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Requirements for Preparation and Review of Returns


On January 21, 2012, the Internal Revenue Service released the final Form 990, Return of Organization Exempt From Income Tax, for 2011. The latest version of the Form contains several significant changes for exempt organizations, including joint ventures and investment partnerships, activities and investments directed toward foreign countries, reportable compensation, and hospitals.

Of particular note, an organization will need to report its distributive share of assets in any entities treated as partnerships for Federal tax purposes according to the ending capital account in the partnership reported on Schedule K-1. Also among the new requirements: organizations with foreign investments valued at more than $100,000 have additional filing requirements.

Key changes, for which not-for-profit organizations will need to allot more time to prepare and review 2011 returns, are detailed below. You can access the new Form 990 at http://www.irs.gov/pub/irs-pdf/f990.pdf for reference as you review the changes.

  • In Part IV, Checklist of Required Schedules: Line 14b states that an organization must complete Schedule F, Part I, if it had foreign investments during the tax year valued at $100,000 or more;
  • In Part VI, Governance, Management, and Disclosure: Line 11 instructions clarify that the organization should answer "No" if it merely informs its governing body members that a copy of the Form 990 is available upon request;
  • In Part VII, Compensation of Officers and Directors, Trustees, key Employees, highest Compensated Employees, and Independent Contractors: Section A, column (C) now clarifies that filers are to check only one "Position" box for each person listed in the compensation table, unless the filer is both an officer and director/trustee of the organization;
  • In Part VIII, Statement of Revenue, the instructions clarify that Medicare and Medicaid payments, and other government payments made to pay or reimburse an organization for medical services provided to individuals who qualify under a government program for the services provided, and who selected the service, should be reported on line 2;
  • The instructions for Part X, Balance Sheet, line 12, clarify that the organization should report its distributive share of assets in any entities treated as partnerships for Federal tax purposes according to its ending capital account in the partnerships as reported on Schedule K-1; and
  • In the Glossary: "Term endowment" is renamed "Temporarily restricted endowment" and includes not only endowment funds established by donor-restricted gifts for a specific period, but all other temporarily restricted net assets held in a donor-restricted endowment, including certain income from permanent endowments.

These are just some of the changes to the 2011 Form 990. For the 2011 instructions for Form 990, visit http://www.irs.gov/pub/irs-pdf/i990.pdf.

For further information on the changes, please contact Thomas Lanning, CPA, a J.H. Cohn partner and member of the Firm's Not-for-Profit Industry Practice, at tlanning@jhcohn.com or 646-834-4108, or your J.H. Cohn representative at 877-704-3500.

Download the full PDF.

Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and J.H. Cohn LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Published date: 2/6/2012

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