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The 2009 Form 990:
Some Changes, More Clarification
by Jennine Anderson
I f you are reading
this article, I sus-
pect you are a Form
990 geek. I know
I’m one.
In calendar 2008,
Form 990 geeks like
me read all the information available
about what the new 990 would look
like. We attended seminars on the
topic. We gave seminars on the topic.
We commented to the IRS about the
draft form. We complained and
whined about the extra work
involved and the extra disclosure
required.
In calendar 2009, when the final 2008
form came out, we tried to educate
clients, and we tried to educate our-
selves about the form and the
instructions. And we tried to figure
out an efficient way to complete the
form. In short, we did what geeks do
best: even in our frustration, we rel-
ished the details and underpinnings
of complex information.
Then, after digging in and learning
all we could, Form 990 geeks like me
started preparing the forms. We dis-
covered that, when applied to real
clients and real situations, the Form
990 instructions were confusing, cir-
cular ... and, to speak the truth, infu-
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riating. We discovered that there
was no efficient way to complete the
form. Yet, somehow, we all sur-
vived; we got quicker; we applied
our own logic to the instructions.
The forms got filed.
But, for those of us who had thought
about this form so much over the last
two years, we kept wondering how
the IRS would respond to feedback
on the 2008 form. Would they listen?
Would they go back and read some
of their own convoluted verbiage?
Would they attempt to stand in our
shoes and actually fill out their own
form? It seems they did, indeed.
When the new 2009 990 was released
in the first week of February 2010,
Form 990 geeks—especially and
including this one—were excited to
see what they’d done.
This article is a summary report on
those changes, categorized as I see
them.
Category I:
Changes We Already Knew
Would Happen
First, the 2009 Form 990 is applica-
ble to more organizations. It is
required reporting for organizations
with either $500,000 or more in
gross receipts, or $1,250,000 or more
March 2010
Vol. 3 • No. 2
L
www.uhyllp-us.com
in total assets, at the end of the tax
year. Second, 2009 is the first year
that Schedules H (Hospitals) and K
(Tax-Exempt Bonds) must be com-
pleted in their entirety.
Category II:
The IRS Tells Us It Wants
More, or Less, Information
Than We Gave Them in 2008
First, the IRS is very clear in the 2009
instructions to Part III and Part IV that
the Form 990 is the mandatory and
only way to report new significant
program services or significant
changes in how an organization con-
ducts program services. Do not send
letters reporting these changes to IRS
Exempt Organizations Determina-
tions asking for confirmation of status
because they don’t do that anymore.
Second, there is a new trick question
that asks if the organization com-
pleted Schedule O. The reason this
is a trick question is because the
new instructions clearly identify the
information which must be given in
Schedule O by every filer. Therefore,
say “no” and you are saying you did
not follow the instructions. The
continued on page 2
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The 2009 Form 990:
Some Changes,
More Clarification
continued from page 1
mandatory Schedule O information
is the description of the process of
Form 990 review (if none, say so),
and if and how the organization
makes its governing documents,
conflict of interest policy statements
and financial statements available to
the public.
Third, there is clarification for trig-
gers requiring Schedule O explana-
tion. These include change in
method of accounting, change in
oversight of financial reporting
process and an explanation of why
the organization did not have an
OMB A-133 audit if required.
Fourth, the IRS clarifies the Part VII
instructions and states specifically
that U.S. source income paid to a
foreign person by the organization,
or a related organization, must be
reported in Part VII, even though
not reported on a W-2 or a 1042-S.
Finally, the IRS tells us what ques-
tions on Part V to leave blank if not
applicable (1c, 7g and 7h).
Category III:
Someone at the IRS Tried to
Follow the 2008 Instructions
First, the 2009 Form includes more
key information in the questions min-
imizing the need to flip from Form to
Instructions, to Form to Instructions.
For example, a Part IV trigger ques-
tion for Schedule D has been expand-
ed to six questions with plain English
words instead of line references as
used before. Another example is Part
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state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. Furthermore, such statements are not presented or intended as, and should not be taken
or assumed to constitute legal advice of any nature, for which advice it is recommended that you consult your own legal counselors or professionals.
UHY Advisors, Inc., provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY Advisors, Inc.,
and its subsidiary entities offer services from offices across the United States. UHY Advisors, Inc., and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent
CPA firm that performs attest services. UHY Advisors, Inc., and UHY LLP are independent U.S. members of Urbach Hacker Young International Limited.
March 2010
Vol. 3 • No. 2
IV, 28 which determines the need to leased employees and explanations
complete Schedule L, “Transactions relating to treatment of employees
with Interested Persons.” The flow of paid by a common paymaster and
the question is much easier to under- payroll agents. In most circum-
stand and answer. stances they get reported on Part
VII. There is also clarification of how
Second, the IRS has given a quanti- to report in Part V the W-3s and
tative trigger for when diversions of 1096s filed by the common paymas-
assets are material and should be ters and payroll agents.
reported. The question must be
answered “yes” if the gross value of Finally, there are revised glossary
diversions exceeds the “lesser of definitions for “control,” “related
(1) 5% of... gross receipts for its tax party” and “escrow or custodial
year, (2) 5% of ... total assets as of the account.” These revisions are easier
end of its tax year, or (3) $250,000.” to read and understand.
The 2008 Form made us guess what
“material” meant. Category IV:
The IRS Got a Few New Ideas
Third, there is a new Appendix with
Business Industry Codes to be used Part X, “Balance Sheet,” has two
in Part VIII. The 2008 form merely changes. The first change is a new
referred us to the instructions for the requirement to report receivables
Form 990T to get the information we from the highest compensated
needed. employees in addition to those from
current and former officers, direc-
Fourth, the IRS modified that most tors, trustees and key employees,
controversial question/answer duo while the 2008 requirement to also
about whether the organization had include “other related parties” has
an audit. Now, if such is the case, been dropped.
there is a place to say that the organ-
ization is audited as part of a con- The second change involves a new
solidated audit. computation on the part of filers. If
an organization’s holdings of a pub-
Fifth, the IRS clarified what goes on licly traded stock comprise more
the Information Technology (IT) line than five percent of an organiza-
on Part IX, “Statement of Functional tion’s total assets, then that stock
Expenses.” The answer pretty much should be listed on the “other secu-
goes like this: everything relating to rities” line (line 12) of Part X rather
IT, including contractor services, than on the “publicly traded securi-
hardware, software and support, ties” line.
goes on this line of the form; and
everything else—such as IT employ- Well, that about wraps things up.
ee payments, depreciation and This is, of course, a summary of the
amortization—does not. changes. The way I see it, there is
nothing as good, nor as satisfying,
Sixth, Part VII (Compensation) mer- as reading the new instructions
ited several clarifications. The yourself ... especially if you are a
instructions have a new section on Form 990 geek like me.