Tate & Tryon's Form 990 Forum

"F" is for Foreign

The IRS, of course, has always been interested in the foreign activities of domestic exempt organizations, but since 9/11 that interest has been somewhat more focused. Charities, especially, are subject to closer scrutiny, all the better to ferret out potential terrorist-funding activities. The current 990, however, provides precious little information regarding activities outside of the U.S.

So, it should be no surprise that the revised Form 990 devotes an entire schedule (Schedule F, predictably) to foreign goings-on. Any fundraising, grantmaking, trade or business, or program activities conducted by any organization, charitable or no, will have to be reported here, if total foreign revenues or expenses exceed $10,000. Associations, for example, will have to provide information about foreign conferences and trade shows, as well as foreign programs. Grantmakers will have to describe how they oversee foreign grants they've already given out (and keep really, really good records).

These new requirements will, of course, add to an organization's recordkeeping requirements. Organizations with foreign activities just might want to take a close look at Schedule F right now, and begin gathering the data that will be needed when it comes time to fill out that new Form 990. The IRS wants to know: how many foreign offices do you have? Foreign employees? What are your foreign activities? How much did you spend on these activities? Grantmakers will have to provide greater detail of grants and assistance to foreign organizations, governments, and individuals.

The initial Schedule F draft had organizations reporting foreign activities on a country-by-country basis. But, after many justified comments regarding personal safety of foreign employees and volunteers, IRS backed away from requiring orgs to pinpoint their activities that closely, settling instead on a "region" approach. Because we don't have instructions yet, we don't know what the "regions" will be, so that's a wait-and-see.

Want to see Schedule F? Handy link, right here.

Debbie

Here's a link to the 2008 Form 990

Here's a handy link to the current version of the 2008 Form 990.

http://www.irs.gov/charities/article/0,,id=176637,00.html

You need to view or print each schedule separately, but I've found it doesn't take too long to print them all out.

Happy reading,

Doug

Politics and Lobbying - Schedule C and watch the 527 Organizations!

I don't know what relevance one can assign to the lettering system of the new supporting schedules for the 2008 990.  However, it does seem more than a little coincidental that the IRS assigned the letter "C" for the schedule that discloses an exempt org's political and lobbying activities.

This lettering serves to place the schedule near the top of the pile - easily in view of the public (and IRS examiners).  It's no secret that the IRS has taken a keen interest in monitoring the political activities of 501(c)(3) orgs.  Thus, I'm not surprised that the political and lobbying activities schedule made its way to the top of the heap.  (Or, perhaps they simply thought "C" for "Campaign"?)

From a reader's perspective, Schedule C should actually make more sense than the hodgepodge of questions and disclosures spread among the old 990 and the old Schedule A.  At least Schedule C gets all the "governmental affairs" items into one place. 

A lot of Schedule C is really nothing new.  Much of it simply compiles questions and tables that were present on the old 990 and Schedule A.  However, there are a few items that I found interesting:

First, Part I-A is to be completed by ALL exempt orgs.  (Including 501(c)(3)s.)  Question #2 of this part asks the org to report its total "political expenditures".  If a 501(c)(3) is in the position of having to report any amount on this line, it seems likely to trigger an audit from the IRS.  501(c)(3) orgs are prohibited from engaging in any political activity.  Therefore, it stands to reason that a 501(c)(3) would never incur any political expenses.  If I was designing the IRS's audit selection criteria, I'd definitely tell the computer to spit out a list of any 501(c)(3) orgs that reported an amount on Part I-A, question #2.

Part I-C is especially interesting because orgs are now required to list (including EIN) all of the 527 organizations (i.e., PACs) to which it has contributed.  On the old 990, there was always a debate as to whether contributions to PACs should be included in the detailed listing of "grants and contributions" on Part II (Statement of Functional Expense).  Clearly, there's now nothing to debate.  Schedule C now provides a concise listing of every 527 supported by the organization.  This is something that each organization should carefully consider before making political expenditures.

Theoretically, most, if not all, contributions made to 527s are open to public disclosure through PAC filings with the FEC and state election agencies.  However, compiling a comprehensive listing of PACs supported by an exempt org would have been cumbersome.  Schedule C removes that barrier.  In my mind, the listing of supported 527 organizations is the single most important change regarding political and lobbying expense disclosure on the 2008 990.

Finally, Schedule C has been designed so that an org has got plenty of space to describe its direct and indirect political campaign activities.  This is a good thing, because such a description is now required!

Just in time for the 2008 political season!

Doug

Overview of Form 990 Changes

Here's a quick, "to the point" two page summary of the major changes to the 990.  As you'll see, the theme of the new 990 is increased transparency.

Naturally, this translates into more information about everyone's favorite topic - COMPENSATION!

Enjoy,

Doug

Download summary_of_990_redesign_for_2008.pdf

Welcome to Tate & Tryon's 990 Forum!

Hi everybody!

Things have been busy here at Tate & Tryon!  We're in the process of digesting the "final" version of the super-deluxe revised Form 990 which will be effective for 2008 tax years.  Naturally, this has caused quite a stir in the non-profit community.

Over the next few months, we're going to be analyzing all the ins and outs of this new bit of tax mania.

Stay tuned for the start of the analysis.

Doug Boedeker