Ensuring Compliance with Form 990 Filing Requirements
Explore common pitfalls in filling out Form 990 after a decade, presented by Elaine L. Sommerville, CPA. Learn about different Form 990 variations based on organization size and revenue, along with crucial sections like mission statement clarity, detailed program accomplishments, Schedule A for 501(c)(3) organizations, and potential issues with Schedule F for foreign activities. Uncover insights on transactions with insiders, maintaining independence in operations, and avoiding pitfalls that may lead to losing public charity status.
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Form 990 What s Wrong After A Decade Presented by: Elaine L. Sommerville, CPA Sommerville & Associates, P.C.
Filing the Right Form Form 990-N electronically filed and for those organizations with average gross receipts of $50,000 or less Form 990-EZ organizations with gross receipts of less than $200,000 and assets of less than $250,000 Form 990 everyone else that has a Form 990 filing requirement but can t file one of the above forms Note: Supporting organizations have special filing requirements
Stating the Mission Part I Line 1 - Most significant activity is often poorly stated
Program Service Accomplishments Part III Line 4 Best foot forward include specifics
Schedule A All 501(c)(3) organizations must complete Schedule A this justifies why they are not a private foundation
Issues with Schedule A Most organizations must complete either Part II or III. Organizations in danger of losing public charity status often do not realize it until it is too late.
It doesnt take a lot of foreign activities or expenditures to trigger Schedule F Schedule F Missed or Overlooked
Part VI Questions on Operations Independence Line 1 Who is not independent Employees receiving any compensation from this organization or a related organization Independent contractors receiving $10,000 or more from this organization or a related organization Any person with a Schedule L transaction or a family member with a Schedule L transaction either with this organization or a related organization
Part VI Line 11 Form 990 Review and Board Interaction While it is important that the board have access to the Form 990 and knows what is reported, it is more important for the organization to have a process for reviewing the return and that process is well explained in Schedule O.
Part VI After more than 20 years of operating under Section 4958, most organizations aren t aware of it and don t understand it. Question 15 is this code section in a nutshell. If you must answer no then think about what can be put into a disclosure that would be positive for the organization.
Part VII Seldom is it completed correctly. Review carefully who must be reported and the compensation to be reported.
Reporting Revenue Properly Revenue on the Form 990 must be reported gross and cannot be netted against revenues. Transactions arising from prior years are net asset adjustments and do not get reported in current year numbers.
Special Events More Detail Than Imagined If gross income is $15,000 or more, then detail is required in Schedule G for any event generating more $5,000 or more in gross revenue.
Part IX Reporting Expenses Watch reporting on lines 5 & 6. If a fiscal year filer, these amounts will not match amounts reported on Part VII
NOW AVAILABLE Visit ChurchLawAndTaxStore.com to order the 2nd Edition of Church Compensation: From Strategic Plan to Compliance byElaine Sommerville, CPA. Elaine Sommerville, CPA Sommerville & Associates, P.C. elaine@nonprofit elaine@nonprofit- -tax.com www.elainesommerville.blogspot.com tax.com
