The New IRS Form 990: Are You Ready?

Clock 12amThe new IRS Form 990 will be required to report on tax years which began in 2008. While many of the changes simply require answering questions in a new order, others may require adopting new policies and record keeping systems.

The IRS acknowledges that many of the questions about board governance are not required by federal tax law. The questions seek info about governance and accountability policies, including the steps your nonprofit is taking to avoid conflicts of interest, private insurement, and excess benefits transactions such as excessive compensation.

Yes or no answers are required to questions about Conflict of Interest, Document Retention, AND Whistleblower policies. The absence of these policies may serve as a potential audit flag for the IRS. Download this sample Conflict of Interest policy or read more about Conflict of Interest policies in our frequently asked questions (you'll find this topic under accountability).

Many nonprofits will find the new requirements for disclosures about board members, donors, executive staff, and vendors more challenging. The new Form 990 has improved the format for supplying the information but added questions that will require learning more about the family and business relationships which may exist among these parties.

Things you can do to prepare 

  • Check out the new Form 990 and instructions, and identify the questions that will require new info from your organization.
  • Consider adopting Conflict of Interest, Whistleblower, and Document Retention policies, and if you do, implement a system to track how you monitor and enforce them.
  • Start collecting information from your board, largest donors, and highest compensated staff about business and family relationships they may have with each other.
  • If you already work with an accountant or attorney to prepare your 990, talk with them to identify the additional info they will need.
  • If you have prepared your own 990 in previous years, consider whether you may need to have your first filing of the new 990 in reviewed by a professional.

Helpful links to the IRS website

  • Review this chart to determine whether to file a 990, 990-EZ, or 990-N
  • Read their most frequently asked questions about the new form
  • View and print 990 Forms and Instructions
  • Read this press release, which links to detailed information about the history of revisions to Form 990, the public comment period that led to the newly revised instructions, and information to help nonprofits assess their next steps

Relevant TACS training opportunities