JUNE 2011

Significant Changes For 2009 Form 990

Lior Temkin, CPA - Senior Manager, Tax Practice

Now that we all survived the first year’s filing of the new Form 990, we have to think about the 2009 tax
filing. The IRS has issued the final 2009 versions of Forms 990 and 990-EZ, as well as their instructions.
The IRS has also provided a detailed explanation of significant changes to the forms. As you will note
below, these changes were issued mostly to clarify some questions that arose due to confusion over the
2008 instructions.

As we all know, Form 990, Return of Organization Exempt From Income Tax, was extensively revised for
2008. The new Form 990 is designed to promote more uniform reporting by exempt organizations, and it
uses questions and answers to offer assistance and clarification. Some of the new features include a glos-
sary of terms, a sequencing list, a compensation table and many illustrative examples.

Based on the IRS’s website, the changes to the 2009 form include

• The filer must report significant changes in program services in Part III of the form (State-
ment of Program Service Accomplishments), rather than in a letter to the IRS’ Exempt Organi-
zations Determinations office.
 • Part IV of the form includes more-detailed trigger questions to help the filer determine
whether it needs to complete various parts of Schedule D, Supplemental Financial State-
ments. Part IV also explains how revenues or expenses from foreign investments affect
whether the filer meets the $10,000 filing threshold for Schedule F, Statement of Activities
Outside the United States.

• The form clarifies that the filer must report the number of its employees reported on Forms
1099, 1098, 5498, W-2G and W-3 by its reporting agents. It also clarifies that, if two officers,
directors, trustees or key employees of the filer serve in similar positions with another tax-
exempt organization, that involvement does not create a reportable business relationship
between the two.

• The filer must report significant changes to its organizational documents on its Form 990,
Part VI, and in Schedule O, Supplemental Information to Form 990, rather than in a letter to
EO Determinations.

• Part VI of the form describes the conditions the filer must meet to answer Yes when it e-
mails board members a link to its Form 990 and also explains when a filer may check the box
for Another’s website. The current five highest compensated employees that must be report-
ed do not include officers, directors, trustees or key employees.

• Part VII of the form clarifies that the key employee responsibility test may be met at any
time during the tax year and that if a person is a key employee for only part of the tax year,
the filer must report that person’s entire compensation for the calendar year ending with or
within the tax year. Part VII also explains how compensation paid by common paymasters and
other reporting and payroll agents should be reported on the form.

• Schedule A, Public Charity Status and Public Support, explains that the IRS does not update
records on a filer’s public charity status based on a change made on Schedule A. The filer may
submit a request for a determination letter on its new public charity status to the EO Determi-
nations office.

• Schedule B, Schedule of Contributors, explains that the filer should specifically identify a
donor, rather than reporting the donor as anonymous, if the filer knows the donor’s identity.

• Schedule D, Supplemental Financial Statements Parts XI-XIII, clarifies that if the filer was in-
cluded in consolidated financial statements (not in separate financial statements), completing
Parts XI-XIII is optional.

• Schedule K, Supplemental Information on Tax-Exempt Bonds, as previously announced, or-

ganizations required to file Schedule K must complete all parts of Schedule K for the 2009 tax
year.

Most tax-exempt organizations must file an annual information return with the IRS. Form 990 must be
filed by any organization that is exempt from tax under IRC § 501(a) that has total assets of $1.25 million
or more at the end of the tax year or has gross receipts of $500,000 or more. Organizations with smaller
gross receipts and assets can still choose to file Form 990-EZ, but we recommend that these organiza-
tions start looking into the requirements in filing the new form as they will sooner or later be required to
file the much larger and more extensive form.
As a reminder, in 2010 (filed in 2011 or 2012) if an organization has total assets of $500,000 or more at
the end of the tax year or has gross receipts of $200,000 or more, they will be required to file the new
form. If your organization will be required to file the new form in the next couple of years, this is a good
time for you to start getting ready for the change.

Lastly, organizations with gross receipts under $25,000 can still choose to file Form 990-N, Electronic
Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. An organiza-
tion that fails to file an annual return or notice for three consecutive years, as required by federal law,
will lose its tax-exempt status.

For more information, or if we can be of assistance to you, please do not hesitate contact one of Singer-
Lewak’s Nonprofit Partners:

Stephen P. Carter - Silicon Valley Lewis Sharpstone - Los Angeles

SCarter@singerlewak.com LSharpstone@singerlewak.com

Jeff Holt - Los Angeles Rob Schlener - Orange County

JHolt@singerlewak.com RSchlener@singerlewak.com