You are on page 1of 2

Nonprofit Advisor L

U H Y LLP C e r t i f i e d P u b l i c A c c o u n t a n t s
March 2010
Vol. 3 • No. 2

6851 Oak Hall Lane Suite 300 Columbia, MD 21045 410-423-4800 Fax 410-381-5538

in total assets, at the end of the tax

The 2009 Form 990: year. Second, 2009 is the first year
Some Changes, More Clarification that Schedules H (Hospitals) and K
(Tax-Exempt Bonds) must be com-
by Jennine Anderson pleted in their entirety.

Category II:
I f you are reading
this article, I sus-
pect you are a Form
riating. We discovered that there
was no efficient way to complete the
form. Yet, somehow, we all sur-
The IRS Tells Us It Wants
More, or Less, Information
990 geek. I know vived; we got quicker; we applied
Than We Gave Them in 2008
I’m one. our own logic to the instructions.
The forms got filed. First, the IRS is very clear in the 2009
In calendar 2008, instructions to Part III and Part IV that
Form 990 geeks like But, for those of us who had thought
the Form 990 is the mandatory and
me read all the information available about this form so much over the last
only way to report new significant
about what the new 990 would look two years, we kept wondering how
program services or significant
like. We attended seminars on the the IRS would respond to feedback
changes in how an organization con-
topic. We gave seminars on the topic. on the 2008 form. Would they listen?
ducts program services. Do not send
We commented to the IRS about the Would they go back and read some
letters reporting these changes to IRS
draft form. We complained and of their own convoluted verbiage?
Exempt Organizations Determina-
whined about the extra work Would they attempt to stand in our
tions asking for confirmation of status
involved and the extra disclosure shoes and actually fill out their own
because they don’t do that anymore.
required. form? It seems they did, indeed.
When the new 2009 990 was released Second, there is a new trick question
In calendar 2009, when the final 2008 that asks if the organization com-
form came out, we tried to educate in the first week of February 2010,
Form 990 geeks—especially and pleted Schedule O. The reason this
clients, and we tried to educate our- is a trick question is because the
selves about the form and the including this one—were excited to
see what they’d done. new instructions clearly identify the
instructions. And we tried to figure information which must be given in
out an efficient way to complete the This article is a summary report on Schedule O by every filer. Therefore,
form. In short, we did what geeks do those changes, categorized as I see say “no” and you are saying you did
best: even in our frustration, we rel- them. not follow the instructions. The
ished the details and underpinnings
Category I: continued on page 2
of complex information.
Changes We Already Knew
Then, after digging in and learning PREFER TO GET YOUR
all we could, Form 990 geeks like me Would Happen
started preparing the forms. We dis- First, the 2009 Form 990 is applica-
Sign up to receive our newsletter
covered that, when applied to real ble to more organizations. It is
through email. Just email Kathy
clients and real situations, the Form required reporting for organizations at, and
990 instructions were confusing, cir- with either $500,000 or more in she’ll take care of the rest.
cular ... and, to speak the truth, infu- gross receipts, or $1,250,000 or more

UHY LLP brings specialists in nonprofit solutions in accounting and tax.

March 2010
Vol. 3 • No. 2

The 2009 Form 990: IV, 28 which determines the need to leased employees and explanations
Some Changes, complete Schedule L, “Transactions relating to treatment of employees
with Interested Persons.” The flow of paid by a common paymaster and
More Clarification the question is much easier to under- payroll agents. In most circum-
continued from page 1 stand and answer. stances they get reported on Part
mandatory Schedule O information VII. There is also clarification of how
is the description of the process of Second, the IRS has given a quanti- to report in Part V the W-3s and
Form 990 review (if none, say so), tative trigger for when diversions of 1096s filed by the common paymas-
and if and how the organization assets are material and should be ters and payroll agents.
makes its governing documents, reported. The question must be
answered “yes” if the gross value of Finally, there are revised glossary
conflict of interest policy statements
diversions exceeds the “lesser of definitions for “control,” “related
and financial statements available to
(1) 5% of... gross receipts for its tax party” and “escrow or custodial
the public.
year, (2) 5% of ... total assets as of the account.” These revisions are easier
Third, there is clarification for trig- end of its tax year, or (3) $250,000.” to read and understand.
gers requiring Schedule O explana- The 2008 Form made us guess what
tion. These include change in “material” meant. Category IV:
method of accounting, change in The IRS Got a Few New Ideas
oversight of financial reporting Third, there is a new Appendix with
Business Industry Codes to be used Part X, “Balance Sheet,” has two
process and an explanation of why
in Part VIII. The 2008 form merely changes. The first change is a new
the organization did not have an
referred us to the instructions for the requirement to report receivables
OMB A-133 audit if required.
Form 990T to get the information we from the highest compensated
Fourth, the IRS clarifies the Part VII needed. employees in addition to those from
instructions and states specifically current and former officers, direc-
that U.S. source income paid to a Fourth, the IRS modified that most tors, trustees and key employees,
foreign person by the organization, controversial question/answer duo while the 2008 requirement to also
or a related organization, must be about whether the organization had include “other related parties” has
reported in Part VII, even though an audit. Now, if such is the case, been dropped.
not reported on a W-2 or a 1042-S. there is a place to say that the organ-
ization is audited as part of a con- The second change involves a new
Finally, the IRS tells us what ques- solidated audit. computation on the part of filers. If
tions on Part V to leave blank if not an organization’s holdings of a pub-
applicable (1c, 7g and 7h). Fifth, the IRS clarified what goes on licly traded stock comprise more
the Information Technology (IT) line than five percent of an organiza-
Category III: on Part IX, “Statement of Functional tion’s total assets, then that stock
Someone at the IRS Tried to Expenses.” The answer pretty much should be listed on the “other secu-
Follow the 2008 Instructions goes like this: everything relating to rities” line (line 12) of Part X rather
IT, including contractor services, than on the “publicly traded securi-
First, the 2009 Form includes more hardware, software and support, ties” line.
key information in the questions min- goes on this line of the form; and
imizing the need to flip from Form to everything else—such as IT employ- Well, that about wraps things up.
Instructions, to Form to Instructions. ee payments, depreciation and This is, of course, a summary of the
For example, a Part IV trigger ques- amortization—does not. changes. The way I see it, there is
tion for Schedule D has been expand- nothing as good, nor as satisfying,
ed to six questions with plain English Sixth, Part VII (Compensation) mer- as reading the new instructions
words instead of line references as ited several clarifications. The yourself ... especially if you are a
used before. Another example is Part instructions have a new section on Form 990 geek like me.

The statements contained herein are provided for informational purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal,
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.