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June 1, 2009, 12:58 PM ET
IRS Releases Tips for Answering Form 990 Questions on Governance Matters
The Internal Revenue Service has released the third in a series of tips to help nonprofit organizations prepare their Form 990 informational tax return, the primary document that groups file each year.
The third batch of tips — which come in the form of frequently asked questions — focuses on information the IRS seeks about organizations’ governance policies and practices in Part VI of the Form 990, which was significantly redesigned for the 2008 tax year.
The IRS acknowledges in the tips that, in general, the policies and practices that the tax agency asks nonprofit organizations about in Part VI are not required of organizations by the federal tax code.
“The IRS will use the information reported in Part VI, along with other information reported on the form, to assess noncompliance and the risk of noncompliance with federal tax law for individual organizations and across the broader exempt sector,” the revenue service said.
The tenth question in Part VI asks, “Was a copy of the Form 990 provided to the organization’s governing body before it was filed? All organizations must describe in Schedule O the process, if any, the organization uses to review the Form 990.”
In its filing tips, the IRS says a nonprofit organization is not required by law to provide a copy of the form to its board or governing body, or have its board or governing body review the form, before it is filed with the IRS. “Nonetheless,” the tax agency said, “it is required to answer Question 10 regarding these matters.”
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