made available for a period of three years beginning on the date the return is required to be filed, or on the date it is actually filed, whichever is later. Generally, the annual return information includes Forms 990, 990-EZ, 990-BL, and Form 1065, as well as all schedules and attachments filed with the IRS. The tax-exempt organization does not have to identify the names and addresses of the contributors to the organization. For those tax returns filed after August 17, 2006, Form 990-T must also be made available.
Where To Make Available?
This obligation may be fulfilled by making these documents available for public inspection without charge (except for cost of copying) at its principal, regional, and district offices during regular business hours. Posting the documents on the Web (in accord with 26 CFR 301.6104(d)-2) relieves the organization of the obligation to comply with requests for copies of the documents, but does not relieve the organization of the obligation to make the documents available for public inspection at its business office. If the information is posted, the entity should respond to requests for information by giving the requester the address of the Internet page where the information is posted, immediately if the request is in person, or within seven days if the request is written.
Charge for Copies and Time for Compliance
If the organization has not posted the material on its Web page in accord with the specifications, then it must promptly reply to requests for copies of the material. If the request is made in person, the organization must generally provide the copies immediately, that is, on the day a request is made, unless exigent circumstances exist (such as the day of the request is the day of student registration, or the amount of copying cannot be done in one day). Written requests must be responded to within 30 days from the date it receives the request, or if the organization requests payment in advance for the copies, then within 30 days from the date it receives payment.
The only charge that may be made is a reasonable charge for copying. The fee is tied to the IRS charge for copies of tax-exempt organization documents, which is currently $1.00 for the first page, and $.15 per page thereafter. If prepayment is not required, then consent should be obtained before filling a request that will exceed $20.00.
Format for Posting on the Internet
The following applies to the format that must be utilized when posting tax documents to the organization's Internet page. First, any individual with access to the Internet must be able to access, download, view, and print the posted document in a format which exactly reproduces the image of the original document filed with the IRS, except for information permitted to be withheld from public disclosure. Second, there must be no fee charged in connection with the above, and special software must not be needed for same, other than software freely available to the public.
Final Regulations on Implementation of Form 990, 76 Fed. Reg. 55746, Sept. 8, 2011
These final regulations make revisions to the regulations to allow for new threshold amounts for reporting
compensation, to require that compensation be reported on a calendar year basis, and to modify the scope of
organizations subject to information reporting requirements upon a substantial contraction. The final regulations also eliminate the advance ruling process for new organizations,change the public support computation period for publicly supported organizations to five years, consistent with the revised Form 990, and clarify that support must be reported using the organization’s overall method of accounting. The regulations are effective September 8th, 2011. The NACUBO summary points out that most of the rules have been in effect since 2008, but that there are a few new rules.
e-Postcard: Frequently Asked Questions about 990-N
Posted on IRS page Nov. 2010. This notice addresses questions about who must file Form 990-N (e-Postcard) and what information must be provided.
IRS Notice 2008-49 (May 19, 2008)
Public Inspection of Form 990-T
This notice modifies Notice 2007-45 and provides additional interim guidance on making Form 990-T available for public inspection. The disclosure requirement, which requires the Form 990-T filed by the institution to be open to public inspection and copying for the three year period beginning on the last day prescribed for filing the 990-T only applies to those schedules, attachments and supporting documents that specifically relate to the imposition of tax via IRC 511 (UBIT).
New Electronic and Magnetic Media Filing Requirements
The IRS has issued Rev. Proc 2008-30, which sets revised requirements for filing Forms 1098, 10999, 5498, and W-2G electronically, or on magnetic media for preparing 2008 and prior years' returns.
Notice 2007-45 Interim Guidance on the new requirement (from the Pension Protection Act) for 501(c)(3) organizations to disclose to the public Form 990-T, Exempt Organization Business Income Return (for UBIT).
The public disclosure requirements apply to all 501(c) (3) organizations, and also apply to those state colleges and universities that have dual status as a 501(c) (3) and 115 organization. (For the time being, Form 990-T Public disclosure requirements apply to state colleges and universities that have received determination letters from the IRS granting them 501(c) (3) status, but do not apply to those state colleges than have not received a formal determination letter.) Under 26 CFR §301.6104 (d)-1 an organization that makes the Form 990-T widely available, such as posting it on the internet, does not need to fill individual requests for the return. The exact image of the return must be posted on the internet to meet this exception. Penalties apply to organizations and officers that do not make the return available.
Small organizations with gross receipts of $50,000 (beginning 2010) or less are required to submit an annual notice, Form 990-N. See the IRS page titled which Forms Do Exempt Organizations File?
Student organizations that have their own EIN will be affected by this rule.
If a student group that is separate from the University is claiming tax exempt status, then it will have to submit this notice. The electronic notification to be submitted identifies the organization, and indicates the basis for not having to file a full information return. It is important to note, however, that merely being exempt as part of a Group Ruling (for example a local chapter of Phi Beta Kappa potentially would be) does not exempt the organization from the new submission requirement. Only where the local organization is exempt as part of a Group Ruling, and the Group Ruling parent organization files financial information for the organization on a Group Ruling return, (generally a Form 990 for all members of the group), will the local organization be exempt from the new submission requirement. A local organization that is exempt under a Group Ruling, but whose "parent" organization does not file a group return (i.e., a Form 990 for the members of the Group), will be required to comply with the new submission requirement. The submission requirement will be fulfilled only thorough an electronic submission of a Form 990-N, frequently called an e-postcard. No paper filing will be permitted. See the IRS Q and A on E-postcards.
Redesigned 990-Forms and Instructions (August 2008)
Link to Internal Revenue Service (IRS) website with final forms and instructions for completion of the new form 990 which must be filed starting with tax year 2008 (filed in 2009) by most organizations exempt from taxation under Internal Revenue Code 501(a), including Sec. 501(c)(3) organizations. See also the updated IRS web page that contains an explanation of key changes to the form and tips on how to get ready for the 2009 tax season. See the New Form 990 Series Phase In Chart for filing dates based upon financial activity.
New Form 990 Redesigned for Tax Year 2008
This is the IRS web page with a link to the new Form 990, Return of Organizations Exempt from Income Tax. The web page includes an overview of the redesign, as well as a discussion draft and background paper. This is the form filed by many public charities and other exempt organizations. The IRS will require this Form for tax returns filed in 2009. The IRS plans to release the related instructions in early 2008, and is working with the nonprofit sector on the instructions. There is a graduated transition period for smaller organizations. See the Press Release (on the linked page) for more on this transition period.
April 7, 2008 IRS Posting: Form 990 for Tax Year 2008 (Forms, Draft Instructions and Highlights)
The new form will apply to fiscal/tax years that begin in 2008. Sean Scally (Tax Counsel for Vanderbilt) notes that compensation reporting (which used to be option on either a calendar or a fiscal year basis) must now be on a calendar year basis... no option available. He also notes to see the expanded definition of a "key employee" for compensation/benefits reporting purposes.
E-file for Charities and Non-Profits: See this page for who must file electronically, along with the FAQ on e-filing for charities and nonprofits. For returns due on or after December 31, 2006, the regulations require tax-exempt organizations with total assets of $10 million or more who file at least 250 returns annually, to file Forms 990 electronically. In addition, private foundations and charitable trusts will be required to file Forms 990-PF electronically regardless of their asset size, if they file at least 250 returns annually.
If the district director for the key district in which the organization's principal office is located determines that the organization is subject to a harassment campaign, and that compliance with the requests are not in the public interest, then the organization does not need to fulfill a request for a copy that it believes is part of a campaign.
FAQ on Part VI of Form 990 (Governance, Management and Disclosure-July 2013)
Includes suggested or required written policies, suggested procedures, and suggested committees that need to be in place in order to be ready for the newly updated Form 990 which is effective for tax exempt organizations for tax years beginning on or after January 1, 2008.
NACUANOTES Dec. 19, 2006 The Pension Protection Act of 2006: Charitable Giving and Reform Measures Impacting Colleges and Universities: This is an excellent resource that gives an overview of all sections of this new law that impact colleges and universities, including the provisions on charitable substantiation. Many helpful hyperlinks included.
updated 4/11/13 CCR
updated mlo 8-5-13 to add FAQs from IRS page