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Instructions for Form 990-EZ
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2008
Department of the Treasury
Internal Revenue Service
Instructions for Form 990-EZ
Short Form Return of Organization Exempt From Income Tax Under Section
501(c), 527, or 4947(a)(1) of the Internal Revenue Code
(except black lung benefit trust or private foundation)
Section references are to the Internal Revenue Code unless
otherwise noted.
Contents
Page
• What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• Phone Help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• Email Subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• Photographs of Missing Children . . . . . . . . . . . . . . . . . . .
• General Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B Organizations Not Required to File Form 990 or
990-EZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C Accounting Periods and Methods . . . . . . . . . . . . . . . . .
D When, Where, and How To File . . . . . . . . . . . . . . . . . .
E Extension of Time To File . . . . . . . . . . . . . . . . . . . . . .
F Amended Return/Final Return . . . . . . . . . . . . . . . . . . .
G Failure-to-File Penalties . . . . . . . . . . . . . . . . . . . . . . . .
H Requirements for a Properly Completed Form
990-EZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I Group Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J Requirements for a Properly Completed Form
990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Completing the Heading of Form 990-EZ . . . . . . . . . . . . .
Part I Revenue, Expenses, and Changes in Net
Assets or Fund Balances . . . . . . . . . . . . . . . . . . . . . . . .
Part II Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . .
Part III Statement of Program Service
Accomplishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV List of Officers, Directors, Trustees, and
Key Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part V Other Information . . . . . . . . . . . . . . . . . . . . . . . .
Part VI Section 501(c)(3) Organizations Only . . . . . . . . . .
Signature Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• Appendix of Special Instructions . . . . . . . . . . . . . . . . . . .
A Exempt Organizations Reference Chart . . . . . . . . . . . .
B How to Determine Whether an Organization’s
Gross Receipts Are Normally $25,000 (or $5,000)
or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C Special Gross Receipts Test for Determining
Exempt Status of Section 501(c)(7) and 501(c)(15)
Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D Public Inspection of Returns . . . . . . . . . . . . . . . . . . . .
E Section 4958 Excess Benefit Transactions . . . . . . . . . .
F Forms and Publications to File or Use . . . . . . . . . . . . . .
G Use of Form 990, or Form 990-EZ, to Satisfy
State Reporting Requirements . . . . . . . . . . . . . . . . . . . .
• Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
What’s New
Unlike Form 990, which has been extensively redesigned for
2008, the 2008 Form 990-EZ is little changed. The dollar
thresholds for Form 990-EZ filers have been raised to allow
many more organizations to file Form 990-EZ. Several new
lines have been added, owing largely to revision of Schedule A.
Several unstructured attachments have been replaced by
Schedules or eliminated. Some instructions have been changed
in coordination with new Form 990 instructions.
Filing amounts. The gross receipts and total assets amounts
for Form 990-EZ filers have been raised. Beginning with the
2008 tax year, an organization may file a Form 990-EZ (rather
than a Form 990) if it satisfies both the gross receipts and total
assets tests set forth in this table.
May file 990-EZ for:
If gross receipts are: If total assets are:
2008 tax year (filed in
2009)
< $1 million
< $2.5 million
2009 tax year (filed in
2010)
< $500,000
< $1.25 million
2010 and later tax years
< $200,000
< $500,000
Replacement of Schedule A with new Part VI and
schedules. For 2008, many parts of the 2007 Schedule A
have been moved to new Schedules or to the Form 990 core
form, which required that corresponding changes be made to
Form 990-EZ. For 2008, Part VI of Form 990-EZ was added to
maintain reporting of information previously required of
organizations that filed a Form 990-EZ and completed Schedule
A.
• Line 47 – for determining which 501(c)(3) organizations are
required to complete Schedule C Part II regarding lobbying
activities (2007 Schedule A, Part VI-A and VI-B)
• Line 48 – for determining which 501(c)(3) schools are
required to complete Schedule E regarding private schools
(2007 Schedule A, Part V)
• Lines 49a and 49b – added to identify transactions between
501(c)(3) organizations and tax-exempt organizations other
than 501(c)(3) organizations (current Schedule A, Part VII).
However, 990-EZ filers are no longer required to provide the
details of such transactions.
• Line 50 – added to report compensation of the five highest
compensated employees other than officers, directors, trustees,
and key employees (current Schedule A, Part I); threshold
raised from $50,000 to $100,000
• Line 51 – added to report compensation of five highest
compensated independent contractors (2007 Schedule A, Parts
II-A and II-B); threshold raised from $50,000 to $100,000
Replacement of certain attachments with new schedules.
Certain unstructured attachments required in the 2007 Form
990-EZ were replaced with schedules or eliminated.
• Part I Revenue, Expenses, and Changes in Net Assets or
Fund Balances
• Line 5c – eliminated the attached schedule for sales of
non-inventory assets
• Line 6a – replaced attached schedule with Parts II and
III of Schedule G when gross revenue from special events
and gaming activities exceeds $15,000
• Part V Other Information
• Line 36 – replaced attached schedule with Schedule N
• Line 38a – replaced attached schedule with Schedule L,
Part II
• Line 40b – replaced attached schedule with Schedule L,
Part I
Cat. No. 22386X
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Instructions for Form 990-EZ
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Other changes to lines.
Line 33 — rephrased
Lines 44 and 45 – added to remind sponsoring organizations
of donor advised funds, and certain section 512(b)(13)
controlling organizations, that they must file Form 990 instead
of Form 990-EZ (see instructions to lines 44 and 45)
Line 46 – for determining which 501(c)(3) organizations are
required to complete Schedule C Part I regarding political
activities
Significant changes to instructions. The Form 990-EZ
instructions are no longer combined with the Form 990
instructions, although the General Instructions and Appendix of
Special Instructions are nearly the same for both forms.
Several of the General Instructions were moved to the
Appendix or eliminated.
Use of other forms as a substitute for Form 990-EZ or Form
990 financial reporting is eliminated.
The instructions clarify that organizations that claim
tax-exempt status but have not yet applied for or been
recognized as exempt must file Form 990-EZ or Form 990.
General Instruction A.
Amended Form 990-EZ returns now require an attachment
describing the amendments. See General Instruction F.
The attached schedule for grants now has a $5,000
threshold per grantee, and no longer requires the names of
grantee individuals. See line 10 instruction.
Organizations may choose one of two methods (Option 1 or
Option 2) of reporting compensation of their officers, directors,
trustees, key employees, and five highest compensated
employees. Option 1 is a simplified version of the new 2008
Form 990 method of compensation reporting (for example, an
organization filing Form 990-EZ that chooses Option 1 need not
complete Schedule J, which may be required for an
organization that completes Form 990). Option 1 requires
calendar-year compensation reporting and is based on Form
W-2 and Form 1099-MISC reporting. Option 2 is essentially the
2007 Form 990-EZ method of compensation reporting.
Whichever method the organization selects for 2008 must be
used consistently for all officers, directors, trustees, key
employees, and five highest compensated employees, and
must be consistently applied for all tax years beginning with
2008.
2. Sponsoring organizations of donor advised funds and
certain controlling organizations defined in section 512(b)(13)
must file Form 990 rather than 990-EZ regardless of the amount
of their gross receipts and total assets. See instructions to Form
990-EZ, lines 44 and 45, and General Instruction A, before
beginning to complete this form.
3. Form 990-EZ may not be used by a private foundation
required to file Form 990-PF, Return of Private Foundation or
Section 4947(a)(1) Nonexempt Charitable Trust Treated as a
Private Foundation. A section 501(c)(3) or 4947(a)(1)
organization should refer to the instructions to Schedule A to
determine whether it is a private foundation.
4. Form 990 must be used to file a group return, not Form
990-EZ. See General Instruction A.
Phone Help
If you have questions and/or need help completing Form 990 or
Form 990-EZ, please call 1-877-829-5500. This toll-free
telephone service is available Monday through Friday.
Email Subscription
The IRS has established a new subscription-based email
service for tax professionals and representatives of tax-exempt
organizations. Subscribers will receive periodic updates from
the IRS regarding exempt organization tax law and regulations,
available services, and other information. To subscribe, visit
www.irs.gov/eo.
Photographs of Missing Children
The Internal Revenue Service is a proud partner with the
National Center for Missing and Exploited Children.
Photographs of missing children selected by the Center may
appear in instructions on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if
you recognize a child.
General Instructions
Overview of Form 990-EZ. The Form 990-EZ is an annual
information return required to be filed with the IRS by many
organizations exempt from income tax under Internal Revenue
Code section 501(a), and certain political organizations and
nonexempt charitable trusts. Parts I through VI of the form must
be completed by all filing organizations, and require reporting
on the organization’s exempt and other activities, finances,
compliance with certain federal tax filings and requirements,
and compensation paid to certain persons. Additional schedules
are required to be completed depending upon the activities and
type of the organization. The entire completed Form 990-EZ
filed with the IRS, except for certain contributor information on
Schedule B (Schedule of Contributors), is required to be made
available to the public by the IRS and the filing organization,
and may be required to be filed with state governments to
satisfy state reporting requirements.
Purpose of Form
Form 990 and Form 990-EZ are used by tax-exempt
organizations, nonexempt charitable trusts, and section 527
political organizations to provide the IRS with the information
required by section 6033.
An organization’s completed Form 990, or Form 990-EZ, is
available for public inspection as required by section 6104.
Schedule B, Schedule of Contributors, is open for public
inspection for section 527 organizations filing Form 990 or Form
990-EZ. For other organizations that file Form 990 or Form
990-EZ, parts of Schedule B may be open to public inspection.
See the Instructions for Schedule B for more details.
Some members of the public rely on Form 990, or Form
990-EZ, as the primary or sole source of information about a
particular organization. How the public perceives an
organization in such cases may be determined by the
information presented on its return. Therefore, the return must
be complete, accurate, and fully describe the organization’s
programs and accomplishments.
Use Form 990 or Form 990-EZ to send a required election to
the IRS, such as the election to capitalize costs under section
266.
Organizations that have total gross income from
unrelated trades or businesses of at least $1,000 also
CAUTION are required to file Form 990-T, Exempt Organization
Business Income Tax Return, in addition to any required Form
990, 990-EZ, or 990-N.
!
Helpful Hints. The following hints may help you more
efficiently review these instructions and complete the form:
1. Throughout these instructions, “the organization” and the
“filing organization” both refer to the organization filing the Form
990-EZ.
2. The examples appearing throughout the Form 990-EZ
Instructions are illustrative only and for the purpose of
completing this Form, and are not all-inclusive.
3. Instructions to the Form 990-EZ Schedules are published
separately from these instructions.
Caution:
1. For the tax year beginning in 2008, Form 990-EZ is for
use by organizations with gross receipts of less than
$1,000,000 and total assets of less than $2,500,000 at the end
of their tax year.
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Instructions for Form 990-EZ
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990-EZ unless specifically excepted under General Instruction
B. Report amounts in U.S. dollars, and state what conversion
rate the organization uses. Combine amounts from within and
outside the U.S., and report the total for each item. All
information must be written in English.
Sponsoring organizations of donor advised funds.
Sponsoring organizations of donor advised funds, if required to
file an annual information return for the year, must file Form 990
and not Form 990-EZ. See line 44 and the related instructions.
Controlling organizations described in section 512(b)(13).
A controlling organization of one or more controlled entities, as
described in section 512(b)(13), must file Form 990 and not
Form 990-EZ if it is required to file an annual information return
for the year and if there was any transfer of funds between the
controlling organization and any controlled entity during the
year. See line 45 and the related instructions.
Section 509(a)(3) supporting organizations. A section
509(a)(3) supporting organization must file Form 990 or
990-EZ, even if its gross receipts are normally $25,000 or less,
unless it qualifies as one of the following:
1. an integrated auxiliary of a church;
2. the exclusively religious activities of a religious order;
3. a religious organization whose gross receipts are
normally not more than $5,000;
4. an organization whose gross receipts are normally not
more than $5,000 that supports a 501(c)(3) religious
organization; or
5. a charitable organization supported partly by funds
contributed by United States, State, or local governmental units,
or primarily by contributions of the general public, whose gross
receipts are normally not more than $5,000
A. Who Must File
Most organizations exempt from income tax under Internal
Revenue Code section 501(a) must file an annual information
return (Form 990 or Form 990-EZ) or an annual electronic
notice (Form 990-N), depending upon the organization’s gross
receipts and total assets.
For tax years beginning in 2008, if an organization has gross
receipts less than $1,000,000 and total assets at the end of the
year less than $2,500,000, it may choose to file Form 990-EZ,
Short Form Return of Organization Exempt From Income Tax,
instead of Form 990. See the instructions below for more
information. But see the special rules described below
regarding controlling organizations under section 512(b)(13)
and sponsoring organizations of donor advised funds.
For 2008, Form 990 (not 990-EZ or 990-N) must be filed by
an organization exempt from income tax under Internal
Revenue Code section 501(a) (including an organization that
has not yet applied for recognition of exemption) if it has either
gross receipts greater than or equal to $1,000,000 or total
assets greater than or equal to $2,500,000 at the end of the tax
year. This includes the following:
• organizations described in section 501(c)(3) (other than
private foundations)
• organizations described in other 501(c) subsections (other
than black lung benefit trusts)
Gross receipts are the total amounts the organization
received from all sources during its annual accounting period,
without subtracting any costs or expenses. See Appendix B for
a discussion of gross receipts. Total assets is the amount
reported by the organization on its balance sheet (Form
990-EZ, Part II, line 25, column (B)) as of the end of the year,
without reduction for liabilities.
For purposes of Form 990 or Form 990-EZ reporting, the
term “section 501(c)(3)” includes organizations exempt under
sections 501(e) and (f) (cooperative service organizations),
501(k) (child care organizations), and 501(n) (charitable risk
pools). In addition, any organization described in one of these
sections is also subject to section 4958 if it obtains a
determination letter from the IRS stating that it is described in
section 501(c)(3).
Form 990-N. If an organization normally has gross receipts of
$25,000 or less, it must file Form 990-N, Electronic Notice
(e-Postcard) for Tax-Exempt Organizations not Required To
File Form 990 or 990-EZ (with exceptions described below for
certain section 509(a)(3) supporting organizations and for
certain organizations described in General Instruction B). See
Appendix B.
Electronic filing. Organizations may file Form 990-EZ
electronically. See General Instruction D for who must file
electronically.
If the organization is described in 3, 4, or 5, then it must file
Form 990-N unless it voluntarily files Form 990 or Form 990-EZ.
Section 501(c)(7) and 501(c)(15) organizations. A section
501(c)(7) or 501(c)(15) organization applies the same gross
receipts test as other organizations to determine whether it
must file the Form 990 or Form 990-EZ, but uses a different
definition of gross receipts to determine whether it qualifies as
tax-exempt for the tax year. See Appendix C for more
information.
Section 527 political organizations. Tax-exempt political
organizations must file Form 990 or Form 990-EZ unless
excepted under General Instruction B. A qualified state or local
political organization must file Form 990 or Form 990-EZ only if
it has gross receipts of $100,000 or more. Political
organizations are not required to file Form 990-N.
Section 4947(a)(1) non-exempt charitable trusts. A
non-exempt charitable trust described under section 4947(a)(1)
of the Code (if it is not treated as a private foundation) is
required to file Form 990 or Form 990-EZ unless excepted
under General Instruction B. Such a trust is treated like an
exempt 501(c)(3) organization for purposes of completing the
form; all references to a 501(c)(3) organization shall include a
section 4947(a)(1) trust (for instance, such a trust must
complete Schedule A, Public Charity Status and Public
Support), unless otherwise specified. If such a trust does not
have any taxable income under Subtitle A of the Code, it can
file Form 990 or Form 990-EZ to meet its section 6012 filing
requirement and does not have to file Form 1041, U.S. Income
Tax Return for Estates and Trusts.
Group returns. A group return filed by the central or parent
organization on behalf of the subordinates in a group exemption
must be filed using Form 990, not Form 990-EZ.
Returns when exempt status not established. An
organization is required to file Form 990 or 990-EZ in
accordance with these instructions if the organization claims
exempt status under section 501(a) but has not yet established
such exempt status by filing Form 1023 or 1024 and receiving
an IRS letter recognizing exempt status. In such case the
organization must check the “application pending” checkbox in
Item B of the Form 990 or 990-EZ Header (whether or not a
Form 1023 or 1024 has yet been filed) to indicate that the Form
The Form 990 (including its schedules) has been
TIP substantially redesigned for 2008 and later tax years.
The IRS has provided transitional relief to small and
mid-size organizations, allowing many to file Form 990-EZ for
2008 and 2009 instead of Form 990, and providing them time to
become familiar with the new Form 990 and its requirements.
The following schedule sets forth the modified amounts for filing
Form 990-EZ (instead of Form 990) during this transition period:
May file 990-EZ for:
If gross receipts are: And if total assets
are:
2008 Form (generally < $1,000,000
filed in 2009)
< $2,500,000
2009 Form (generally < $500,000
filed in 2010)
< $1,250,000
2010 and later Forms < $200,000
< $500,000
Foreign and U.S. Possession organizations. Foreign
organizations and U.S. Possession organizations as well as
domestic organizations described above must file Form 990 or
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Instructions for Form 990-EZ
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990 or 990-EZ is being filed in the belief that the organization is
exempt under section 501(a), but that the IRS has not yet
recognized such exemption.
13. A black lung benefit trust described in section 501(c)(21).
Use Form 990-BL, Information and Initial Excise Tax Return for
Black Lung Benefit Trusts and Certain Related Persons,
14. A religious or apostolic organization described in section
501(d). Use Form 1065, U.S. Return of Partnership Income.
15. A stock bonus, pension, or profit-sharing trust that
qualifies under section 401. Use Form 5500, Annual Return/
Report of Employee Benefit Plan.
B. Organizations Not Required to File
Form 990 or 990-EZ
For tax years beginning in 2008, an organization does not have
to file Form 990 or 990-EZ even if it has at least $1,000,000 of
gross receipts or $2,500,000 of total assets if it is described
below (except for section 509(a)(3) supporting
organizations — the filing exceptions for supporting
organizations are described above). See General Instruction A
(above) for determining whether the organization may file Form
990-EZ instead of Form 990. An organization described in 2,
10, 11, or 13 below is required to file Form 990-N unless it
voluntarily files Form 990, 990-EZ, or 990-BL.
A public charity described in section 170(b)(1)(A)(iv) or
TIP (vi) or 509(a)(2) that is not within an advance ruling
period should first complete Part II or III of Schedule A
(Public Charity Status and Public Support) to ensure that it
continues to qualify as a public charity for the tax year. If it fails
to qualify as a public charity, then it must file Form 990-PF
rather than Form 990-EZ.
C. Accounting Periods and Methods
Certain religious organizations
1. A church, an interchurch organization of local units of a
church, a convention or association of churches, or an
integrated auxiliary of a church as described in Regulations
section 1.6033-2(h) (such as a men’s or women’s organization,
religious school, mission society, or youth group).
2. A church-affiliated organization that is exclusively
engaged in managing funds or maintaining retirement programs
and is described in Rev. Proc. 96-10, 1996-1 C.B. 577.
3. A school below college level affiliated with a church or
operated by a religious order, as described in Regulations
section 1.6033-2(g)(1)(vii).
4. A mission society sponsored by, or affiliated with, one or
more churches or church denominations, if more than half of
the society’s activities are conducted in, or directed at, persons
in foreign countries.
5. An exclusively religious activity of any religious order
described in Rev. Proc. 91-20.
Certain governmental organizations
6. A state institution whose income is excluded from gross
income under section 115.
7. A governmental unit or affiliate of a governmental unit
described in Rev. Proc. 95-48, 1995-2 C.B. 418.
8. An organization described in section 501(c)(1). A section
501(c)(1) organization is a corporation organized under an act
of Congress that is an instrumentality of the United States, and
exempt from federal income taxes.
Certain political organizations
9. A political organization that is:
• A state or local committee of a political party;
• A political committee of a state or local candidate;
• A caucus or association of state or local officials; or
• Required to report under the Federal Election Campaign
Act of 1971 as a political committee (as defined in section
301(4) of such Act).
Certain organizations with limited gross receipts
10. An organization whose gross receipts are normally
$25,000 or less. To determine what an organization’s gross
receipts “normally” are, see Appendix B.
11. A foreign organization, including organizations located in
U.S. Possessions, whose gross receipts from sources within
the U.S. are normally $25,000 or less. To determine what an
organization’s gross receipts “normally” are, see Appendix B.
Certain organizations that file different kinds of annual
information returns
12. A private foundation (including a private operating
foundation) exempt under section 501(c)(3) and described in
section 509(a). Use Form 990-PF, Return of Private
Foundation. Use Form 990-PF also for a taxable private
foundation, a section 4947(a)(1) nonexempt charitable trust
treated as a private foundation, and a private foundation
terminating its status by becoming a public charity under
section 507(b)(1)(B) (for tax years within its 60-month
termination period; if the organization successfully terminates,
then it files Form 990 or 990-EZ in its final year of termination).
See IRS Publication 538, Accounting Periods and
TIP Methods, about reporting changes to accounting periods
and methods.
ACCOUNTING PERIODS
Calendar year. Use the 2008 Form 990-EZ to report on the
2008 calendar year accounting period. A calendar year
accounting period begins on January 1 and ends on December
31.
Fiscal year. If the organization has established a fiscal year
accounting period, use the 2008 Form 990-EZ to report on the
organization’s fiscal year that began in 2008 and ended 12
months later. A fiscal year accounting period should normally
coincide with the natural operating cycle of the organization. Be
certain to indicate in the heading of Form 990-EZ the date the
organization’s fiscal year began in 2008 and the date the fiscal
year ended in 2009.
Short period. A short accounting period is a period of less
than 12 months, which exists when an organization first
commences operations, changes its accounting period, or
terminates. If the organization’s short year ended prior to
December 31, 2008 (not on or after December 31, 2008), it may
use the 2007 Form 990-EZ or Form 990 to file for such short
year.
Accounting period change. If the organization changes its
accounting period, it must file a Form 990-EZ for the short
period resulting from the change. Write “Change of Accounting
Period” at the top of this short-period return.
If the organization previously changed its accounting period
within the 10-calendar-year period that includes the beginning
of the short period, and it had a Form 990-EZ filing requirement
at any time during that 10-year period, it must also attach a
Form 1128 to the short-period return. See Rev. Proc. 85-58,
1985-2 C.B. 740.
ACCOUNTING METHODS
Unless instructed otherwise, the organization should generally
use the same accounting method on the return to report
revenue and expenses that it regularly uses to keep its books
and records. To be acceptable for Form 990-EZ reporting
purposes, however, the method of accounting must clearly
reflect income.
Accounting method change. Generally, the organization
must file Form 3115 to change its accounting method. An
exception applies where a 501(c) organization changes its
accounting method to comply with SFAS 116, Accounting for
Contributions Received and Contributions Made. See Notice
96-30, 1996-1 C.B. 378. An organization that makes a change
in accounting method, regardless of whether if files Form 3115,
and that has audited financial statements, must report any
adjustment required by Internal Revenue Code section 481(a)
on Form 990-EZ line 20 (other changes in net assets or fund
balances) as a net asset adjustment made during the tax year.
The organization must attach an explanation of the change and
net asset adjustment. The adjustment must be identified as the
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effect of changing to the method provided in SFAS 116. The
beginning of year statement of financial position (balance sheet)
should not be restated to reflect any prior period adjustments.
State reporting. Most states that accept Form 990-EZ in place
of their own forms require that all amounts be reported based
on the accrual method of accounting. If the organization
prepares Form 990-EZ for state reporting purposes, it may file
an identical return with the IRS even though the return does not
agree with the books of account, unless the way one or more
items are reported on the state return conflicts with the
instructions for preparing Form 990-EZ for filing with the IRS.
Example 1. The organization maintains its books on the
cash receipts and disbursements method of accounting but
prepares a Form 990-EZ return for the state based on the
accrual method. It could use that return for reporting to the IRS.
Example 2. A state reporting requirement requires the
organization to report certain revenue, expense, or balance
sheet items differently from the way it normally accounts for
them on its books. A Form 990-EZ prepared for that state is
acceptable for the IRS reporting purposes if the state reporting
requirement does not conflict with the Form 990-EZ
instructions.
An organization should keep a reconciliation of any
differences between its books of account and the Form 990-EZ
that is filed.
for this purpose include information returns (for example, Forms
W – 2, Forms 1099), income tax returns, employment tax returns
(including quarterly Forms 941), and excise tax returns.
If an organization is required to file a return electronically but
does not, the organization is considered not to have filed its
return, even if a paper return is submitted. See Regulations
section 301.6033-4 for more information.
For additional information on the electronic filing
requirement, visit www.irs.gov/efile.
The IRS may waive the requirements to file electronically in
cases of undue hardship. For information on filing a waiver, see
Notice 2005-88, 2005-48 I.R.B. 1060.
E. Extension of Time to File
Use Form 8868 to request an automatic 3-month extension of
time to file. Use Form 8868 also to apply for an additional (not
automatic) 3-month extension if the original 3 months was not
enough time. To obtain this additional extension of time to file,
the organization must show reasonable cause for the additional
time requested. See the Instructions for Form 8868.
F. Amended Return/Final Return
To change the organization’s return for any year, file a new
return including any required schedules. Use the version of
Form 990-EZ applicable to the year being amended. The
amended return must provide all the information called for by
the form and instructions, not just the new or corrected
information. Check the Amended Return box in the heading of
the return. Also, state in an attachment which parts and
schedules of the Form 990-EZ were amended and describe the
amendments.
The organization may file an amended return at any time to
change or add to the information reported on a previously filed
return for the same period. It must make the amended return
available for inspection for 3 years from the date of filing or 3
years from the date the original return was due, whichever is
later.
Use Form 4506 to obtain a copy of a previously filed return.
See www.irs.gov for information on getting blank tax forms.
If the return is a final return, see the Specific Instructions for
Form 990-EZ line 36 and Schedule N, Liquidation, Termination,
Dissolution or Significant Disposition of Assets, for further
details.
Amended returns and state filing considerations. State law
may require that the organization send a copy of an amended
Form 990-EZ return (or information provided to the IRS
supplementing the return) to the state with which it filed a copy
of Form 990-EZ originally to meet that state’s filing requirement.
A State may require an organization to file an amended Form
990-EZ to satisfy State reporting requirements, even if the
original return was accepted by the IRS.
D. When, Where, and How to File
File Form 990-EZ by the 15th day of the 5th month after the
organization’s accounting period ends (May 15 for a
calendar-year filer). If the regular due date falls on a Saturday,
Sunday, or legal holiday, file on the next business day. A
business day is any day that is not a Saturday, Sunday, or legal
holiday.
If the organization is liquidated, dissolved, or terminated, file
the return by the 15th day of the 5th month after liquidation,
dissolution, or termination.
If the return is not filed by the due date (including any
extension granted), attach a statement giving the reasons for
not filing on time.
Send the return to the:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
Foreign and U.S. possession organizations. If the
organization’s principal business, office, or agency is located in
a foreign country or U.S. possession, send the return to the:
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
Private delivery services. The organization can use certain
private delivery services designated by the IRS to meet the
“timely mailing as timely filing/paying” rule for tax return
payments. These private delivery services include only the
following:
• DHL Express (DHL): DHL “Same Day” Service, DHL Next
Day 10:30 AM, DHL Next Day 12:00 PM, DHL Next Day 3:00
PM, and DHL 2nd Day Service.
• Federal Express (FedEx): FedEx Priority Overnight, FedEx
Standard Overnight, FedEx 2Day, FedEx International Priority,
FedEx International First.
• United Parcel Service (UPS): UPS Next Day Air, UPS Next
Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air AM, UPS
Worldwide Express Plus, and UPS Worldwide Express.
The private delivery service can tell you how to get written
proof of the mailing date.
Electronic filing. The organization can file Form 990-EZ or
Form 990 and related forms, schedules, and attachments
electronically. However, if an organization files at least 250
returns of any type during the calendar year and has total
assets of $10 million or more at the end of the tax year, it must
file Form 990 electronically (and not Form 990-EZ). “Returns”
G. Failure-to-File Penalties
Against the organization. Under section 6652(c)(1)(A), a
penalty of $20 a day, not to exceed the smaller of $10,000 or
5% of the gross receipts of the organization for the year, may
be charged when a return is filed late, unless the organization
can show that the late filing was due to reasonable cause.
Organizations with annual gross receipts exceeding $1 million
are subject to a penalty of $100 for each day failure continues
(with a maximum penalty with respect to any one return of
$50,000). The penalty begins on the due date for filing the Form
990-EZ.
Tax exempt organizations which are required to file
electronically but do not are deemed to have failed to file the
return. This is true even if a paper return is submitted.
The penalty may also be charged if the organization files an
incomplete return, such as by failing to complete a required line
item or a required part of a schedule. To avoid penalties and
having to supply missing information later:
1. complete all applicable line items;
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2. unless instructed to skip a line, answer each question on
the return;
3. make an entry (including a zero when appropriate) on all
lines requiring an amount or other information to be reported;
and
4. provide required explanations as instructed.
is insufficient, or if a “Yes” or “No” answer is required but the
organization wishes to explain its answer.
Reporting proper amounts. Some lines may request
information reported on other forms filed by the organization. If
the organization is aware that the amount actually reported on
the other form is incorrect, it must report on Form 990-EZ the
information that should have been reported on the other form
(in addition to filing an amended form with the proper amount).
Also, this penalty may be imposed if the organization’s return
contains incorrect information. For example, an organization
that reports contributions net of related fundraising expenses
may be subject to this penalty.
Use of a paid preparer does not relieve the organization of
its responsibility to file a complete return.
Against Responsible Person(s). If the organization does not
file a complete return or does not furnish correct information,
the IRS will send the organization a letter that includes a fixed
time to fulfill these requirements. After that period expires, the
person failing to comply will be charged a penalty of $10 a day.
The maximum penalty on all persons for failures with respect to
any one return shall not exceed $5,000.
There are also penalties (fines and imprisonment) for willfully
not filing returns and for filing fraudulent returns and statements
with the IRS (sections 7203, 7206, and 7207). States may
impose additional penalties for failure to meet their separate
filing requirements.
Inclusion of activities and items of disregarded entities and
joint ventures. An organization must report in its Form
990-EZ all of the revenues, expenses, assets, liabilities, and net
assets or funds of a disregarded entity of which it is the sole
member, and must report in its Form 990-EZ its share of all
such items of a joint venture or other investment or
arrangement taxed as a partnership. This includes passive
investments. In addition, the organization generally must report
the activities of a disregarded entity or a joint venture in the
appropriate parts of schedules of the Form 990-EZ.
List of required schedules and attachments. An
organization may be required to file one or more of Schedules
A, B, C, E, G, L, or N, or various other attachments as
described in the form or instructions. The following is a list of
the Form 990-EZ schedules that the organization may have to
complete:
Schedule A, Public Charity Status and Public Support. See
Heading and Part V instructions.
Schedule B, Schedule of Contributors. See Heading Item H
instructions.
Schedule C, Political Campaign and Lobbying Activities, Part
I. See line 46 instructions.
Schedule C, Political Campaign and Lobbying Activities, Part
II. See line 47 instructions.
Schedule E, Schools. See line 48 instructions.
Schedule G, Supplemental Information Regarding
Fundraising or Gaming Activities, Parts II and III. See line 6
instructions.
Schedule L, Transactions with Interested Persons, Part I.
See line 40b instructions.
Schedule L, Transactions with Interested Persons, Part II.
See line 38 instructions.
Schedule N, Liquidation, Termination, Dissolution or
Significant Disposition of Assets, Parts I and II (substantial
contraction). See line 36 instructions.
J. Requirements for a Properly
Completed Form 990
All organizations must complete Parts I through VI of the Form
990-EZ, and any required schedules and attachments.
Public inspection. In general, all information the organization
reports on or with its Form 990-EZ, including schedules and
attachments, will be available for public inspection. Note,
however, the special rules for Schedule B (Schedule of
Contributors), a required schedule for certain organizations that
file Form 990-EZ. Make sure the forms and schedules are clear
enough to photocopy legibly. For more information on public
inspection requirements, see Appendix D and Publication 557.
Signature. A Form 990-EZ is not complete without a proper
signature. For details, see the instructions to the Signature
Block.
Recordkeeping. The organization’s records should be kept for
as long as they may be needed for the administration of any
provision of the Internal Revenue Code. Usually, records that
support an item of income, deduction, or credit must be kept for
a minimum of 3 years from the date the return is due or filed,
whichever is later. Keep records that verify the organization’s
basis in property for as long as they are needed to figure the
basis of the original or replacement property. Applicable law
and an organization’s policies may require that the organization
retain records longer than 3 years.
The organization should also keep copies of any returns it
has filed. They help in preparing future returns and in making
computations when filing an amended return.
Rounding off to whole dollars. The organization must round
off cents to whole dollars on the returns and schedules, unless
otherwise noted for particular questions. To round, drop
amounts under 50 cents and increase amounts from 50 to 99
cents to the next dollar. For example, $1.49 becomes $1 and
$2.50 becomes $3. If the organization has to add two or more
amounts to figure the amount to enter on a line, include cents
when adding the amounts and round off only the total.
Completing all lines. Make an entry (including a zero when
appropriate) on all lines requiring an amount or other
information to be reported. Do not leave any applicable lines
blank, unless expressly instructed to skip that line. If answering
a line is predicated on a “Yes” answer to the preceding line, and
if the organization’s answer to the preceding line was “No,” then
leave the “If Yes” line blank.
In general, answers may be explained or supplemented in
an attachment if the allotted space in the form or other schedule
The following is a list of required attachments to Form 990-EZ
(not including required schedules listed above):
1. Form 1128 for change of accounting period. See General
Instruction C.
2. Reasons for late filing. See General Instruction D.
3. Description of amendments in amended return. See
General Instruction F.
4. Name change amendment to organizing document. See
Heading Item B instructions.
5. Additional a.k.a. names. See Heading Item C
instructions.
6. Explanation of why an organization that reports more
than $15,000 in Part I, line 6a is not required to complete
Schedule G. See Part I, line 6 instructions.
7. Schedule of grants made. See Part I, line 10 instructions.
8. Explanation of other changes in net assets or fund
balances. See Part I, line 20 instructions.
9. Schedule listing other program services. See Part III, line
31 and Part III instructions.
10. Statement regarding personal benefit contracts. See Part
VI instructions.
11. Description of activities not previously reported. See Part
V, line 33 instructions.
12. Conformed copy of changes to organizing or governing
document. See Part V, line 34 instructions.
13. Reasons for not reporting income from business activities
on Form 990-T. See line 35 instructions.
14. Request and determination letter regarding termination of
exempt status. See Schedule N instructions.
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15. Articles of merger or dissolution, resolutions, and plans of
liquidation or merger. See Schedule N instructions.
Item C. Name and address
Enter the organization’s legal name in the “Name of
organization” box. If the organization operates under a name
different from its legal name, identify its alternate name, after
the legal name, by writing “a.k.a.” (also known as) and the
alternate name of the organization. If multiple a.k.a. names will
not fit in the box, list them in an attachment. However, if the
organization has changed its legal name, follow the instructions
for Name change in Item B — Checkboxes.
Include the suite, room, or other unit number after the street
address. If the Post Office does not deliver mail to the street
address and the organization has a P.O. box, show the box
number instead of the street address.
If the organization receives its mail in care of a third party
(such as an accountant or an attorney), enter on the street
address line C/O followed by the third party’s name and street
address or P.O. box.
For foreign addresses, enter information in the following
order: city, province or state, and the name of the country.
Follow the foreign country’s practice in placing the postal code
in the address. Please do not abbreviate the country name.
If a change of address occurs after the return is filed, use
Form 8822 to notify the IRS of the new address.
Assembling Form 990-EZ, schedules, and attachments.
Before filing the Form 990-EZ, assemble the package of form,
schedules, and attachments in the following order:
1. core form with all parts completed (Parts I-V, Part VI by
501(c)(3) organizations, Signature Block)
2. Schedules A, B, C, E, G, L, and/or N, completed as
applicable, filed in alphabetical order
3. attachments, completed as applicable (including
attachments to explain or supplement answers because the
allotted space in the form is insufficient) , filed in sequential
order.
Do not attach materials not authorized in the instructions.
Specific Instructions for Form
990-EZ
Completing the Heading of Form 990-EZ
The instructions that follow are keyed to items in the heading for
Form 990-EZ.
Item D. Employer identification number (EIN)
Item A. Accounting period
Use the employer identification number (EIN) provided to the
organization for filing its Form 990-EZ and federal tax returns.
The organization must have only one EIN. If the organization
has more than one EIN and has not been advised which to use,
notify the:
File the 2008 return for calendar year 2008 and fiscal years that
began in 2008 and ended in 2009. For a fiscal year return, fill in
the tax year space at the top of page 1. See General Instruction
C for additional information about accounting periods.
Item B. Checkboxes
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
State what EINs the organization has, the name and address
to which each number was assigned, and the address of the
organization’s principal office. The IRS will advise the
organization which number to use.
Address change, name change, and initial return. Check
the appropriate box if the organization changed its address or
legal name (not its “doing business as” name) since it filed its
previous return, or if this is the first time the organization is filing
either a Form 990 or a Form 990-EZ.
If the organization has changed its name, attach the
following documents:
IF the organization is:
THEN attach:
A corporation
Amendments to the articles of
incorporation with proof of filing
with the state of incorporation.
A trust
Amendments to the trust
agreements signed by the trustee.
An association
Amendments to the articles of
association, constitution, bylaws,
or other organizing document,
with the signatures of at least two
officers/members.
A subordinate organization in a group exemption that is
TIP filing an individual Form 990-EZ return must use its own
EIN, not that of the central organization or of the group
return.
A section 501(c)(9) voluntary employees’ beneficiary
TIP association must use its own EIN and not the EIN of its
sponsor.
Item E. Telephone number
Enter a telephone number of the organization that members of
the public and government personnel may use during normal
business hours to obtain information about the organization’s
finances and activities. If the organization does not have a
telephone number, enter the telephone number of an
organization official who can provide such information.
Termination. Check this box if the organization has
terminated its existence or ceased to be a section 501(a) or
section 527 organization and is filing its final return as an
exempt organization or 4947(a)(1) trust. See the instructions for
line 36 that discuss liquidations, dissolutions, terminations, or
substantial contractions. An organization that checks this box
must also attach Schedule N, Liquidation, Termination,
Dissolution or Significant Disposition of Assets.
Amended Return. Check this box if the organization
previously filed a return with the IRS for the same tax year and
is now filing another return for the same tax year to amend the
previously filed return. Attach a statement explaining which
Parts, Schedules, or attachments of the Form 990-EZ were
amended and describe the amendments. See General
Instruction F for more information.
Application pending. Check this box if the organization has
not yet filed either a Form 1023 or Form 1024 with the IRS, or
has filed one and is awaiting a response. If this box is checked,
the organization must complete all parts of the Form 990-EZ
and any required schedules.
Item F. Group Exemption Number
Enter the four-digit group exemption number if the organization
is included in a group exemption. The group exemption number
(GEN) is a number assigned by the IRS to the central/parent
organization of a group that has a group ruling. Contact the
central/parent organization to ascertain the GEN assigned.
If the organization is covered by a group exemption
letter as a subordinate organization, the organization
CAUTION should file Form 990-EZ only if the organization is not
included in a group return filed by the central/parent
organization.
!
!
CAUTION
The central/parent organization of a group ruling cannot
file a group return with Form 990-EZ but must use Form
990.
Section 501(c)(3) organizations and section 4947(a)(1)
nonexempt charitable trusts. Such organizations must
complete and attach Schedule A (Form 990 or 990-EZ), Public
Charity Status and Public Support.
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includes organizations exempt under sections 501(e), (f), (k),
and (n).
Item G. Accounting Method
Indicate the method of accounting used in preparing this return.
See General Instruction C.
Item K—Gross Receipts of $25,000 or Less
Check this box if the organization is not a section 509(a)(3)
supporting organization and its gross receipts are normally not
more than $25,000 but the organization chooses to file Form
990-EZ. If the organization chooses to file Form 990-EZ, be
sure to file a complete return. See Appendix B for a discussion
of gross receipts and General Instruction H for a discussion of a
complete return.
Item H. Schedule B
Whether or not the organization enters any amount on line 1 of
Form 990-EZ, the organization must either check the box in
item H or attach Schedule B. Failure to either check the box in
item H or file Schedule B will result in a determination that the
return is incomplete. See the Instructions for Schedule B for
more information.
Section 501(c)(7) and 501(c)(15) organizations use
different definitions of gross receipts to determine
CAUTION whether they qualify for tax exemption for the year. See
the definition of gross receipts for 501(c)(7) and 501(c)(15)
exemption purposes under Appendix C. Do not use the section
501(c)(7) or 501(c)(15) definition of gross receipts to determine
whether the organization’s gross receipts are normally $25,000
or less.
For purposes of Schedule B, contributors include
TIP individuals, fiduciaries, partnerships, corporations,
associations, trusts, and exempt organizations. For
organizations described in section 170(b)(1)(A)(iv) or (vi) or
509(a)(2), contributors also include governmental units.
!
Guidelines for Meeting the Requirements
of Schedule B
Item L—Determining Gross Receipts
Add lines 5b, 6b, and 7b to line 9 to determine gross receipts.
See Appendix B and Appendix C for discussion of gross
receipts.
For 2008 tax years, only those organizations with gross
receipts of less than $1,000,000 and total assets of less than
$2,500,000 at the end of the year can use the Form 990-EZ. If
the organization does not meet these requirements, it must file
Form 990, unless excepted under General Instruction B.
Section 501(c)(3) Organization Meeting the /
Support Test of 170(b)(1)(A)
13
If
A section 501(c)(3) organization that met the
33-and-1/3% support test of the regulations under
509(a)(1)/ 170(b)(1)(A) did not receive a contribution
of the greater of $5,000 or 2% of the amount on line
1 of Form 990-EZ from any one contributor,*
Then
The organization should check the box in item H to
certify that it is not required to attach Schedule B.
Otherwise
Complete and attach Schedule B.
!
CAUTION
Part I—Revenue, Expenses, and
Changes in Net Assets or Fund Balances
Section 501(c)(7), (8), or (10) Organizations
If
All organizations filing Form 990-EZ with the IRS or any state
must complete Part I. Some states that accept Form 990-EZ in
place of their own forms may require additional information. See
Appendix G.
A section 501(c)(7), (8), or (10) organization did not
receive any contribution or bequest for use
exclusively for religious, charitable, scientific, literary,
or educational purposes, or the prevention of cruelty
to children or animals (and did not receive any
noncharitable contributions of $5,000 or more as
described below under General Rule),
Then
The organization should check the box in item H to
certify that it is not required to attach Schedule B.
Otherwise
Complete and attach Schedule B.
Revenue:
Line 1. Contributions, Gifts, Grants, and Similar
Amounts Received
A. What is included on line 1
• Report amounts received as voluntary contributions; for
example, payments, or the part of any payment, for which the
payer (donor) does not receive full retail value (fair market
value) from the recipient (donee) organization. Contributions
are reported on line 1 regardless of whether they are deductible
by the contributor.
• Enter the gross amounts of contributions, gifts, grants, and
bequests that the organization received from individuals, trusts,
corporations, estates, affiliates, foundations, public charities,
and other exempt organizations, or raised by an outside
professional fundraiser.
• Report the value of noncash contributions at the time of the
donation. For example, report the gross value of a donated car
as of the time the car was received as a donation.
• Report all related expenses on lines 12 through 16. Show on
line 13 professional fundraising fees relating to the gross
amounts of contributions collected in the charity’s name by
fundraisers.
Reporting line 1 in accordance with SFAS 116, Accounting for
Contributions Received and Contributions Made, is acceptable
but not required by the IRS. However, state law may require it.
An organization that receives a grant to be paid in future years
should, according to SFAS 116, report the grant’s present value
on line 1. Accruals of present value increments to the unpaid
grant should also be reported on line 1 in future years.
A1. Contributions can arise from special events when an
excess payment is received for items offered. Fundraising
activities relate to soliciting and receiving contributions.
All Other Form 990-EZ Organizations (General
Rule)
If
The organization did not receive a contribution of
$5,000 or more from any one contributor* (reportable
on line 1 of the Form 990-EZ),
Then
The organization should check the box in item H to
certify that it is not required to attach Schedule B.
Otherwise
Complete and attach Schedule B.
Do not use the definition of gross receipts for section
501(c)(7) or 501(c)(15) exemption purposes (discussed
in Appendix C) to determine the amount to enter here.
* Total a contributor’s gifts of $1,000 or more to determine if a
contributor gave $5,000 or more. Do not include smaller gifts.
Item I—Website
Enter the organization’s website address. If the organization
does not maintain a website, enter “N/A” (not applicable).
Item J— Organization Type
Check the applicable box to show the organization’s type of tax
status. If the organization is exempt under section 501(c), check
the 501(c) box and insert the appropriate subsection number
within the parentheses (for example,“3” for a 501(c)(3)
organization). See the chart in Appendix A, Exempt
Organization Reference Chart. The term section 501(c)(3)
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However, special fundraising activities such as dinners,
door-to-door sales of merchandise, carnivals, and bingo games
can produce both contributions and revenue. Report as a
contribution, both on line 1 and on line 6a (within the
parentheses), any amount received through such a special
event that is greater than the fair market value (retail value) of
the merchandise or services furnished by the organization to
the contributor.
This situation usually occurs when organizations seek
support from the public through solicitation programs that are in
part special events or activities and are in part solicitations for
contributions. The primary purpose of such solicitations is to
receive contributions and not to sell the merchandise at its retail
value even though this might produce a profit.
Example. An organization announces that anyone who
contributes at least $40 to the organization can choose to
receive a book worth $16 retail value. A person who gives $40,
and who chooses the book, is really purchasing the book for
$16 and also making a contribution of $24. The contribution of
$24, which is the difference between the buyer’s payment and
the $16 retail value of the book, would be reported on line 1 and
again on line 6a (within the parentheses). The revenue received
($16 retail value of the book) would be reported in the
right-hand column on line 6a. Any expenses directly relating to
the sale of the book would be reported on line 6b. Any
fundraising expenses relating to the contribution of $24 would
be reported on lines 12 through 16.
If a contributor gives more than $40, that person would be
making a larger contribution, the difference between the book’s
retail value of $16 and the amount actually given. Rev. Rul.
67-246, 1967-2 C.B. 104, explains this principle in detail. See
also the instructions for line 6 and Pub. 526, Charitable
Contributions.
benefits the grantor incidentally (but see line 1, instruction B1,
below).
A5. Contributions or grants from governmental units. A
grant or other payment from a governmental unit is treated as a
grant equivalent to a contribution if its primary purpose is to
enable the recipient to provide a service to, or maintain a facility
for, the direct benefit of the public rather than to serve the direct
and immediate needs of the grantor (even if the public pays part
of the expense of providing the service or facility). (See also line
2, instruction D below.)
The following are examples of governmental grants and
other payments that are treated as contributions and reported
on line 1:
• Payments by a governmental unit for the construction or
maintenance of library or museum facilities open to the public.
• Payments by a governmental unit to nursing homes to
provide health care to their residents (but see treatment of
Medicare, Medicaid, and other third-party reimbursements on
behalf of specific individuals under the line 2 instructions
below).
• Payments by a governmental unit to child placement or child
guidance organizations under government programs to better
serve children in the community.
The following examples illustrate the distinction between
government payments reportable on lines 1 and 2:
• A payment by a governmental agency to a medical clinic to
provide vaccinations to the general public is a contribution
reported on line 1. A payment by a governmental agency to a
medical clinic to provide vaccinations to employees of the
agency is program service revenue reported on line 2.
• A payment by a governmental agency to an organization to
provide job training and placement for disabled individuals is a
contribution reported on line 1. A payment by a governmental
agency to the same organization to operate the agency’s
internal mail delivery system is program service revenue
reported on line 2.
A6. Contributions received through other fundraising
organizations. Contributions received indirectly from the
public through solicitation campaigns conducted by federated
fundraising agencies (such as United Way) are included on line
1.
A7. Contributions received from associated
organizations. Include on line 1 amounts contributed by other
organizations closely associated with the reporting organization.
This includes contributions received from a parent organization,
subordinate, or another organization having the same parent.
A8. Contributions from a commercial co-venture.
Include amounts contributed by a commercial co-venture on
line 1. These contributions are amounts received by the
organization for allowing an outside organization (donor) or
individual to use the recipient organization’s name in a sales
promotion campaign, such as where the outside organization
agrees to contribute 2% of all sales proceeds to the
organization.
At the time of any solicitation or payment, organizations
that are eligible to receive tax-deductible contributions
CAUTION should advise patrons of the amount deductible for
federal tax purposes. See Pub. 1771, Charitable Contributions Substantiation and Disclosure Requirements.
A2. Contributions can arise from special events when
items of only nominal or insubstantial value are given or
offered. If an organization offers goods or services of only
nominal or insubstantial value through a special event, or
distributes free, unordered, low-cost items to patrons, report the
entire amount received for such benefits as a contribution on
line 1. See also line 6, instruction B1 regarding nominal or
insubstantial value. Report all related expenses on lines 12
through 16.
Benefits have a nominal or insubstantial value if the
organization informs patrons how much of their payment is a
deductible contribution, and either:
1. The fair market value of all of the benefits received in
connection with the payment is not more than 2% of the
payment or $91, whichever is less, or
2. The payment is $45.50 or more and the only benefits
received in connection with the payment are token items
(bookmarks, calendars, key chains, mugs, posters, T-shirts,
etc.) bearing the organization’s name or logo. The cost to the
organization (as opposed to fair market value) of all benefits
received by a donor must, in the aggregate, be $9.10 or less.
!
B. What is not included on line 1
B1. Grants that are payments for services are not
contributions. A grant is a payment for services, and not a
contribution, when the terms of the grant provide the grantor
with a specific service, facility, or product, rather than providing
a benefit to the general public or that part of the public served
by the grant recipient. The recipient organization would report
such a grant as income on line 2 (program service revenue).
B2. Donations of services or of use of property. Do not
include the value of services donated to the organization, or of
the free use of property (such as equipment or facilities), as
contributions on line 1. However, for the optional reporting of
such amounts, see the instruction for donated services in Part
III.
A3. Contributions in the form of membership dues.
Include on line 1 membership dues and assessments to the
extent they are contributions and not payments for benefits
received. (See line 3, instruction C1.)
A4. Grants equivalent to contributions. Grants made to
encourage an organization receiving the grant to carry on
programs or activities that further the grant recipient’s exempt
purposes are grants that are equivalent to contributions. Report
them on line 1. The grantor may specify which of the recipient’s
activities the grant may be used for, such as an adoption
program or a disaster relief project.
A grant is still equivalent to a contribution if the grant
recipient performs a service, or produces a work product, that
Any unreimbursed expenses of officers, employees, or
volunteers do not belong on the Form 990-EZ. See the
explanations of charitable contributions and employee business
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expenses in Pub. 526, Charitable Contributions, and Pub. 463,
Travel, Entertainment, Gift, and Car Expenses, respectively.
B3. Section 501(c)(9), (17), and (18) organizations.
These organizations provide participants with life, sickness,
accident, welfare and unemployment insurance, pension(s), or
similar benefits, or a combination of these benefits. When such
an organization receives payments from participants, or their
employers, to provide these benefits, report the payments on
line 2 as program service revenue, rather than on line 1 as
contributions.
C. How to value noncash contributions. Report noncash
contributions on line 1 at fair market (retail) value. If fair market
value cannot be readily determined, use an appraised or
estimated value. See also the instructions for Part II of
Schedule B.
D. Schedule of contributors. Attach Schedule B if required.
See the Specific Instructions for Completing the Heading of
Form 990-EZ, Item H.
government agency for providing a service, facility, or product
for the primary benefit of the general public.
Line 3—Membership Dues and Assessments
Enter members’ and affiliates’ dues and assessments that are
not contributions.
A. What is included on line 3
A1. Dues and assessments received that compare
reasonably with the benefits of membership. When the
organization receives dues and assessments the value of which
compare reasonably with the value of benefits provided to
members (whether or not the membership benefits are used by
the members), report such dues and assessments on line 3.
A2. Organizations that generally match dues and
benefits. Organizations described in section 501(c)(5), (6), or
(7) generally provide benefits with a reasonable relationship to
dues, although benefits to members may be indirect.
B. Examples of membership benefits. These include
subscriptions to publications; newsletters (other than one about
the organization’s activities only); free or reduced-rate
admissions to events sponsored by the organization; use of the
organization’s facilities; and discounts on articles or services
that both members and nonmembers can buy. In figuring the
value of membership benefits, disregard such intangible
benefits as the right to attend meetings, vote, or hold office in
the organization, and the distinction of being a member of the
organization.
Section 501(c)(3) organizations must compute the
TIP amount of contributions according to the above
instructions in preparing the support schedule in Part II
or III of Schedule A (Form 990 or 990-EZ), Public Charity Status
and Public Support.
Line 2—Program Service Revenue Including
Government Fees and Contracts
Enter the total program service revenue (exempt function
income). Program services are primarily those that form the
basis of an organization’s exemption from tax.
A. Examples. A clinic would include on line 2 all of its charges
for medical services (whether to be paid directly by the patients
or through Medicare, Medicaid, or other third-party
reimbursement), laboratory fees, and related charges for
services.
Program service revenue also includes tuition received by a
school; revenue from admissions to a concert or other
performing arts event or to a museum; royalties received as
author of an educational publication distributed by a commercial
publisher; payments received by a section 501(c)(9)
organization from participants or employers of participants for
health and welfare benefits coverage; and registration fees
received in connection with a meeting or convention.
B. Program-related investment income. Program service
revenue also includes income from program-related
investments. These investments are made primarily to
accomplish an exempt purpose of the investing organization
rather than to produce income. Examples of program-related
investments are scholarship loans and low-interest loans to
charitable organizations, indigents, or victims of a disaster. See
also the instructions for line 4.
Rental income received from an exempt function is another
example of program-related investment income, such as
below-market rents from housing leased to low-income
persons. When an organization rents to an unaffiliated exempt
organization at less than fair rental value for the purpose of
aiding that tenant’s exempt function, the reporting organization
should report such rental income as program service revenue
on line 2. For purposes of this return, report all rental income
from an affiliated organization on line 2.
C. Unrelated trade or business activities. Unrelated trade or
business activities (not including any special events or
activities) that generate fees for services may also be program
service activities. A social club, for example, should report as
program service revenue the fees it charges both members and
nonmembers for the use of its tennis courts and golf course.
D. Government fees and contracts. Program service
revenue includes income earned by the organization for
providing a government agency with a service, facility, or
product that benefited that government agency directly rather
than benefiting the public as a whole. See line 1, instruction A5,
for reporting guidelines when payments are received from a
C. What is not included on line 3
C1. Dues or assessments received that exceed the value
of available membership benefits. Dues received by an
organization, to the extent they exceed the monetary value of
the membership benefits available to the dues payer, are a
contribution that should be reported on line 1.
C2. Dues received primarily for the organization’s
support. If a member pays dues primarily to support the
organization’s activities, and not to obtain benefits of more than
nominal or insubstantial monetary value, those dues are a
contribution to the organization includible on line 1.
Example. M is an organization whose primary purpose is to
support the local symphony orchestra. Members have the
privilege of purchasing subscriptions to the symphony’s annual
concert series before they go on sale to the general public, but
must pay the same price as any other member of the public.
They also are entitled to attend a number of rehearsals each
season without charge. Under these circumstances, M’s
receipts from members are contributions reported on line 1.
Line 4—Investment Income
A. What is included on line 4
A1. Interest on savings and temporary cash
investments. Include the amount of interest received from
interest-bearing checking accounts, savings, and temporary
cash investments, such as money market funds, commercial
paper, certificates of deposit, and U.S. Treasury bills or other
governmental obligations that mature in less than one year.
So-called dividends or earnings received from mutual savings
banks, money market funds, etc., are actually interest and
should be included on this line.
A2. Dividends and interest from securities. Include
dividends from equity securities (stocks), and interest income
from debt securities and notes and loans receivable, other than
program-related investments. Include amounts received from
payments on securities loans, as defined in section 512(a)(5).
A3. Gross rents. Include gross rental income received
during the year from investment property (other than
program-related investments reported on line 2).
A4. Other investment income. Include, for example,
royalties received by the organization from licensing the
ongoing use of its property to others (other than royalties
generated in the conduct of the organization’s exempt function,
such as royalties received from a publisher for an educational
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• Gross sales price,
• Cost, other basis, or if donated, value at time acquired,
• Expense of sale and cost of improvements made after
work authored by the organization). Typically, royalties are
received for the use of intellectual property, such as copyrights,
patents, and trademarks. Royalties also include payments to
the owner of property for the right to exploit natural resources
on the property, such as oil, natural gas, or minerals.
acquisition, and
• Depreciation since acquisition, if depreciable property.
B. What is not included on line 4
Lines 6a through 6c —Special Events and Activities
B1. Capital gains dividends and unrealized gains and
losses. Do not include on this line any capital gains dividends.
They are reported on line 5. Also do not include unrealized
gains and losses on investments carried at market value. See
the instructions for line 20.
B2. Exempt function revenue (program service). Do not
include on line 4 amounts that represent income from an
exempt function (program service). Report these amounts on
line 2 as program service revenue. Report expenses related to
this income on lines 12 through 16.
Exempt function rental income. An organization whose
exempt purpose is to provide low-rental housing to persons with
low income receives exempt function income from such rentals.
An organization receives exempt function income if it rents or
sublets rental space to a tenant whose activities are related to
the reporting organization’s exempt purpose. Exempt function
income also arises when an organization rents to an unaffiliated
exempt organization at less than fair rental value for the
purpose of helping that unaffiliated organization carry out its
exempt purpose. Report rental income received in these
instances on line 2 and not on line 4. Only for purposes of
completing this return, treat income from renting property to
affiliated exempt organizations as exempt function income and
include such income on line 2 as program service revenue.
Other program-related investments. Investment income
from program-related investments should be reported on line 2.
See the line 2 instructions for a discussion of program-related
investments. Gains or losses from the sale of program-related
investment assets are reported on line 5.
On the appropriate line, enter the gross revenue, expenses,
and net income (or loss) from all special events and activities,
such as dinners, dances, carnivals, concerts, sports events,
auctions, raffles, bingo games, other gaming activities, and
door-to-door sales of merchandise.
Special events and activities only incidentally accomplish an
exempt purpose. Their sole or primary purpose is to raise funds
(that are other than contributions) to finance the organization’s
exempt activities. They do not include events or activities that
substantially further the organization’s exempt purpose even if
they also raise funds. They do not include activities regularly
carried on (except for gaming).
Example. An organization formed to promote and preserve
folk music and related cultural traditions holds an annual folk
music festival featuring concerts, handcraft demonstrations, and
similar activities. Because the festival directly furthers the
organization’s exempt purpose, income from ticket sales should
be reported on line 2 as program service revenue.
Special events and activities raise funds by offering goods or
services that have more than a nominal or insubstantial value
(compared to the price charged) for a payment that is more
than the direct cost of those goods or services. See line 1
instructions A1 and A2 for a discussion on contributions
reportable on line 1 and revenue reportable on line 6.
The fact that tickets, advertising, or solicitation materials
refer to a required payment as a donation or contribution does
not control how these payments should be reported on Form
990-EZ.
The gross revenue from gaming activities and other special
events must be reported in the right-hand column on line 6a
without reduction for cash or noncash prizes, cost of goods
sold, compensation, fees, or other expenses.
Gaming. Check the box for gaming if the organization
conducted directly, or through a promoter, any amount of
gaming during the year. Report the gross revenue, expenses,
and net income (or loss) from all gaming activities, whether or
not regularly carried on, in line 6.
Gaming includes (but is not limited to): bingo, pull tabs,
instant bingo raffles, scratch-offs, charitable gaming tickets,
break-opens, hard cards, banded tickets, jar tickets, pickle
cards, Lucky Seven cards, Nevada Club tickets, casino nights,
Las Vegas nights, and coin-operated gambling devices.
Coin-operated gambling devices include slot machines,
electronic video slot or line games, video poker, video
blackjack, video keno, video bingo, video pull tab games, etc.
Many games of chance are taxable. Income from bingo
games is not subject to the tax on unrelated business income if
the games meet the legal definition of bingo. For a game to
meet the legal definition of bingo, wagers must be placed,
winners must be determined, and prizes or other property must
be distributed in the presence of all persons placing wagers in
that game.
A wagering game that does not meet the legal definition of
bingo does not qualify for the exclusion, regardless of its name.
For example, “instant bingo,” in which a player buys a
pre-packaged bingo card with pull-tabs that the player removes
to determine if he or she is a winner, does not qualify. See
Publication 598, Tax on Unrelated Business Income of Exempt
Organizations and Form 990-T.
Lines 5a through 5c—Gains (or Losses) From
Sale of Assets Other Than Inventory
A. What is included on line 5
Report on line 5a all sales of securities and sales of all other
types of investments (such as real estate, royalty interests, or
partnership interests) as well as sales of all other non-inventory
assets (such as program-related investments and fixed assets
used by the organization in its related and unrelated activities).
Also report capital gains dividends, the organization’s share of
capital gains and losses from a partnership, and capital gains
distributions from trusts.
Total the cost or other basis (less depreciation) and selling
expenses and enter the result on line 5b. On line 5c, enter the
net gain or loss.
For reporting sales of securities on Form 990-EZ, the
organization may use the more convenient way to figure the
organization’s gain or loss from sales of securities by
subtracting from the sales price the average-cost basis of the
particular security sold. However, the average-cost basis is not
used to figure the gain or loss from sales of securities
reportable on Form 990-T.
B. What is not included on line 5
Do not include on line 5 any unrealized gains or losses on
securities that are carried in the books of account at market
value. See the instructions for line 20.
C. Books and records
The organization should maintain books and records to
substantiate information regarding any securities or other
assets sold for which market quotations were not published or
were not otherwise readily available. The recorded information
should include:
• A description of the asset,
• Date acquired,
• Whether acquired by donation or purchase,
• Date sold and to whom sold,
A. What is included on line 6
A1. Gross revenue/contributions. When an organization
receives payments for goods or services offered through a
special event, enter:
1. As gross revenue, on line 6a (in the right-hand column),
the retail value of the goods or services,
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2. As a contribution, on both line 1 and line 6a (within the
parentheses), any amount received that exceeds the retail
value of the goods or services given.
Example. At a special event, an organization received $100
in gross receipts for goods valued at $40. The organization
entered gross revenue of $40 on line 6a and entered a
contribution of $60 on both line 1 and within the parentheses on
line 6a. The contribution was the difference between the gross
revenue of $40 and the gross receipts of $100.
A2. Raffles or lotteries. Report as revenue, on line 6a,
any amount received from raffles or lotteries that require
payment of a specified minimum amount for each entry, unless
the prizes awarded have only nominal or insubstantial value.
See line 6, instruction B1 and B2, below.
A3. Direct expenses. Report on line 6b only the direct
expenses attributable to the goods or services the buyer
receives from a special event. If an expense is included on line
6b, do not report it again on line 7b. Report cost of goods
related to the sale of inventory on line 7b. Fundraising
expenses attributable to contributions reported on lines 1 and
6a (within the parentheses) are reportable on lines 12 through
16.
$4,000 in contributions) from the dinner and $14,000 in gross
revenue from the bingo nights. Organization Y is directed to
Schedule G because it reports $16,000 on line 6a, which
exceeds the $15,000 threshold for filing Schedule G.
Organization Y must report the dinner as a fundraising event in
Part II of Schedule G because the gross receipts from the
dinner (including contributions) was $6,000 (in excess of
$5,000). Organization Y must report the $14,000 in gross
revenue from the conduct of bingo games in Part III of Schedule
G, even though that amount is less than $15,000, because the
total amount reported on line 6a exceeded $15,000.
Example 3. Organization Z conducted six special events
(other than gaming) during the tax year. Each special event
generated $3,000 in gross revenue and $1,000 in contributions.
Organization Z is directed to Schedule G because it reports
$18,000 in line 6a. Organization Z is not required to file Part II
of Schedule G, however, as each event had gross receipts of
$4,000, below the $5,000 threshold for reporting fundraising
events in Part II. Because Organization Z had no gross revenue
from gaming, it is not required to file Part III of Schedule G.
Organization Z should describe the above facts in its
attachment explaining that it is not required to file Schedule G
even though its line 6a amount exceeds $15,000.
B. What is not included on line 6
Lines 7a through 7c —Gross Sales of Inventory
B1. Sales or gifts of goods or services of only nominal
or insubstantial value. If the goods or services offered at the
special event have only nominal or insubstantial value, include
all of the receipts as contributions on line 1 and all of the related
expenses on lines 12 through 16. See line 1, instruction A2 for
a description of nominal or insubstantial benefits.
B2. Sweepstakes, raffles, and lotteries. Report as a
contribution, on line 1, the proceeds of solicitation campaigns in
which the names of contributors and other respondents (who
were not required to make a minimum payment) are entered in
a drawing for prizes.
Where a minimum payment is required for each raffle or
lottery entry and prizes of only nominal or insubstantial value
are awarded, report any amount received as a contribution.
Report the related expenses on lines 12 through 16.
B3. Activities that generate only contributions are not
special events. An activity that generates only contributions,
such as a solicitation campaign by mail, is not a special event.
Any amount received should be included on line 1 as a
contribution. Related expenses are reportable on lines 12
through 16.
Line 7a. Sales of inventory. Include on line 7a the gross
sales (less returns and allowances) of inventory items, whether
the sales activity is an exempt function or an unrelated trade or
business. Inventory items are goods the organization makes to
sell to others, or that it buys for resale. Include all inventory
sales except sales of goods at special events, which are
reportable on line 6. Do not include on line 7 sales of
investments on which the organization expected to profit by
appreciation and sale; report sales of these investments on line
5.
Line 7b. Cost of goods sold. On line 7b, report the cost of
goods sold related to sales of such inventory. The usual items
included in cost of goods sold are direct and indirect labor,
materials and supplies consumed, freight-in, and a proportion of
overhead expenses. Marketing and distribution expenses are
not includible in cost of goods sold but are reported on lines 12
through 16.
Line 8—Other Revenue
Enter the total income from all sources not covered by lines 1
through 7. Examples of types of income includible on line 8 are
interest on notes receivable not held as investments or as
program-related investments (defined in the line 2 instructions);
interest on loans to officers, directors, trustees, key employees,
and other employees; and royalties that are not investment
income or program service revenue.
C. Attached Schedule G, Parts II and III
If the organization reports more than $15,000 in line 6a (not
including the contribution amount in the parentheses), then it
must complete Part II of Schedule G (Form 990 or 990-EZ),
Supplemental Information Regarding Fundraising or Gaming
Activities, for any special events (other than gaming) with gross
receipts greater than $5,000. (Please note that Schedule G
refers to special events other than gaming as “fundraising
events.”) If the organization reports more than $15,000 in line
6a (not including the contribution amount in the parentheses)
and any part of the amount is gross revenue from gaming, then
it must complete Schedule G, Part III to report its gaming
activities. If the organization reports more than $15,000 in line
6a (not including the contribution amount in the parentheses)
but is not required to complete either Part II or Part III of
Schedule G, then explain this in an attachment. Organizations
filing Form 990-EZ are not required to complete Part I of
Schedule G. The following examples illustrate these Form
990-EZ reporting rules for Schedule G.
Example 1. Organization X receives gross revenue of
$14,000 during the tax year from the sale of pull tabs.
Organization X reports $14,000 in line 6a. Organization X is not
required to file Schedule G because its line 6a amount does not
exceed $15,000.
Example 2. Organization Y conducted during the tax year
its annual fundraising dinner plus monthly bingo nights.
Organization Y received $2,000 in gross revenue (excluding
Expenses:
Line 10—Grants and Similar Amounts Paid
A. What is included on line 10
Enter the amount of actual grants and similar amounts paid to
individuals and organizations selected by the filing organization.
Include scholarship, fellowship, and research grants to
individuals.
A1. Specific assistance to individuals. Include on this
line the amount of payments to, or for the benefit of, particular
clients or patients, including assistance by others at the
organization’s expense.
A2. Payments, voluntary awards, or grants to affiliates.
Include on line 10 certain types of payments to organizations
affiliated with (closely related to) the filing organization. These
payments include predetermined quota support and dues
payments by local organizations to their state or national
organizations.
!
CAUTION
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If the organization uses Form 990-EZ for state reporting
purposes, be sure to distinguish between payments to
affiliates and awards and grants. See Appendix G.
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B. What is not included on line 10
and the employer’s share of contributions to employee benefit
programs (such as insurance, health, and welfare programs)
that are not an incidental part of a pension plan.
B1. Administrative expenses. Do not include on this line
expenses made in selecting recipients or monitoring
compliance with the terms of a grant or award. Enter those
expenses on lines 12 through 16.
B2. Purchases of goods or services from affiliates. Do
not report the cost of goods or services purchased from
affiliates on line 10. Report these expenses on lines 12 through
16.
B3. Membership dues paid to another organization.
Report membership dues that the organization pays to another
organization (other than an affiliated organization) for general
membership benefits, such as regular services, publications,
and materials, on line 16 as Other expenses.
Complete Form 5500, Annual Return/Report of
TIP Employee Benefit Plan, if the organization is required to
file it.
Also include in the total the amount of federal, state, and
local payroll taxes for the year that are imposed on the
organization as an employer. This includes the employer’s
share of social security and Medicare taxes, Federal
unemployment tax (FUTA), state unemployment compensation
tax, and other state and local payroll taxes. Taxes withheld from
employees’ salaries and paid over to the various governmental
units (such as Federal and state income taxes and the
employees’ share of social security and Medicare taxes) are
part of the employees’ salaries included on line 12. Report
expenses paid or incurred for employee events such as a picnic
or holiday party on this line.
C. Attached schedule
Attach a schedule to itemize grants (and similar amounts) in
excess of $5,000 paid during the organization’s tax year to a
grantee organization or individual. Show on this schedule:
• Each class of activity,
• The grantee’s name and address (for grantee organizations,
not grantee individuals),
• The amount given, and
• The relationship of the grantee (in the case of grants to
individuals) if the relationship is by blood, marriage, adoption, or
employment (including employees’ children) to any person or
corporation with an interest in the organization, such as a
creator, donor, director, trustee, officer, key employee, etc.
Line 13—Professional Fees and Other Payments to
Independent Contractors
Enter the total amount of legal, accounting, auditing, other
professional fees (such as fees for fundraising or investment
services) and related expenses charged by outside firms and
individuals who are not employees of the organization.
Do not include any penalties, fines, or judgments imposed
against the organization as a result of legal proceedings; report
and identify those expenses on line 16. Report on line 12 fees
paid to directors and trustees. Also report on line 12
compensation to employees that provide fundraising, legal,
accounting, or other professional services as part of their
employment. Report broker fees/commissions as sales
expenses on line 5b.
If the individual grantee is related to a grantor or
contributor to the organization, then do not provide the
CAUTION name of the grantor or contributor. Instead, identify such
persons generically as “grantee” and as “grantor” or
“contributor.”
If any affiliate received any payment reported on line 10,
then so indicate, and also specify the purpose of the payment.
Classify activities on this schedule in more detail than by
using such broad terms as charitable, educational, religious, or
scientific. For example, identify payments to affiliates; payments
for nursing services; fellowships; and payments for food,
shelter, or medical services for indigents or disaster victims.
Colleges, universities, and primary and secondary schools
reporting scholarships or other financial assistance may instead
attach a statement that (a) groups each type of financial aid
provided; (b) indicates the number of individuals who received
the aid; and (c) specifies the aggregate dollar amount.
If an organization gives property other than cash and
measures an award or grant by the property’s fair market value,
also show on this schedule:
• A description of the property,
• The book value of the property,
• How the organization determined the book value,
• How the organization determined the fair market value, and
• The date of the gift.
Any difference between a property’s fair market value and
book value should be recorded in the organization’s books of
account and on line 20.
!
In some cases the organization may be required to
TIP report payments to an independent contractor on Form
1099-MISC, Miscellaneous Income.
Line 14—Occupancy, Rent, Utilities, and
Maintenance
Enter the total amount paid or incurred for the use of office
space or other facilities, including rent or mortgage interest;
heat, light, power, and other utilities; outside janitorial services;
real estate taxes and property insurance attributable to rental
property; and similar expenses.
These expenses relate to real property actually occupied by
the organization, whether as tenant or owner, or used in the
conduct of exempt functions (such as low-income rental
housing). Report on line 16 expenses relating to real property
used for investment purposes. If the organization occupies part
of the property and leases a part to others, then expenses must
be reasonably allocated between occupancy-related and
investment-related expenses, and reported accordingly on lines
14 and 16.
If the organization records depreciation on property it
occupies, enter the total for the year. For an explanation of
acceptable methods for computing depreciation, see Pub. 946.
Do not subtract from rental expenses reported on line 14 or
16 any rental income received from renting or subletting rented
space. See the instructions for lines 2 and 4 to determine
whether such income is reportable as exempt function income
or investment income. However, report on line 14 or 16 any
rental expenses for rental income reported on lines 2 and 4.
Line 11—Benefits Paid To or For Members
For an organization that gives benefits to members or
dependents (such as organizations exempt under section
501(c)(8), (9), or (17)), enter the amounts paid for: (a) death,
sickness, hospitalization, or disability benefits; (b)
unemployment compensation benefits; and (c) other benefits.
Report on line 12, rather than line 11, the cost of
employment-related benefits (such as health insurance) that the
organization gives its officers and employees.
Line 15—Printing, Publications, Postage, and
Shipping
Enter the printing and related costs of producing the reporting
organization’s own newsletters, leaflets, films, and other
informational materials on this line. Include the costs of outside
mailing services on this line. Also include the cost of any
purchased publications as well as postage and shipping costs
not reportable on lines 5b, 6b, or 7b. Do not include any
expenses, such as salaries, for which a separate line is
provided.
Line 12—Salaries, Other Compensation, and
Employee Benefits
Enter the total salaries and wages paid to all employees and
the fees paid to officers, directors, and trustees. Include the
total of the employer’s share of the contributions the
organization paid to qualified and nonqualified pension plans
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Line 16—Other Expenses
Line 27—Net Assets or Fund Balances
Report expenses here that are not reportable in lines 10-15.
Include here such expenses as penalties, fines, and judgments;
unrelated business income taxes; insurance, interest,
depreciation, and real estate taxes not reported as occupancy
expenses; travel and transportation costs; and expenses for
conferences, conventions, and meetings.
Some states that accept Form 990-EZ in satisfaction of their
filing requirements may require that certain types of
miscellaneous expenses be itemized. See Appendix G.
Subtract line 26 (total liabilities) from line 25 (total assets) to
determine net assets. Enter this net asset amount on line 27.
The amount entered in column (B) must agree with the net
asset or fund balance amount on line 21.
States that accept Form 990-EZ as their basic report form
may require a separate statement of changes in net assets.
See Appendix G.
Part III—Statement of Program Service
Accomplishments
Net Assets:
A program service is a major (usually ongoing) objective of an
organization, such as adoptions, recreation for the elderly,
rehabilitation, or publication of journals or newsletters.
Line 18—Excess or (Deficit) for the Year
Enter the difference between lines 9 and 17. If line 17 is more
than line 9, enter the difference in parentheses.
Line 19—Net Assets or Fund Balances at Beginning
of Year
Step Action
1
State the organization’s primary exempt purpose.
2
All organizations must describe their exempt purpose
achievements for each of their three largest program services (as
measured by total expenses incurred). If there were three or fewer
of such activities, describe each program service activity.
• Describe program service accomplishments through
measurements such as clients served, days of care, number
of sessions or events held, or publications issued.
• Describe the activity’s objective, for both this time period
and the longer-term goal, if the output is intangible, such as
in a research activity.
• Give reasonable estimates for any statistical information if
exact figures are not readily available. Indicate that this
information is estimated.
• Be clear, concise, and complete in the description. Avoid
attaching brochures, newsletters, newspaper articles about
the organization, etc.
3
Public interest law firm. A public interest law firm exempt under
section 501(c)(3) or (c)(4) must attach a list of all the cases in
litigation or that have been litigated during the year. For each
case, describe the matter in dispute and explain how the litigation
will benefit the public generally. Also state the fees sought and
recovered in each case. See Rev. Proc. 92-59, 1992-2 C.B. 411.
4
If part of the total expenses of any program service consists of
grants reported on line 10, enter the amount of grants in the
space provided and include the grants in the Expenses column. If
the amount of grants entered includes foreign grants, check the
box to the left of the entry space for Program Services Expenses.
• Section 501(c)(3) and (4) organizations, and section
4947(a)(1) nonexempt charitable trusts, must show the
amount of grants and allocations to others and must enter
the total expenses for each program service reported.
• For all other organizations, completing the Program
Services Expenses column (and the Grants entry) in Part III
is optional.
5
Attach a schedule that lists the organization’s other program
services.
• The detailed information required for the three largest
services is not necessary for this schedule.
• However, section 501(c)(3) and (4) organizations, and
section 4947(a)(1) nonexempt charitable trusts must show
the expenses attributable to their program services.
6
The organization may report the amount of any donated services,
or use of materials, equipment, or facilities it received or utilized in
connection with a specific program service.
• Disclose the applicable amounts of any donated services,
etc., on the lines for the narrative description of the
appropriate program service.
• Do not include these amounts in the expense column in Part
III.
• See the instructions for line 1, B2.
Enter the end-of-year amount from the balance sheet on the
prior year’s return.
Line 20—Other Changes in Net Assets or Fund
Balances
Attach a statement explaining any changes in net assets or
fund balances between the beginning and end of the
organization’s tax year that are not accounted for by the amount
on line 18. Amounts to report here include adjustments of
earlier years’ activity; unrealized gains and losses on
investments carried at market value; and any difference
between fair market value and book value of property given as
an award or grant. See General Instruction C regarding the
reporting of a section 481(a) adjustment to conform to SFAS
116.
Part II—Balance Sheet
Every organization must complete columns (A) and (B) of Part II
of the return and may not submit a substitute balance sheet.
Failure to complete Part II may result in penalties for filing an
incomplete return. If there is no amount to report in column (A),
Beginning of year, enter a zero in that column.
Some states require more information. See Appendix G for
more information about completing a Form 990-EZ to be filed
with any state or local government agency.
Line 22—Cash, Savings, and Investments
Include all interest and non-interest bearing accounts such as
petty cash funds, checking accounts, savings accounts, money
market funds, commercial paper, certificates of deposit, U.S.
Treasury bills, and other government obligations. Also include
the book value of securities held as investments, and all other
investment holdings including land and buildings held for
investment. Report the income from these investments on line
4.
Line 23—Land and Buildings
Enter the book value (cost or other basis less accumulated
depreciation) of all land and buildings owned by the
organization and not held for investment.
Line 24—Other Assets
Enter the total of other assets along with a description of those
assets. Amounts to include here are (among others) accounts
receivable, inventories, and prepaid expenses.
Line 25—Total Assets
Enter the amount of total assets. If the end-of-year total assets
entered in column (B) are $2,500,000 or more, Form 990 must
be filed instead of Form 990-EZ.
Part IV—List of Officers, Directors,
Trustees, and Key Employees
Line 26—Total Liabilities
List each person who was an officer, director, trustee, or key
employee (defined below) of the organization at any time during
the organization’s tax year, even if they did not receive any
compensation from the organization.
Liabilities include such items as accounts payable, grants
payable, mortgages or other loans payable, and deferred
revenue (revenue received but not yet earned).
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Beginning in 2008, Form 990-EZ filers have two options
Aid in the processing of the organization’s return by grouping
together, preferably at the end of the list, those who received no
compensation. Be careful not to repeat names.
Use an attachment if there are more than 18 persons to list
in Part IV.
Give the preferred address at which officers, directors, etc.,
want the Internal Revenue Service to contact them, whether
home address, business address, or the organization’s address
listed on page 1 of Form 990-EZ. This information, like the other
information in the Form 990-EZ, will be available to the public.
TIP for reporting compensation (see the instructions below).
Officer. An officer is a person elected or appointed to
manage the organization’s daily operations, such as a
president, vice-president, secretary, or treasurer. The officers of
an organization may be determined by reference to its
organizing document, bylaws, or resolutions of its governing
body, but at a minimum include those officers required by
applicable state law.
Director or Trustee. A director or trustee is a member of
the organization’s governing body, but only if the member has
voting rights. The governing body is the group of persons
authorized under state law to make governance decisions on
behalf of the organization and its shareholders or members, if
applicable. The governing body is, generally speaking, the
board of directors (sometimes referred to as board of trustees)
of a corporation or association, or the board of trustees of a
trust (sometimes referred to simply as the trustees, or trustee, if
only one trustee).
Key employee. A key employee is any person having
responsibilities or powers similar to those of officers, directors,
or trustees. The term includes the chief management and
administrative officials of an organization (such as an executive
director or chancellor). A chief financial officer and the officer in
charge of the administration or program operations are both key
employees if they have the authority to control the
organization’s activities, its finances, or both.
Enter a zero in columns (c), (d), and (e) (leave column (e)
blank if Option 1 compensation reporting, described below, is
used) if no hours were entered in column (b) and no
compensation, contributions, expenses, and other allowances
were paid during the year or deferred for payment to a future
year.
Show all forms of cash and noncash compensation received
by each listed officer, director, etc., whether paid currently or
deferred, as described more fully under the Option 1 and Option
2 instructions below.
If the organization pays any other person, such as a
management services company, for the services provided by
any of the organization’s officers, directors, trustees, or key
employees, report the compensation and other items in Part IV
as if the organization had paid the officers, etc., directly. Also,
see Ann. 2001-33, 2001-17 I.R.B. 1137.
A failure to fully complete Part IV can subject both the
organization and the individuals responsible for such failure to
penalties for filing an incomplete return. See General Instruction
G. In particular, entering the phrase on Part IV, “Information
available upon request,” or a similar phrase, is not acceptable.
In addition to the information required in Part IV, the
organization may provide an attachment to explain the entire
annual compensation package for any person listed in Part IV.
Form 941 must be filed to report income tax withholding and
social security and Medicare taxes. The organization must also
file Form 940 to report Federal unemployment tax, unless the
organization is not subject to these taxes. See Pub. 15 (Circular
E) for more information.
Amounts paid or accrued by certain other organizations
treated as paid or accrued by the filing organization. Treat
as paid, accrued, or held directly by the organization any
amounts paid or accrued under a deferred compensation plan,
or held by a deferred compensation trust, that is established,
sponsored, or maintained by the organization.
Treat as paid or accrued directly by the organization any
amounts paid or accrued by a common paymaster as defined in
Regulations section 3121(s)-1(b) for services performed for the
organization.
Column (B)
List each person’s title or position with the organization. List all
titles or positions if more than one (for instance, President and
Director).
In column (B), a numerical estimate of the average hours per
week devoted to the position is required for a complete answer.
Statements such as “as needed” or “as required,” or “40+” are
unacceptable.
Two methods to report compensation in columns (c) – (e).
The organization may report the compensation of officers,
directors, trustees, and key employees in accordance with
either Option 1 or Option 2. Option 1 is similar to the 2008 Form
990 method of compensation reporting but simplified. Option 2
is essentially the 2007 Form 990-EZ method of compensation
reporting. Whichever option is selected for 2008 must be used
consistently from year to year, and must be used for all officers,
directors, trustees, and key employees (and, for 501(c)(3)
organizations, for their five highest compensated employees in
Part VI).
Option 1 (W-2 and 1099-MISC Method). All compensation
reporting under Option 1 is based on the calendar year ending
with or within the organization’s tax year. For example, if a
fiscal-year organization’s tax year is the 12-month period
ending June 30, 2009, the organization must report
compensation for the calendar year ending December 31, 2008.
Option 1 – column (c). Report the person’s reportable
compensation. Reportable compensation consists of:
• For officers and other employees - amounts required to be
reported in Box 5 of Form W-2;
• For directors and individual trustees - amounts required to be
reported in Box 7 of Form 1099-MISC (plus Box 5 of Form W-2
if also compensated as an officer or employee); and
• For institutional trustees (such as banks or trust companies) fees for services paid pursuant to a contractual agreement or
statutory entitlement.
If the organization did not file a Form 1099-MISC because the
amounts paid were below the threshold reporting requirement,
then include and report the amount actually paid.
Corporate officers are considered employees for
TIP purposes of Form W-2 reporting, unless they perform no
services as officers, or perform only minor services and
neither receive nor are entitled to receive, directly or indirectly,
any compensation. Corporate directors are considered
independent contractors, not employees, and director
compensation, if any, generally is required to be reported on
Form 1099-MISC. See Regulations section 31.3401(c)-1(f).
For certain kinds of employees, such as certain members of
the clergy and religious workers who are not subject to social
security and Medicare taxes as employees, Box 5 of Form W-2
may be zero or blank. In such case, the amount required to be
reported in Box 1 of Form W-2 must be reported as reportable
compensation in column (c).
Option 1 – column (d). Report the following items of deferred
compensation and benefits:
1. Tax-deferred contributions by the employer to a qualified
defined-contribution retirement plan;
2. The annual increase in actuarial value of a qualified
defined-benefit plan, whether or not funded or vested;
3. The value of health benefits provided by the employer,
whether or not qualified, that are not included in reportable
compensation. For this purpose, health benefits provided by the
Column (A)
Report the name and address of each person who was an
officer, director, trustee, or key employee (defined above) at
any time during the organization’s tax year.
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employer include payments of health benefit plan premiums,
medical reimbursement and flexible spending programs, and
the value of health coverage (rather than actual benefits paid)
provided by an employer’s self-insured or self-funded
arrangement. Health benefits include dental, optical, drug, and
medical equipment benefits. They do not include disability or
long-term care insurance premiums or benefits for this purpose;
4. Tax-deferred contributions by the employer and
employee to a non-qualified defined contribution plan, whether
or not funded, vested, or subject to a substantial risk of
forfeiture; and
5. The annual increase in actuarial value of a non-qualified
defined benefit plan, whether or not funded, vested, or subject
to a substantial risk of forfeiture.
Line 34—Changes in Organizing or Governing
Documents
Attach a conformed copy of any changes to the articles of
incorporation, articles of association, constitution, trust
instrument, or other organizing document, or to the bylaws or
other governing document.
A conformed copy is one that agrees with the original
document and all amendments to it. If the copies are not
signed, they must be accompanied by a written declaration
signed by an officer authorized to sign for the organization,
certifying that they are complete and accurate copies of the
original documents. Photocopies of articles of incorporation
showing the certification of an appropriate state official need not
be accompanied by such a declaration. See Rev. Proc. 68-14,
1968-1 C.B. 768, for details. When a number of changes are
made, attach a copy of the entire revised organizing instrument
or governing document.
However, if the exempt organization changes its legal
structure, such as from a trust to a corporation, the new legal
entity must file a new exemption application to establish that it
qualifies for exemption.
Reasonable estimates may be used if precise cost figures are
not readily available to determine column (d) amounts.
Option 1 – column (e). Leave column (e) blank.
Option 2 (Pre-2008 Method). For purposes of reporting all
amounts in columns (b) through (e) in Part IV, fiscal-year
organizations may either use their tax year, or the calendar year
ending within such tax year. Whichever year is selected (tax
year or calendar year) must be used consistently from year to
year, and must be used for all officers, directors, trustees, and
key employees (and, for 501(c)(3) organizations, for their five
highest compensated employees in Part VI).
Line 35—Unrelated Business Income and
Lobbying Proxy Tax
Unrelated business income
Option 2 – column (c). For each person listed, report salary,
fees, bonuses, and severance payments paid. Include
current-year payments of amounts reported or reportable as
deferred compensation in any prior year.
Political organizations described in section 527 are not required
to answer this question.
Check “Yes” on line 35a if the organization’s total gross
income from all of its unrelated trades and businesses is $1,000
or more for the tax year. Gross income is gross receipts less
the cost of goods sold. See Pub. 598, Tax on Unrelated
Business Income of Exempt Organizations, for a description of
unrelated business income, and the Form 990-T Instructions for
the Form 990-T filing requirements.
If the organization had income from business activities, such
as those reported on lines 2, 6, and 7 (among others), but not
reported on Form 990-T, attach a statement explaining the
reasons for not reporting the income on Form 990-T.
Neither Form 990-T nor Form 990-EZ is a substitute for the
other. Items of income and expense reported on Form 990-T
must also be reported on Form 990-EZ (and vice versa) when
the organization is required to file both forms.
Option 2 – column (d). Include in this column all forms of
deferred compensation and future severance payments
(whether or not funded; whether or not vested; and whether or
not the deferred compensation plan is a qualified plan under
section 401(a)). Include also payments to welfare benefit plans
on behalf of the officers, etc. Such plans provide benefits such
as medical, dental, life insurance, severance pay, disability, etc.
Reasonable estimates may be used if precise cost figures are
not readily available.
Unless the amounts were reported in column (C), report, as
deferred compensation in column (D), salaries and other
compensation earned during the period covered by the return,
but not yet paid by the date the organization files its return.
Option 2 – column (e). Enter both taxable and nontaxable
fringe benefits, other than
1. working condition fringe benefits described in section
132(d), including expense reimbursements and allowances
under an accountable plan, and
2. de minimis fringe benefits described in section 132(e).
All tax-exempt organizations must pay estimated taxes
with respect to their unrelated business income if they
CAUTION expect their tax liability to be $500 or more. Use Form
990-W to compute these amounts.
!
Section 6033(e) tax for lobbying expenditures
If the organization checks “No” to line 35a, it is certifying that
the organization was not subject to the notice and reporting
requirements of section 6033(e) and that the organization had
no lobbying and political expenditures potentially subject to the
proxy tax.
Section 6033(e) notice and reporting requirements and
proxy tax. Section 6033(e) requires certain section 501(c)(4),
(5), and (6) organizations to tell their members the portion of
their membership dues that were allocable to the political or
lobbying activities of the organization. If an organization does
not give its members this information, then the organization is
subject to a proxy tax. The tax is reported on Form 990-T.
If the organization checks “Yes” on line 35a to declare that it
had reportable section 6033(e) lobbying and political expenses
in the tax year (and potential liability for the proxy tax):
1. Complete Parts III-A and III-B of Schedule C (Form 990
or 990-EZ), Political Campaign and Lobbying Activities (see
instructions); and
2. Attach this Schedule to Form 990-EZ.
Include amounts that the recipients must report as income on
their separate income tax returns. Examples include amounts
for which the recipient did not account to the organization or
allowances that were more than the payee spent on serving the
organization. Include payments made under indemnification
arrangements, the value of the personal use of housing,
automobiles, or other assets owned or leased by the
organization (or provided for the organization’s use without
charge), as well as any other taxable and nontaxable fringe
benefits. See Pub. 525, Taxable and Nontaxable Income, for
more information.
Part V—Other Information
See the beginning of the Part VI instructions for required
statements for certain organizations regarding personal benefit
contracts and Schedule A filing.
Line 33—Change in Activities
Attach a statement to describe any significant activities initiated
during the past three years that were not previously reported to
the IRS on Form 990-EZ or Form 990. Also describe significant
activities that were discontinued.
Only the following tax-exempt organizations are subject to
the section 6033(e) notice and reporting requirements, and a
potential proxy tax:
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• 501(c)(4) social welfare organizations;
• 501(c)(5) agricultural and horticultural organizations; and
• 501(c)(6) organizations.
• The official actions or positions of covered executive branch
officials through direct communication.
Direct lobbying does not include attempting to
influence:
• Any local council on legislation of direct interest to the
organization or its members, and
• The general public regarding legislative matters (grassroots
lobbying).
Other lobbying includes:
• Grassroots lobbying,
• Foreign lobbying,
• Third-party lobbying, and
• Dues paid to another organization that were used to lobby.
In-house expenditures include:
• Salaries, and
• Other expenses of the organization’s officials and staff
(including amounts paid or incurred for the planning of
legislative activities).
In-house expenditures do not include:
• Any payments to other taxpayers engaged in lobbying or
political activities as a trade or business.
• Any dues paid to another organization that are allocable to
lobbying or political activities.
If the organization is not tax-exempt under sections
501(c)(4), (5), or (6), check “No” on line 35a, unless it had
$1,000 or more of unrelated business income.
If the organization meets Exception 1 or 2 below, it is
excluded from the notice, reporting, and proxy tax requirements
of section 6033(e), and it should check “No” to line 35a, unless
the organization had $1,000 or more of unrelated business
income. See also Rev. Proc. 98-19, 1998-1 C.B. 547.
Exception 1. Section 6033(e)(3) exception for
nondeductible dues.
1. All organizations exempt from tax under section 501(a),
other than section 501(c)(4), (5), and (6) organizations;
2. Local associations of employees’ and veterans’
organizations described in section 501(c)(4), but not section
501(c)(4) social welfare organizations;
3. Labor unions and other labor organizations described in
section 501(c)(5), but not section 501(c)(5) agricultural and
horticultural organizations;
4. Section 501(c)(4), (5), and (6) organizations that receive
more than 90% of their dues from:
a. Section 501(c)(3) organizations,
b. State or local governments,
c. Entities whose income is exempt from tax under section
115, or
d. Organizations described in 1 through 3, above;
5. Section 501(c)(4) and (5) organizations that receive more
than 90% of their annual dues from:
a. Persons,
b. Families, or
c. Entities
that each paid annual dues of $97 or less in 2008 (adjusted
annually for inflation). See Rev. Proc. 2007-66;
6. Any organization that receives a private letter ruling from
the IRS stating that the organization satisfies the section
6033(e)(3) exception;
7. Any organization that keeps records to substantiate that
90% or more of its members cannot deduct their dues (or
similar amounts) as business expenses whether or not any part
of their dues are used for lobbying purposes; or
8. Any organization that is not a membership organization.
Line 36—Liquidation, Dissolution, Termination,
or Substantial Contraction
If there was a liquidation, dissolution, termination, or substantial
contraction, state “Yes” and complete and attach the applicable
parts of Schedule N.
For a complete liquidation, dissolution, termination, or
cessation of operations, also check the Termination box in the
heading of the return.
A substantial contraction is a partial liquidation or other
major disposition of assets except transfers for full
consideration or distributions from current income.
A major disposition of assets means one or more
dispositions for the tax year that:
1. Amount to more than 25% of the fair market value of the
organization’s net assets at the beginning of the tax year; or
2. Are one of a series of related dispositions begun in earlier
years that add up to more than 25% of the net assets the
organization had at the beginning of the tax year when the first
disposition in the series was made. Whether a major disposition
of assets took place through a series of related dispositions
depends on the facts in each case.
Special rules treat affiliated social welfare organizations,
agricultural and horticultural organizations, and business
CAUTION leagues as parts of a single organization for purposes of
meeting the nondeductible dues exception. See Rev. Proc.
98-19.
Exception 2. Section 6033(e)(1) $2,000 in-house lobbying
exception. An organization satisfies the $2,000 in-house
lobbying exception if it:
1. Did not receive a waiver for proxy tax owed for the prior
year;
2. Did not make any political expenditures or foreign
lobbying expenditures during the current tax year; and
3. Incurred lobbying expenses during the current tax year
consisting only of in-house direct lobbying expenses totaling
$2,000 or less, but excluding:
a. Any allocable overhead expenses, and
b. All direct lobbying expenses of any local council
regarding legislation of direct interest to the organization or its
members.
!
An organization filing Form 990-EZ need not complete
TIP Part II of Schedule N for a transaction that is not a
substantial contraction.
Line 37—Expenditures for Political Purposes
Political organizations described in section 527 are not
required to answer this question.
A political expenditure is one intended to influence the
selection, nomination, election, or appointment of anyone to a
federal, state, or local public office, or office in a political
organization, or the election of Presidential or Vice Presidential
electors. It does not matter whether the attempt succeeds.
An expenditure includes a payment, distribution, loan,
advance, deposit, or gift of money, or anything of value. It also
includes a contract, promise, or agreement to make an
expenditure, whether or not legally enforceable.
All section 501(c) organizations. An exempt organization
that is not a political organization must file Form 1120-POL if it
is treated as having political organization taxable income under
section 527(f)(1).
If a section 501(c) organization establishes and maintains a
section 527(f)(3) separate segregated fund, it is the fund’s
responsibility to file its own Form 1120-POL if the fund meets
the Form 1120-POL filing requirements. Do not include the
segregated fund’s receipts, expenditures, and balance sheet
items on the Form 990-EZ of the section 501(c) organization
Definitions
Grassroots lobbying refers to attempts to influence any
segment of the general public regarding legislative matters or
referendums.
Direct lobbying includes attempting to influence:
• Legislation through communication with legislators and other
government officials, and
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that establishes and maintains the fund. When answering
question 37 on its Form 990-EZ, the section 501(c) organization
should disregard the political expenses and Form 1120-POL
filing requirement of the segregated fund. However, when a
section 501(c) organization transfers its own funds to a
separate segregated section 527(f)(3) fund for use as political
expenses, the 501(c) organization must report the transferred
funds as its own political expenses on its Form 990-EZ.
Section 501(c)(3) organizations. A section 501(c)(3)
organization will lose its tax-exempt status if it engages in
political activity.
A section 501(c)(3) organization must pay a section 4955
excise tax for any amount paid or incurred on behalf of, or in
opposition to, any candidate for public office. The organization
must pay an additional excise tax if it fails to correct the
expenditure timely.
A manager of a section 501(c)(3) organization who
knowingly agrees to a political expenditure must pay a section
4955 excise tax, unless the agreement is not willful and there is
reasonable cause. A manager who does not agree to a
correction of the political expenditure may have to pay an
additional excise tax.
When an organization promotes a candidate for public office
(or is used or controlled by a candidate or prospective
candidate), amounts paid or incurred for the following purposes
are political expenditures:
• Remuneration to such individual (a candidate or prospective
candidate) for speeches or other services;
• Travel expenses of such individual;
• Expenses of conducting polls, surveys, or other studies, or
preparing papers or other material for use by such individual;
• Expenses of advertising, publicity, and fundraising for such
individual; and
• Any other expense that has the primary effect of promoting
public recognition or otherwise primarily accruing to the benefit
of such individual.
An organization is effectively controlled by a candidate or
prospective candidate only if such individual has a continuing,
substantial involvement in the day-to-day operations or
management of the organization.
A determination of whether the primary purpose of an
organization is promoting the candidacy or prospective
candidacy of an individual for public office is made on the basis
of all the facts and circumstances. See section 4955 and
Regulations section 53.4955.
Use Form 4720 to figure and report these excise taxes.
Line 39b. Gross receipts for public use of club facilities are
gross receipts (as defined above for 501(c)(7) exemption
purposes) derived for the use of the organization’s facilities
from persons other than members, spouses of members,
dependents of members, or guests of members.
Line 38—Loans To or From Officers, Directors,
Trustees, and Key Employees
Line 40b—Section 501(c)(3) and 501(c)(4)
Organizations: Disclosure of Section 4958
Excess Benefit Transactions and Excise Taxes
Investment income and Form 990-T. If the 35% and 15%
limits do not affect the club’s exempt status, include the income
shown on line 39b on the club’s Form 990-T. Investment
income earned by a section 501(c)(7) organization is not
tax-exempt income unless it is set aside for one or more of the
following purposes: religious, charitable, scientific, literary,
educational purposes, or prevention of cruelty to children or
animals.
If the combined amount of an organization’s gross
investment income and other unrelated business income
exceeds $1,000, it must report the investment income and other
unrelated business income on Form 990-T.
Nondiscrimination policy. A section 501(c)(7) organization is
not exempt from income tax if any written policy statement,
including the governing instrument and bylaws, allows
discrimination on the basis of race, color, or religion.
However, section 501(i) allows social clubs to retain their
exemption under section 501(c)(7) even though their
membership is limited (in writing) to members of a particular
religion, if the social club:
1. Is an auxiliary of a fraternal beneficiary society exempt
under section 501(c)(8), and
2. Limits its membership to the members of a particular
religion; or the membership limitation is:
a. A good-faith attempt to further the teachings or principles
of that religion, and
b. Not intended to exclude individuals of a particular race or
color.
Line 40a—Section 501(c)(3) Organizations:
Disclosure of Excise Taxes Imposed under
Section 4911, 4912, or 4955
Section 501(c)(3) organizations must disclose any excise tax
imposed during the year under section 4911 (excess lobbying
expenditures), 4912 (disqualifying lobbying expenditures), or,
unless abated, 4955 (political expenditures). See sections 4962
and 6033(b).
Enter the end-of-year unpaid balance of secured and
unsecured loans made to or received from officers, directors,
trustees, and key employees (as defined in Part IV above). For
example, if the organization borrowed $1,000 from one officer
and loaned $500 to another, none of which has been repaid,
report $1,500 on line 38b.
For loans outstanding at the end of the year, complete and
attach Part II of Schedule L (Form 990 or 990-EZ), Transactions
with Interested Persons. See the Schedule L instructions.
Report any interest expense paid to an officer, director,
trustee, or key employee on line 16 (except for mortgage
interest reportable on line 14) and any interest income paid by
an officer, director, trustee, or key employee on line 8.
Sections 6033(b) and 6033(f) require section 501(c)(3) and (4)
organizations to report the amount of taxes imposed under
section 4958 (excess benefit transactions) involving the
organization, unless abated, as well as any other information
the Secretary may require concerning those transactions.
If the organization answers “Yes,” then complete and attach
Part I of Schedule L (Form 990 or 990-EZ), Transactions with
Interested Persons.
An excess benefit transaction may have serious
TIP implications for the disqualified person that entered into
the transaction with the organization, any organization
managers that knowingly approved of the transaction, and the
organization itself. A section 501(c)(3) or 501(c)(4) organization
that becomes aware that it may have engaged in an excess
benefit transaction should obtain competent advice regarding
section 4958, consider pursuing correction of any excess
benefit, and take other appropriate steps to protect its interests
with regard to such transaction and the potential impact it could
have on the organization’s continued exempt status. See
Appendix E for a discussion of section 4958, and Schedule L,
Part I, regarding reporting of excess benefit transactions.
Line 39—Section 501(c)(7) Organizations
Gross receipts test. See Appendix C for discussion of the
gross receipts test for purposes of determining exemption under
section 501(c)(7). This definition of gross receipts differs from
the definition for purposes of Header Item L and determining
whether the organization must file Form 990 or Form 990-EZ.
Line 39a. Include on line 39a capital contributions, initiation
fees, and unusual amounts of income not included in gross
receipts.
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exempt-interest dividends received from a mutual fund or other
regulated investment company as well as tax-exempt interest
received directly.
Line 40c—Taxes Imposed on Organization
Managers or Disqualified Persons
For line 40c, enter the amount of taxes imposed on organization
managers and/or disqualified persons under sections 4912,
4955, and 4958, unless abated.
Line 44. Donor Advised Funds
Line 40d—Taxes Reimbursed by the
Organization
!
CAUTION
For line 40d, enter the amount of tax on line 40c that was
reimbursed by the organization. Any reimbursement of the
excise tax liability of a disqualified person or organization
manager will be treated as an excess benefit unless (1) the
organization treats the reimbursement as compensation during
the year the reimbursement is made, and (2) the total
compensation to that person, including the reimbursement, is
reasonable.
A sponsoring organization of a donor advised fund must
file Form 990 rather than Form 990-EZ, regardless of
the amount of its gross receipts or net assets.
A sponsoring organization is any of the following types of
organizations if it maintains one or more donor advised funds:
1. A section 501(c)(3) public charity described in section
509(a)(1), (2), or (3).
2. A veterans’ organization, organized in the United States
or any of its possessions, no part of the net earnings of which
inures to the benefit of any private shareholder or individual,
that meets the requirements to receive deductible contributions
under section 170(c)(3).
3. A domestic fraternal organization described in section
501(c)(8) or (10) that uses charitable contributions exclusively
for charitable purposes.
4. A cemetery company described in section 501(c)(13).
Line 40e—Tax on Prohibited Tax Shelter
Transactions
Answer “Yes” if the organization was a party to a prohibited tax
shelter transaction as described in section 4965(e) at any time
during the organization’s tax year. An organization that files
Form 990-EZ (other than a section 527 political organization or
a section 4947(a)(1) trust) and that is a party to a prohibited tax
shelter transaction must file Form 8886-T and may also have to
file Form 4720 and pay excise tax imposed by section 4965.
For more information, see the instructions to Forms 8886-T and
4720.
A “donor advised fund” is a fund or account:
1. That is separately identified by reference to contributions
of a donor or donors;
2. That is owned and controlled by a sponsoring
organization; and
3. For which the donor or donor advisor has or reasonably
expects to have advisory privileges in the distribution or
investment of amounts held in the donor advised funds or
accounts because of the donor’s status as a donor.
Line 41—List of States
List each state with which the organization is filing a copy of this
return in full or partial satisfaction of state filing requirements.
Line 42a. Location of Books and Records.
A donor advised fund does not include any fund or account:
1. That makes distributions only to a single identified
organization or governmental entity, or
2. In which a donor or donor advisor gives advice about
which individuals receive grants for travel, study, or other
similar purposes, if:
a. The donor or donor advisor’s advisory privileges are
performed exclusively by such person in his or her capacity as
a committee member in which all of the committee members
are appointed by the sponsoring organization;
b. No combination of donors or donor advisors (and related
persons as defined below) directly or indirectly control the
committee; and
c. All grants from the fund or account are awarded on an
objective and nondiscriminatory basis following a procedure
approved in advance by the board of directors of the sponsoring
organization. The procedure must be designed to ensure that
all grants meet the requirements of sections 4945(g)(1), (2), or
(3); or
3. That the Secretary exempts from being treated as a
donor advised fund because either such fund or account is
advised by a committee not directly or indirectly controlled by
the donor or donor advisor or such fund benefits a single
identified charitable purpose. For example, see Notice
2006-109, 2006-51 I.R.B. 1121, and any future related
guidance.
Provide the name of the person who possesses the books and
records. The organization is not required to provide the address
or telephone number for the personal residence of an individual.
The organization’s address and phone number may be used
instead, or the business address and telephone number of such
individual.
Line 42b. Foreign Financial Accounts
Answer “Yes” if either item 1 or 2 below applies:
1. At any time during the calendar year (ending with or
within the organization’s tax year), the organization had an
interest in, or signature or other authority over, a financial
account in a foreign country (such as a bank account, securities
account, or other financial account); and
a. The combined value of the accounts was more than
$10,000 at any time during the calendar year; and
b. The accounts were not with a U.S. military banking facility
operated by a U.S. financial institution.
2. The organization owns more than 50% of the stock in any
corporation that would answer “Yes” to item 1 above.
If the “Yes” box is checked, enter the name of the foreign
country or countries. Attach a separate sheet if more space is
needed.
File Form TD F 90-22.1 by June 30 after the end of the
calendar year with the Department of the Treasury at the
address shown on the form. Form TD F 90-22.1 is available by
calling 1-800-TAX-FORM (1-800-829-3676) or by downloading
it from the IRS website at www.irs.gov. Do not file it with the
IRS or attach it to Form 990-EZ.
A “donor advisor” is any person appointed or designated by
a donor to advise a sponsoring organization on the distribution
or investment of amounts held in the donor’s donor advised
fund or similar account.
Line 45. Section 512(b)(13) Controlled Entity
Line 43. Section 4947(a)(1) Nonexempt
Charitable Trusts
A controlling organization of a controlled entity under
section 512(b)(13) must file Form 990 rather than Form
CAUTION 990-EZ if there was any transfer of funds between the
controlling organization and any controlled entity during the
year.
The controlled entity may be a stock or nonstock
corporation, association, partnership, limited liability company,
A section 4947(a)(1) nonexempt charitable trust that has no
taxable income under Subtitle A may use Form 990-EZ to meet
its Section 6012 filing requirement by checking the box on line
43 (in which case Form 1041 is not required). In such case,
enter on line 43 the total of exempt-interest dividends received
or accrued (if reporting under the accrual method of accounting)
during the tax year. Such tax-exempt interest includes
!
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or trust. Control exists if the controlling organization owns more
than 50% of:
• The stock of a corporation (measured by voting power or
value);
• The profits or capital interest in a partnership; or
• The beneficial interest in a trust or other entity.
Control of a nonstock corporation means that over 50% of its
directors or trustees are either representatives of, or directly or
indirectly controlled by, the controlling organization. A trustee or
director is a representative of an exempt organization if a
trustee, director, agent, or employee of such exempt
organization. A trustee or director is controlled by an exempt
organization if such organization has the power to remove such
trustee or director and designate a new trustee or director.
A transfer for this purpose is any transaction or arrangement
in which the organization transferred something of value (cash,
other assets, services, use of property, etc.) to the exempt
non-charitable related organization, whether or not for adequate
consideration. The organization may (but is not required to)
explain the transfer in an attachment.
A related organization for this purpose is an organization
with either of the following relationships to the filing organization
at any time during the organization’s tax year:
1. The two organizations share some element of common
control, or
2. A historic and continuing relationship exists between the
two organizations.
An element of common control is present when one or more
of the officers, directors, or trustees of one organization are
elected or appointed by the officers, directors, trustees, or
members of the other. An element of common control is also
present when more than 25% of the officers, directors, or
trustees of one organization serve as officers, directors, or
trustees of the other organization.
A historic and continuing relationship exists when two
organizations participate in a joint effort to work in concert
toward the attainment of one or more common purposes on a
continuous or recurring basis rather than on the basis of one or
several isolated transactions or activities. Such a relationship
also exists when two organizations share facilities, equipment,
or paid personnel during the year, regardless of the length of
time the arrangement is in effect.
Part VI—Section 501(c)(3) Organizations
Only
All section 501(c)(3) organizations and 4947(a)(1) trusts must
complete Part VI.
Required Statements
1. Schedule A attachment.Section 501(c)(3) organizations
and section 4947(a)(1) nonexempt charitable trusts must
complete and attach Schedule A (Form 990 or 990-EZ), Public
Charity Status and Public Support.
2. Statement regarding personal benefit contract. If, in
connection with a transfer of funds to the organization, the
organization directly or indirectly pays premiums on any
personal benefit contract, or there is an understanding or
expectation that any person will directly or indirectly pay such
premiums, the organization must do the following:
• Attach a statement describing the organization’s
involvement with the personal benefit contract(s);
• Report on Form 8870 the premiums that the organization
paid, and the premiums paid by others but treated as paid by
the organization; and
• Report and pay an excise tax, equal to premiums paid, on
Form 4720
Line 50. Five Highest Compensated Employees
over $100,000
Complete this table for the five employees (other than officers,
directors, trustees, and key employees as defined in Part IV
above) with the highest annual compensation over $100,000. At
the bottom of the table, enter the number of other employees
(other than officers, directors, trustees, and key employees)
with annual compensation over $100,000 who are not
individually listed.
Determination of the five highest compensated employees
depends on whether the organization uses Option 1 or Option 2
for Part IV compensation reporting. Whichever option is
selected must be used for both Part IV and Part VI
compensation reporting.
Under Option 1, a fiscal-year organization must use the
calendar year ending within its tax year to determine its five
highest compensated employees over $100,000, and to report
such compensation. Combine the compensation includible in
columns (c) and (d) in determining whether compensation
exceeds $100,000 for the calendar year.
Under Option 2, a fiscal-year organization may determine
the five highest compensated employees over $100,000 for its
tax year, or for the calendar year ending within its tax year. Use
the same year as was used in reporting compensation for
officers, directors, trustees, and key employees in Part IV.
Combine compensation includible in columns (c), (d), and (e) in
determining whether compensation exceeds $100,000.
See the Part IV instructions for more information on Option 1
and Option 2 compensation reporting and for filling out the table
columns (a) through (e) of line 50.
Example. S is not a key employee. The organization uses a
calendar tax year. During the year, S received a salary of
$80,000 and a $2,000 bonus. S contributed $5,000 of the salary
on a pre-tax basis to a qualified defined-contribution retirement
plan, and received a matching employer contribution of $5000
from the organization. S contributed another $5,000 of the
salary on a pre-tax basis to a qualified health plan. S received
from the employer non-taxable health benefits for herself and
her family of $10,000, and non-taxable family educational
benefits of $5,000.
To determine whether S is to be listed as among the five
highest compensated employees under Option 1, S’s
compensation in column (c) would be $82,000, the amount
A personal benefit contract is generally any life insurance,
annuity, or endowment contract that benefits, directly or
indirectly, the transferor, a member of the transferor’s family, or
any other person designated by the transferor (other than an
organization described in section 170(c)). See section
170(f)(10); Notice 2000-24, 2000-1 C.B. 952; and
Announcement 2000-82, 2000-2 C.B. 385.
Line 46. Political Campaign Activities
Answer “Yes” and complete Part I of Schedule C (Form 990 or
Form 990-EZ), Political Campaign and Lobbying Activities, if the
organization participated or intervened in (including the
publishing of statements), any political campaign on behalf of
(or in opposition to) any candidate for public office, directly or
indirectly. See the Schedule C instructions for a discussion of
political campaign activity.
Line 47. Lobbying Activities
Answer “Yes” and complete Part II of Schedule C (Form 990 or
990-EZ), Political Campaign and Lobbying Activities, if the
organization engaged in lobbying activities. See the Schedule C
instructions for a discussion of lobbying activities.
Line 48. School
Answer “Yes” and complete Schedule E (Form 990 or Form
990-EZ), Schools, if the organization checked the box on line 2
of Schedule A (Form 990 or Form 990-EZ), Public Charity
Status and Public Support, Part I, indicating that it is a school.
Line 49. Transfers to Exempt Non-Charitable
Related Organizations
Answer “Yes” if the organization made any transfer to a related
organization that is an exempt organization other than a
501(c)(3) organization, such as a related 501(c)(4) organization
or a related 527 political organization.
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reportable in Form W-2, Box 5, consisting of the $80,000 salary
(including her contributions to the qualified plans) and the
$2,000 bonus. S’s compensation in column (d) would be
$15,000, consisting of the organization’s payments of $5,000 to
the retirement plan and $10,000 to the health plan. Thus, under
Option 1, S’s total compensation of $97,000 would not place
her among the five highest compensated employees over
$100,000.
corporation or association, this officer may be the president,
vice president, treasurer, assistant treasurer, chief accounting
officer, or other corporate or association officer, such as a tax
officer. A receiver, trustee or assignee must sign any return he
or she files for a corporation or association. For a trust, the
authorized trustee(s) must sign.
To determine whether S is to be listed as among the five
highest compensated employees under Option 2, S would have
the following compensation: $82,000 under column (c),
consisting of the $80,000 salary and $2,000 bonus; and
$20,000 under column (d), consisting of the employer’s
payments of $5,000 to the retirement plan, $10,000 to the
health plan, and $5,000 of educational benefits. Total
compensation of S would be $102,000. Thus, under Option 2, S
would be listed in line 50 as one of the five highest
compensated employees unless there are five other employees
(other than key employees) with higher compensation.
Generally, anyone who is paid to prepare the return must sign
the return and fill in the other blanks in the Paid Preparer’s Use
Only area. An employee of the filing organization is not a paid
preparer.
Paid Preparer
The paid preparer must:
• Sign the return in the space provided for the preparer’s
signature;
• Enter the preparer information (other than PTIN and EIN
blocks, except as described below); and
• Give a copy of the return to the organization.
See Pub. 525, Taxable and Nontaxable Income, for more
information.
The paid preparer must enter the preparer’s identifying
taxpayer identification number and the preparer’s firm’s EIN
only if filing Form 990-EZ for a section 4947(a)(1) nonexempt
charitable trust that is not filing Form 1041. The preparer’s
identifying number is the preparer’s social security number or
the preparer’s taxpayer identification number (PTIN), if
obtained, or the preparer’s social security number.
Line 51. Five Highest Compensated Independent
Contractors over $100,000
Complete this table for the five highest compensated
independent contractors that received more than $100,000 in
compensation for services, whether professional services or
other services, from the organization. At the bottom of the table,
enter the number of other independent contractors with annual
compensation over $100,000 who are not individually listed.
The IRS is not authorized to redact the paid preparer’s
social security number if such SSN is entered in the paid
CAUTION preparer’s block. Because the Form 990-EZ is a publicly
disclosable document, any information entered in this block will
be publicly disclosed (see Appendix D). Accordingly, any paid
preparer whose identifying number must be listed on the Form
990 may wish to apply for and obtain a PTIN using Form W-7P.
!
Independent contractors include organizations as well as
individuals and may include professional fundraisers, law firms,
accounting firms, publishing companies, management
companies, and investment management companies. See
Publication 1779 and Publication 15-A for distinguishing
employees from independent contractors. Any compensation
received by an officer, director, trustee, key employee, or
highest compensated employee in the capacity as an
independent contractor must be included in such person’s
compensation reported in Part IV or Part VI line 50.
Paid Preparer Authorization
On the last line of Part II, check “Yes” if the IRS may contact the
paid preparer who signed the return to discuss the return. This
authorization applies only to the individual whose signature
appears in the “Paid Preparer’s Use Only” section of the Form
990-EZ. It does not apply to the firm, if any, shown in that
section.
Fiscal-year organizations must use the same year (whether
tax year or calendar year ending within the tax year) as is used
in Part IV for determining their five highest compensated
independent contractors and reporting their compensation in
such year.
By checking this box “Yes,” the organization is authorizing
the IRS to contact the paid preparer to answer any questions
that may arise during the processing of the return. The
organization is also authorizing the paid preparer to:
• Give the IRS any information that is missing from the return,
• Call the IRS for information about the processing of the
return, and
• Respond to certain IRS notices about math errors, offsets,
and return preparation.
Column (C). Compensation. Enter the amount of
compensation the organization paid or incurred for the
applicable year. If the organization uses the calendar year and
the cash method of accounting, report the amount reported on
Form 1099-MISC, Box 7, if filed. Otherwise, report the amount
paid pursuant to the parties’ agreement or applicable state law.
The organization is not authorizing the paid preparer to bind
the organization to anything or otherwise represent the
organization before the IRS.
Form 1099-MISC is not always required to be issued for
TIP payments to an independent contractor.
Compensation includes fees and similar payments to
independent contractors but not reimbursement of expenses.
However, for this purpose, the organization must report the
gross payment to the independent contractor that includes
expenses and fees if the expenses are not separately reported
to the organization.
The authorization will automatically end no later than the due
date (excluding extensions) for filing the organization’s 2008
Form 990-EZ. If the organization wants to expand the paid
preparer’s authorization or revoke the authorization before it
ends, see Pub. 947, Practice Before the IRS and Power of
Attorney.
Signature Block
Check “No” if the IRS is to contact the organization at the
address or telephone number listed in the heading, rather than
the paid preparer.
To make the return complete, an officer of the organization
authorized to sign it must sign in the space provided. For a
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Appendix of Special Instructions to Form 990-EZ
Contents
A
B
C
D
E
F
G
Exempt Organizations Reference Chart
How to Determine Whether an Organization’s Gross Receipts Are Normally $25,000 (or $5,000) or Less
Special Gross Receipts Test for Determining Exempt Status of Section 501(c)(7) and Section 501(c)(15) Organizations
Public Inspection of Returns
Section 4958 Excess Benefit Transactions
Forms and Publications To File or Use
Use of Form 990, or Form 990-EZ, To Satisfy State Reporting Requirements
Appendix A: Exempt Organizations Reference Chart
To determine how the instructions for Form 990 – EZ apply to the organization, an organization must know the Code section under which the
organization is exempt.
Type of Organization
I.R.C Section
Corporations Organized Under Act of Congress
501(c)(1)
Title Holding Corporations
501(c)(2)
Charitable, Religious, Educational, Scientific, etc. Organizations
501(c)(3)
Civic Leagues and Social Welfare Organizations
501(c)(4)
Labor, Agricultural, and Horticultural Organizations
501(c)(5)
Business Leagues, etc.
501(c)(6)
Social and Recreation Clubs
501(c)(7)
Fraternal Beneficiary and Domestic Fraternal Societies and
Associations
501(c)(8) & (c)(10)
Voluntary Employees’ Beneficiary Associations
501(c)(9)
Teachers’ Retirement Fund Associations
501(c)(11)
Benevolent Life Insurance Associations, Mutual Ditch or Irrigation
Companies, Mutual or Cooperative Telephone Companies, etc.
501(c)(12)
Cemetery Companies
501(c)(13)
State Chartered Credit Unions, Mutual Reserve Funds
501(c)(14)
Insurance Companies or Associations Other than Life
501(c)(15)
Cooperative Organizations to Finance Crop Operations
501(c)(16)
Supplemental Unemployment Benefit Trusts
501(c)(17)
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Type of Organization
I.R.C Section
Employee Funded Pension Trusts (created before 6/25/1959)
501(c)(18)
Organizations of Past or Present Members of the Armed Forces
501(c)(19) & (c)(23)
Black Lung Benefit Trusts
501(c)(21)
Withdrawal Liability Payment Funds
501(c)(22)
Title Holding Corporations or Trusts
501(c)(25)
State-Sponsored Organizations Providing Health Coverage for
High-Risk Individuals
501(c)(26)
State-Sponsored Workmen’s Compensation and Insurance and
Reinsurance Organizations
501(c)(27)
Religious and Apostolic Associations
501(d)
Cooperative Hospital Service Organizations
501(e)
Cooperative Service Organizations of Operating Educational
Organizations
501(f)
Child Care Organizations
501(k)
Charitable Risk Pools
501(n)
Political Organizations
527
Appendix B: How to
Determine Whether an
Organization’s Gross
Receipts Are Normally
$25,000 (or $5000) or Less
To figure whether an organization has to
file Form 990-EZ (or Form 990), apply the
$25,000 (or $5000) gross receipts test
(below) using the following definition of
gross receipts and information in Figuring
Gross Receipts below.
Gross Receipts
Gross receipts are the total amounts the
organization received from all sources
during its annual accounting period,
without subtracting any costs or
expenses.
Do not use the definition of gross
receipts described in Appendix C,
CAUTION Special Gross Receipts Test for
Determining Exempt Status of Section
501(c)(7) and Section 501(c)(15)
Organizations, to figure gross receipts for
this purpose. That test is limited to
!
determining exempt status of such
organizations.
Gross receipts when acting as an
agent. If a local chapter of a section
501(c)(8) fraternal organization collects
insurance premiums for its parent lodge
and merely sends those premiums to the
parent without asserting any right to use
the funds or otherwise deriving any
benefit from them, the local chapter does
not include the premiums in its gross
receipts. The parent lodge reports them
instead. The same treatment applies in
other situations in which one organization
collects funds merely as an agent for
another.
Figuring Gross Receipts
Figure gross receipts for Form 990 and
Form 990-EZ as follows.
Form 990. Gross receipts are the sum of
lines 6b (both columns), 7b (both
columns), 8b, 9b, 10b, and 12, Column A
of Form 990, Part VIII.
Form 990-EZ. Gross receipts are the
sum of lines 5b, 6b, 7b, and 9 of Form
990-EZ, Part I.
Example. Organization M reported
$50,000 as total revenue on line 9 of its
-23-
Form 990-EZ. M added back the costs
and expenses it had deducted on lines 5b
($2,000); 6b ($1,500); and 7b ($500) to its
total revenue of $50,000 and determined
that its gross receipts for the tax year
were $54,000.
$25,000 Gross Receipts Test
To determine whether an organization’s
gross receipts are normally $25,000 or
less, apply the following test. An
organization’s gross receipts are
considered normally to be $25,000 or less
if the organization is:
1. Up to a year old and has received,
or donors have pledged to give, $37,500
or less during its first tax year;
2. Between 1 and 3 years old and
averaged $30,000 or less in gross
receipts during each of its first 2 tax
years; or
3. Three years old or more and
averaged $25,000 or less in gross
receipts for the immediately preceding 3
tax years (including the year for which the
return would be filed).
If the organization’s gross receipts are
normally $25,000 or less, it must file Form
990-N, Electronic Notice (e-Postcard) for
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Tax-Exempt Organizations not Required
To File Form 990 or 990-EZ (with
exceptions for certain organizations
described in General Instruction B).
$5,000 Gross Receipts Test
To determine whether an organization’s
gross receipts are normally $5,000 or
less, apply the following test. An
organization’s gross receipts are
considered normally to be $5,000 or less
if the organization is:
1. Up to a year old and has received,
or donors have pledged to give, $7,500 or
less during its first tax year;
2. Between 1 and 3 years old and
averaged $6,000 or less in gross receipts
during each of its first 2 tax years; or
3. Three years old or more and
averaged $5,000 or less in gross receipts
for the immediately preceding 3 tax years
(including the year for which the return
would be filed).
Appendix C: Special Gross
Receipts Test for
Determining Exempt
Status of Section 501(c)(7)
and 501(c)(15)
Organizations
Section 501(c)(7) organizations (social
clubs) and 501(c)(15) organizations
(insurance companies) apply the same
gross receipts test as other organizations
to determine whether they must file the
Form 990 or Form 990-EZ. However,
section 501(c)(7) and 501(c)(15)
organizations are also subject to separate
gross receipts tests to determine whether
they qualify as tax-exempt for the tax
year. The following tests use a special
definition of gross receipts for purposes of
determining whether these organizations
are exempt for a particular tax year.
501(c)(7)
A section 501(c)(7) organization may
receive up to 35% of its gross receipts,
including investment income, from
sources outside its membership and
remain tax-exempt. Part of the 35% (up to
15% of gross receipts) may be from
public use of a social club’s facilities.
“Gross receipts” for purposes of
determining 501(c)(7) exemption are the
club’s income from its usual activities and
include:
• Charges,
• Admissions,
• Membership fees
• Dues,
• Assessments, and
• Investment income (such as dividends,
rents, and similar receipts), and normal
recurring capital gains on investments.
Gross receipts for this purpose do not
include:
• Capital contributions (see Regulations
section 1.118-1),
• Initiation fees, or
• Unusual amounts of income (such as
the sale of the clubhouse).
College fraternities or sororities or
other organizations that charge
CAUTION membership initiation fees, but not
annual dues, must include initiation fees
in their gross receipts.
!
501(c)(15)
If any section 501(c)(15) insurance
company (other than life insurance)
normally has gross receipts of more than
$25,000 for the tax year and meets both
parts of the following test, then the
company may file Form 990 (or Form
990-EZ, if applicable).
1. The company’s gross receipts must
be equal to or less than $600,000, and
2. The company’s premiums must be
more than 50% of its gross receipts.
If the company did not meet this test
and the company is a mutual insurance
company, then it must meet the Alternate
test to qualify to file Form 990 (or Form
990-EZ, if applicable). Insurance
companies that do not qualify as
tax-exempt must file Form 1120-PC, U.S.
Property and Casualty Insurance
Company Income Tax Return, or Form
1120, U.S. Corporation Income Tax
Return, as taxable entities for the year.
See Notice 2006-42, which is on page
878 of the Internal Revenue Bulletin
2006-19 available at www.irs.gov.
Alternate test. If any section
501(c)(15) insurance company (other
than life insurance) is a mutual insurance
company and it did not meet the above
test, then the company must meet both
parts of the following alternate test.
1. The company’s gross receipts must
be equal to or less than $150,000, and
2. The company’s premiums must be
more than 35% of its gross receipts.
If the company does not meet either
test, then it must file Form 1120-PC or
Form 1120 (if the company is not entitled
to insurance reserves) instead of Form
990 or Form 990-EZ.
The alternate test does not apply if
any employee of the mutual
CAUTION insurance company or a member
of the employee’s family is an employee
of another company that is exempt under
section 501(c)(15) (or would be exempt if
this provision did not apply).
Gross receipts. To determine
whether a section 501(c)(15) organization
satisfies either of the above tests
described in Appendix C, figure gross
receipts by adding:
1. premiums (including deposits and
assessments) without reduction for return
premiums or premiums paid for
reinsurance;
2. gross investment income of a
non-life insurance company (as described
in section 834(b)); and
3. other items that are included in the
filer’s gross income under Subchapter B,
Chapter 1, Subtitle A of the Code.
!
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This definition does not, however,
include contributions to capital. For more
information, see Notice 2006-42.
Premiums. Premiums consist of all
amounts received as a result of entering
into an insurance contract. They are
reported in Form 990, Part VIII
(Statement of Revenue), line 2, or in
Form 990-EZ, Part I, line 2.
Anti-abuse rule. The anti-abuse rule,
found in section 501(c)(15)(C), explains
how gross receipts (including premiums)
from all members of a controlled group
are aggregated in figuring the above
tests.
Appendix D: Public
Inspection of Returns
Some members of the public rely on Form
990, or Form 990-EZ, as the primary or
sole source of information about a
particular organization. How the public
perceives an organization in such cases
may be determined by the information
presented on its returns.
An organization’s completed Form
990, or Form 990-EZ, is available for
public inspection as required by section
6104. Schedule B, Schedule of
Contributors (Form 990, 990-EZ, or
990-PF) is open for public inspection for
section 527 organizations filing Form 990
or Form 990-EZ. For other organizations
that file Form 990 or Form 990-EZ, parts
of Schedule B may be open to public
inspection. Form 990-T filed after August
17, 2006, by a 501(c)(3) organization to
report any unrelated business income, is
also available for public inspection and
disclosure.
Through the IRS
Use Form 4506-A to request:
• A copy of an exempt or political
organization’s return, report, notice, or
exemption application;
• An inspection of a return, report, notice,
or exemption application at an IRS office.
The IRS can provide copies of exempt
organization returns on a compact disc
(CD). Requesters can order the complete
set (all Forms 990 and 990-EZ or all
Forms 990-PF filed for a year) or a partial
set by state or by month. For more
information on the cost and how to order
CD-ROMs, call the TEGE Customer
Account Services toll-free number
(1-877-829-5500) or write to the IRS:
Internal Revenue Service
TE/GE EO Determinations
P.O. Box 2508
Cincinnati, OH 45201
The IRS may not disclose portions of
an exemption application relating to any
trade secrets, etc. Additionally, the IRS
may not disclose the names and
addresses of contributors. See the
Instructions for Schedule B (Form 990,
990-EZ, or 990-PF) for more information
about the disclosure of that schedule.
Notice 2008-49, 2008-20 I.R.B. 979,
provides interim guidance regarding the
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requirement that section 501(c)(3)
organizations and the IRS make available
for public inspection Form 990-T.
Forms 990 or 990-EZ can only be
requested for section 527 organizations
for tax years beginning after June 30,
2000.
A return, report, notice, or exemption
application may be inspected at an IRS
office free of charge. Copies of these
items may also be obtained through the
organization as discussed in the following
section.
Through the Organization
Public inspection and distribution of
certain returns of unrelated business
income. Section 501(c)(3) organizations
that are required to file Form 990-T after
August 17, 2006, must make Form 990-T
available for public inspection under
section 6104(d)(1)(A)(ii).
Public inspection and distribution of
returns and reports for a political
organization. Section 527 political
organizations required to file Form 990, or
Form 990-EZ, must, in general, make
their Form 8871, 8872, 990, or 990-EZ
available for public inspection in the same
manner as annual information returns of
section 501(c) organizations and
4947(a)(1) nonexempt charitable trusts
are made available. See the public
inspection rules for Tax-exempt
organizations, later. Generally, Form
8871 and Form 8872 are available for
inspection and printing in the Charities &
Nonprofits section of the IRS Web site
(www.irs.gov).
Note that a section 527 political
TIP organization (and an organization
filing Form 990-PF) must disclose
their Schedule B (Form 990, 990-EZ, or
990-PF). See the Instructions for
Schedule B. The penalties discussed in
General Instruction H also apply to
section 527 political organizations (Rev.
Rul. 2003-49, 2003-20 I.R.B. 903).
Public inspection and distribution of
applications for tax exemption and
annual information returns of
tax-exempt organizations. Under
Regulations sections 301.6104(d)-1
through -3, a tax-exempt organization
must:
• Make its application for recognition of
exemption and its annual information
returns available for public inspection
without charge at its principal, regional
and district offices during regular
business hours.
• Make each annual information return
available for a period of 3 years beginning
on the date the return is required to be
filed (determined with regard to any
extension of time for filing) or is actually
filed, whichever is later.
• Provide a copy without charge (for
Form 990-T, this requirement applies only
to Forms 990-T filed after August 17,
2006), other than a reasonable fee for
reproduction and actual postage costs, of
all or any part of any application or return
required to be made available for public
inspection to any individual who makes a
request for such copy in person or in
writing (except as provided in Regulations
sections 301.6104(d)-2 and -3).
Definitions
Tax-exempt organization is any
organization that is described in section
501(c) or (d) and is exempt from taxation
under section 501(a). The term
tax-exempt organization also includes any
section 4947(a)(1) nonexempt charitable
trust or nonexempt private foundation that
is subject to the reporting requirements of
section 6033.
Application for tax exemption
includes:
• Any prescribed application form (such
as Form 1023 or Form 1024),
• All documents and statements the IRS
requires an applicant to file with the form,
• Any statement or other supporting
document submitted in support of the
application, and
• Any letter or other document issued by
the IRS concerning the application.
Application for tax exemption does
not include:
• Any application for tax exemption filed
before July 15, 1987, unless the
organization filing the application had a
copy of the application on July 15, 1987;
• In the case of a tax-exempt
organization other than a private
foundation, the name and address of any
contributor to the organization; or
• Any material that is not available for
public inspection under section 6104.
!
CAUTION
If there is no prescribed
application form, see Regulations
section 301.6104(d)-1(b)(4)(i).
Annual information return includes:
• An exact copy of the Form 990 or Form
990-EZ filed by a tax-exempt organization
as required by section 6033.
• Any amended return the organization
files with the IRS after the date the
original return is filed.
• An exact copy of Form 990-T if one is
filed by a 501(c)(3) organization.
The copy must include all information
furnished to the IRS on Form 990, Form
990-EZ, or Form 990-T as well as all
schedules, attachments and supporting
documents, except for the name and
address of any contributor to the
organization. See the Instructions for
Schedule B (Form 990, 990-EZ, or
990-PF). However, schedules,
attachments, and supporting documents
filed with Form 990-T that do not relate to
the imposition of unrelated business
income tax are not required to be made
available for public inspection and
copying. See Notice 2008-49, 2008-20
I.R.B. 979.
Annual returns more than 3 years
old. An annual information return does
not include any return after the expiration
of 3 years from the date the return is
required to be filed (including any
-25-
extension of time that has been granted
for filing such return) or is actually filed,
whichever is later.
If an organization files an amended
return, however, the amended return
must be made available for a period of 3
years beginning on the date it is filed with
the IRS.
Local or subordinate organizations.
For rules relating to annual information
returns of local or subordinate
organizations, see Regulations section
301.6104(d)-1(f)(2).
Regional or district offices. A
regional or district office is any office of a
tax-exempt organization, other than its
principal office, that has paid employees,
whether part-time or full-time, whose
aggregate number of paid hours a week
are normally at least 120.
A site is not considered a regional or
district office, however, if:
• The only services provided at the site
further exempt purposes (such as day
care, health care or scientific or medical
research); and
• The site does not serve as an office for
management staff, other than managers
who are involved solely in managing the
exempt function activities at the site.
Special rules relating to public
inspection
Permissible conditions on public
inspection. A tax-exempt organization:
• May have an employee present in the
room during an inspection.
• Must allow the individual conducting
the inspection to take notes freely during
the inspection.
• Must allow the individual to photocopy
the document at no charge, if the
individual provides photocopying
equipment at the place of inspection.
Organizations that do not maintain
permanent offices. A tax-exempt
organization with no permanent office:
• Must make its application for tax
exemption and its annual information
returns available for inspection at a
reasonable location of its choice.
• Must permit public inspection within a
reasonable amount of time after receiving
a request for inspection (normally not
more than 2 weeks) and at a reasonable
time of day.
• May mail, within 2 weeks of receiving
the request, a copy of its application for
tax exemption and annual information
returns to the requester instead of
allowing an inspection.
• May charge the requester for copying
and actual postage costs only if the
requester consents to the charge.
An organization that has a permanent
office, but has no office hours, or very
limited hours during certain times of the
year, must make its documents available
during those periods when office hours
are limited, or not available, as though it
were an organization without a permanent
office.
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Special rules relating to copies.
Time and place for providing copies
in response to requests made
in-person. A tax-exempt organization
must:
• Provide copies of required documents
under section 6104(d) in response to a
request made in person at its principal,
regional and district offices during regular
business hours.
• Provide such copies to a requester on
the day the request is made, except for
unusual circumstances (see below).
Unusual circumstances. In the case
of an in-person request, where unusual
circumstances exist so that fulfilling the
request on the same business day
causes an unreasonable burden to the
tax-exempt organization, the organization
must provide the copies no later than the
next business day following the day that
the unusual circumstances cease to exist,
or the 5th business day after the date of
the request, whichever occurs first.
Unusual circumstances include:
• Requests received that exceed the
organization’s daily capacity to make
copies;
• Requests received shortly before the
end of regular business hours that require
an extensive amount of copying; or
• Requests received on a day when the
organization’s managerial staff capable of
fulfilling the request is conducting special
duties, such as student registration or
attending an off-site meeting or
convention, rather than its regular
administrative duties.
Agents for providing copies. For
rules relating to use of agents to provide
copies, see Regulations sections
301.6104(d)-1(d)(1) and (2).
Request for copies in writing. A
tax-exempt organization must honor a
written request for a copy of documents
(or the requested part) required under
section 6104(d) if the request:
1. Is addressed to, and delivered by
mail, electronic mail, facsimile, or a
private delivery service, as defined in
section 7502(f), to a principal, regional, or
district office of the organization; and
2. Sets forth the address to which the
copy of the documents should be sent.
Time and manner of fulfilling written
requests
IF the
organization
THEN the organization
Receives a
written request
for a copy,
Must mail the copy of the
requested documents (or
the requested parts)
within 30 days from the
date it receives the
request.
Mails the copy of Is deemed to have
the requested
provided the copy on the
document,
postmark date or private
delivery mark (if sent by
certified or registered
mail, the date of
registration or the date of
the postmark on the
sender’s receipt).
Requires
payment in
advance,
Is required to provide the
copies within 30 days
from the date it receives
payment.
Receives a
Is deemed to have
request or
received it 7 days after
payment by mail, the date of the postmark,
absent evidence to the
contrary.
Receives a
request
transmitted by
electronic mail or
facsimile,
Is deemed to have
received it the day the
request is transmitted
successfully.
Receives a
written request
without payment
or with an
insufficient
payment, when
payment in
advance is
required,
Must notify the requester
of the prepayment policy
and the amount due
within 7 days from the
date of the request’s
receipt.
Receives consent
from an individual
making a
request,
May provide a copy of the
requested document
exclusively by electronic
mail (the material is
provided on the date the
organization successfully
transmits the electronic
mail.
Request for a copy of parts of a
document. A tax-exempt organization
must fulfill a request for a copy of the
organization’s entire application for tax
exemption or annual information return or
any specific part or schedule of its
application or return. A request for a copy
of less than the entire application or less
than the entire return must specifically
identify the requested part or schedule.
Fees for copies. A tax-exempt
organization may charge a reasonable
fee for providing copies. Before the
organization provides the documents, it
may require that the individual requesting
copies of the documents pay the fee. If
the organization has provided an
individual making a request with notice of
the fee, and the individual does not pay
the fee within 30 days, or if the individual
-26-
pays the fee by check and the check does
not clear upon deposit, the organization
may disregard the request.
Form of payment — (A) Request
made in person. If a tax-exempt
organization charges a fee for copying, it
must accept payment by cash and money
order for requests made in person. The
organization may accept other forms of
payment, such as credit cards and
personal checks.
(B) Request made in writing. If a
tax-exempt organization charges a fee for
copying and postage, it must accept
payment by certified check, money order,
and either personal check or credit card
for requests made in writing. The
organization may accept other forms of
payment.
Avoidance of unexpected fees.
Where a tax-exempt organization does
not require prepayment and a requester
does not enclose payment with a request,
an organization must receive consent
from a requester before providing copies
for which the fee charged for copying and
postage exceeds $20.
Documents to be provided by
regional and district offices. Except as
otherwise provided, a regional or district
office of a tax-exempt organization must
satisfy the same rules as the principal
office with respect to allowing public
inspection and providing copies of its
application for tax exemption and annual
information returns.
A regional or district office is not
required, however, to make its annual
information return available for inspection
or to provide copies until 30 days after the
date the return is required to be filed
(including any extension of time that is
granted for filing such return) or is actually
filed, whichever is later.
Documents to be provided by
local and subordinate
organizations.
Applications for tax exemption.
Except as otherwise provided, a
tax-exempt organization that did not file
its own application for tax exemption
(because it is a local or subordinate
organization covered by a group
exemption letter) must, upon request,
make available for public inspection, or
provide copies of, the application
submitted to the IRS by the central or
parent organization to obtain the group
exemption letter and those documents
which were submitted by the central or
parent organization to include the local or
subordinate organization in the group
exemption letter.
However, if the central or parent
organization submits to the IRS a list or
directory of local or subordinate
organizations covered by the group
exemption letter, the local or subordinate
organization is required to provide only
the application for the group exemption
ruling and the pages of the list or directory
that specifically refer to it. The local or
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subordinate organization must permit
public inspection, or comply with a
request for copies made in person, within
a reasonable amount of time (normally
not more than 2 weeks) after receiving a
request made in person for public
inspection or copies and at a reasonable
time of day. See Regulations section
301.6104(d)-1(f) for further information.
Annual information returns. A local
or subordinate organization that does not
file its own annual information return
(because it is affiliated with a central or
parent organization that files a group
return) must, upon request, make
available for public inspection, or provide
copies of, the group returns filed by the
central or parent organization.
However, if the group return includes
separate schedules with respect to each
local or subordinate organization included
in the group return, the local or
subordinate organization receiving the
request may omit any schedules relating
only to other organizations included in the
group return.
The local or subordinate organization
must permit public inspection, or comply
with a request for copies made in person,
within a reasonable amount of time
(normally not more than 2 weeks) after
receiving a request made in person for
public inspection or copies and at a
reasonable time of day.
In a case where the requester seeks
inspection, the local or subordinate
organization may mail a copy of the
applicable documents to the requester
within the same time period instead of
allowing an inspection. In such a case,
the organization may charge the
requester for copying and actual postage
costs only if the requester consents to the
charge.
If the local or subordinate organization
receives a written request for a copy of its
annual information return, it must fulfill the
request by providing a copy of the group
return in the time and manner specified in
the paragraph earlier, Request for copies
in writing.
The requester has the option of
requesting from the central or parent
organization, at its principal office,
inspection or copies of group returns filed
by the central or parent organization. The
central or parent organization must fulfill
such requests in the time and manner
specified in the paragraphs, Special rules
relating to public inspection and Special
rules relating to copies earlier.
Failure to comply. If an organization
fails to comply with the requirements
specified in this paragraph, the penalty
provisions of sections 6652(c)(1)(C),
6652(c)(1)(D), and 6685 apply.
Making applications and returns
widely available. A tax-exempt
organization is not required to comply
with a request for a copy of its application
for tax exemption or an annual
information return if the organization has
made the requested document widely
available (see below).
An organization that makes its
application for tax exemption and/or
annual information return widely available
must nevertheless make the document
available for public inspection as required
under Regulations section
301.6104(d)-1(a).
A tax-exempt organization makes its
application for tax exemption and/or an
annual information return widely available
if the organization complies with the
Internet posting requirements and the
notice requirements given below.
Internet posting. A tax-exempt
organization can make its application for
tax exemption and/or an annual
information return widely available by
posting the document on a World Wide
Web page that the tax-exempt
organization establishes and maintains or
by having the document posted, as part of
a database of similar documents of other
tax-exempt organizations, on a World
Wide Web page established and
maintained by another entity. The
document will be considered widely
available only if:
• The World Wide Web page through
which it is available clearly informs
readers that the document is available
and provides instructions for downloading
it;
• The document is posted in a format
that, when accessed, downloaded,
viewed and printed in hard copy, exactly
reproduces the image of the application
for tax exemption or annual information
return as it was originally filed with the
IRS, except for any information permitted
by statute to be withheld from public
disclosure; and
• Any individual with access to the
Internet can access, download, view and
print the document without special
computer hardware or software required
for that format (other than software that is
readily available to members of the public
without payment of any fee) and without
payment of a fee to the tax-exempt
organization or to another entity
maintaining the World Wide Web page.
Reliability and accuracy. In order for
the document to be widely available
through an Internet posting, the entity
maintaining the World Wide Web page
must have procedures for ensuring the
reliability and accuracy of the document
that it posts on the page and must take
reasonable precautions to prevent
alteration, destruction or accidental loss
of the document when posted on its page.
In the event that a posted document is
altered, destroyed or lost, the entity must
correct or replace the document.
Notice requirement. If a tax-exempt
organization has made its application for
tax exemption and/or an annual
information return widely available, it must
notify any individual requesting a copy
where the documents are available
-27-
(including the address on the World Wide
Web, if applicable). If the request is made
in person, the organization must provide
such notice to the individual immediately.
If the request is made in writing, the
notice must be provided within 7 days of
receiving the request.
Tax-exempt organization subject to
harassment campaign. If the Director
EO Examination (or designee) determines
that the organization is being harassed, a
tax-exempt organization is not required to
comply with any request for copies that it
reasonably believes is part of a
harassment campaign.
Whether a group of requests
constitutes a harassment campaign
depends on the relevant facts and
circumstances such as:
• a sudden increase in requests;
• an extraordinary number of requests by
form letters or similarly worded
correspondence;
• hostile requests;
• evidence showing bad faith or
deterrence of the organization’s exempt
purpose;
• prior provision of the requested
documents to the purported harassing
group; and
• a demonstration that the organization
routinely provides copies of its documents
upon request.
A tax-exempt organization may
disregard any request for copies of all or
part of any document beyond the first two
received within any 30-day period or the
first four received within any 1-year period
from the same individual or the same
address, regardless of whether the
Director EO Examination (or designee)
has determined that the organization is
subject to a harassment campaign.
A tax-exempt organization may apply
for a determination that it is the subject of
a harassment campaign and that
compliance with requests that are part of
the campaign would not be in the public
interest by submitting a signed application
to the Director EO Examination (or
designee) for the area where the
organization’s principal office is located.
In addition, the organization may
suspend compliance with any request it
reasonably believes to be part of the
harassment campaign until it receives a
response to its application for a
harassment campaign determination.
However, if the Director EO Examination
(or designee) determines that the
organization did not have a reasonable
basis for requesting a determination that it
was subject to a harassment campaign or
reasonable belief that a request was part
of the campaign, the officer, director,
trustee, employee, or other responsible
individual of the organization remains
liable for any penalties for not providing
the copies in a timely fashion. See
Regulations section 301.6104(d)-3.
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Appendix E: Section 4958
Excess Benefit
Transactions
The intermediate sanction regulations are
important to the exempt organization
community as a whole, and for ensuring
compliance in this area. The rules provide
a roadmap by which an organization may
steer clear of situations that may give rise
to inurement.
Under section 4958, any disqualified
person who benefits from an excess
benefit transaction with an applicable
tax-exempt organization is liable for a
25% tax on the excess benefit. The
disqualified person is also liable for a
200% tax on the excess benefit if the
excess benefit is not corrected by a
certain date. Also, organization managers
who participate in an excess benefit
transaction knowingly, willfully, and
without reasonable cause are liable for a
10% tax on the excess benefit, not to
exceed $20,000 for all participating
managers on each transaction.
Applicable Tax-Exempt
Organization
These rules only apply to certain
applicable section 501(c)(3) and 501(c)(4)
organizations. An applicable tax-exempt
organization is a section 501(c)(3) or a
section 501(c)(4) organization that is tax
exempt under section 501(a), or was such
an organization at any time during a
5-year period ending on the day of the
excess benefit transaction.
An applicable tax-exempt organization
does not include:
• A private foundation as defined in
section 509(a).
• A governmental entity that is exempt
from (or not subject to) taxation without
regard to section 501(a) or relieved from
filing an annual return under Regulations
section 1.6033-2(g)(6).
• Certain foreign organizations.
An organization is not treated as a
section 501(c)(3) or 501(c)(4)
organization for any period covered by a
final determination that the organization
was not tax-exempt under section 501(a),
so long as the determination was not
based on private inurement or one or
more excess benefit transactions.
Disqualified Person
The vast majority of section 501(c)(3) or
501(c)(4) organization employees and
contractors will not be affected by these
rules. Only the few influential persons
within these organizations are covered by
these rules when they receive benefits,
such as compensation, fringe benefits, or
contract payments. The IRS calls this
class of covered individuals disqualified
persons.
A disqualified person, regarding any
transaction, is any person who was in a
position to exercise substantial influence
over the affairs of the applicable
tax-exempt organization at any time
during a 5-year period ending on the date
of the transaction. Persons who hold
certain powers, responsibilities, or
interests are among those who are in a
position to exercise substantial influence
over the affairs of the organization. This
would include, for example, voting
members of the governing body, and
persons holding the power of:
• Presidents, chief executive officers, or
chief operating officers.
• Treasurers and chief financial officers.
A disqualified person also includes
certain family members of a disqualified
person, and 35% controlled entities of a
disqualified person.
The following persons are considered
disqualified persons with respect to the
following organizations, along with certain
family members and 35% controlled
entities associated with them:
• With respect to a sponsoring
organization of a donor advised fund, a
donor of a donor advised fund,
• With respect to a sponsoring
organization of a donor advised fund, an
investment advisor of the sponsoring
organization, and
• With respect to a supported
organization of a section 509(a)(3)
supporting organization, the disqualified
persons of the section 509(a)(3)
supporting organization.
Substantial contributors to supporting
organizations are also considered
disqualified persons along with their
family members and 35% controlled
entities.
See the instructions for Form 4720,
Schedule I for more information regarding
these disqualified persons.
Who is not a disqualified person? The
rules also clarify which persons are not
considered to be in a position to exercise
substantial influence over the affairs of an
organization. They include:
• An employee who receives benefits
that total less than the highly
compensated amount ($100,000 in 2007)
and who does not hold the executive or
voting powers just mentioned; is not a
family member of a disqualified person;
and is not a substantial contributor;
• Tax-exempt organizations described in
section 501(c)(3); and
• Section 501(c)(4) organizations with
respect to transactions engaged in with
other section 501(c)(4) organizations.
Who else may be considered a
disqualified person? Other persons not
described above can also be considered
disqualified persons, depending on all the
relevant facts and circumstances.
Facts and circumstances tending to
show substantial influence:
• The person founded the organization.
• The person is a substantial contributor
to the organization under the section
507(d)(2)(A) definition, only taking into
account contributions to the organization
for the past 5 years.
• The person’s compensation is primarily
based on revenues derived from activities
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of the organization that the person
controls.
• The person has or shares authority to
control or determine a substantial portion
of the organization’s capital expenditures,
operating budget, or compensation for
employees.
• The person manages a discrete
segment or activity of the organization
that represents a substantial portion of
the activities, assets, income, or
expenses of the organization, as
compared to the organization as a whole.
• The person owns a controlling interest
(measured by either vote or value) in a
corporation, partnership, or trust that is a
disqualified person.
• The person is a nonstock organization
controlled directly or indirectly by one or
more disqualified persons.
Facts and circumstances tending to
show no substantial influence:
• The person is an independent
contractor whose sole relationship to the
organization is providing professional
advice (without having decision-making
authority) with respect to transactions
from which the independent contractor
will not economically benefit.
• The person has taken a vow of poverty.
• Any preferential treatment the person
receives based on the size of the
person’s donation is also offered to others
making comparable widely solicited
donations.
• The direct supervisor of the person is
not a disqualified person.
• The person does not participate in any
management decisions affecting the
organization as a whole or a discrete
segment of the organization that
represents a substantial portion of the
activities, assets, income, or expenses of
the organization, as compared to the
organization as a whole.
What about persons who staff
affiliated organizations? In the case of
multiple affiliated organizations, the
determination of whether a person has
substantial influence is made separately
for each applicable tax-exempt
organization. A person may be a
disqualified person with respect to more
than one organization in the same
transaction.
Excess Benefit Transaction
An excess benefit transaction is a
transaction in which an economic benefit
is provided by an applicable tax-exempt
organization, directly or indirectly, to or for
the use of any disqualified person, and
the value of the economic benefit
provided by the applicable tax-exempt
organization exceeds the value of the
consideration (including the performance
of services) received for providing such
benefit. An excess benefit transaction
also can occur when a disqualified person
embezzles from the exempt organization.
To determine whether an excess
benefit transaction has occurred, all
consideration and benefits exchanged
between a disqualified person and the
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applicable tax exempt organization, and
all entities it controls, are taken into
account.
For purposes of determining the value
of economic benefits, the value of
property, including the right to use
property, is the fair market value. Fair
market value is the price at which
property, or the right to use property,
would change hands between a willing
buyer and a willing seller, neither being
under any compulsion to buy, sell or
transfer property or the right to use
property, and both having reasonable
knowledge of relevant facts.
Donor advised funds. For a donor
advised fund, an excess benefit
transaction includes a grant, loan,
compensation, or similar payment from
the fund to a:
• Donor or donor advisor,
• Family member of a donor, or donor
advisor,
• 35% controlled entity of a donor, or
donor advisor, or
• 35% controlled entity of a family
member of a donor, or donor advisor.
The excess benefit in this transaction
is the amount of the grant, loan,
compensation, or similar payment. For
additional information see the Instructions
for Form 4720.
Supporting organizations. For any
supporting organization, defined in
section 509(a)(3), an excess benefit
transaction includes grants, loans,
compensation, or similar payment
provided by the supporting organization to
a:
• Substantial contributor
• Family member of a substantial
contributor
• 35% controlled entity of a substantial
contributor
• 35% controlled entity of a family
member of a substantial contributor
Additionally, an excess benefit
transaction includes any loans provided
by the supporting organization to a
disqualified person (other than an
organization described in section
509(a)(1), (2), or (4)).
A substantial contributor is any person
who contributed or bequeathed an
aggregate of more than $5000 to the
organization, if that amount is more than
2% of the total contributions and bequests
received by the organization before the
end of the tax year of the organization in
which the contribution or bequest is
received by the organization from such
person. A substantial contributor includes
the grantor of a trust.
The excess benefit for substantial
contributors and parties related to those
contributors includes the amount of the
grant, loan, compensation, or similar
payment. For additional information see
the Instructions for Form 4720.
When does an excess benefit
transaction usually occur? An excess
benefit transaction occurs on the date the
disqualified person receives the economic
benefit from the organization for federal
income tax purposes. However, when a
single contractual arrangement provides
for a series of compensation payments or
other payments to a disqualified person
during the disqualified person’s tax year,
any excess benefit transaction with
respect to these payments occurs on the
last day of the taxpayer’s tax year.
In the case of the transfer of property
subject to a substantial risk of forfeiture,
or in the case of rights to future
compensation or property, the transaction
occurs on the date the property, or the
rights to future compensation or property,
is not subject to a substantial risk of
forfeiture. Where the disqualified person
elects to include an amount in gross
income in the tax year of transfer under
section 83(b), the excess benefit
transaction occurs on the date the
disqualified person receives the economic
benefit for federal income tax purposes.
Section 4958 applies only to
post-September 1995 transactions.
Section 4958 applies to excess benefit
transactions occurring on or after
September 14, 1995. Section 4958 does
not apply to any transaction occurring
pursuant to a written contract that was
binding on September 13, 1995, and at all
times thereafter before the transaction
occurs.
What is reasonable
compensation?
Reasonable compensation is the
valuation standard that is used to
determine if there is an excess benefit in
the exchange of a disqualified person’s
services for compensation.
Reasonable compensation is the value
that would ordinarily be paid for like
services by like enterprises under like
circumstances. This is the section 162
standard that will apply in determining the
reasonableness of compensation. The
fact that a bonus or revenue-sharing
arrangement is subject to a cap is a
relevant factor in determining the
reasonableness of compensation.
For determining the reasonableness of
compensation, all items of compensation
provided by an applicable tax-exempt
organization in exchange for the
performance of services are taken into
account in determining the value of
compensation (except for certain
economic benefits that are disregarded,
as discussed in What benefits are
disregarded? later). Items of
compensation include:
• All forms of cash and noncash
compensation, including salary, fees,
bonuses, severance payments, and
deferred and noncash compensation.
• The payment of liability insurance
premiums for, or the payment or
reimbursement by the organization of
taxes or certain expenses under section
4958, unless excludable from income as
a de minimis fringe benefit under section
132(a)(4). (A similar rule applies in the
private foundation area.) Inclusion in
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compensation for purposes of
determining reasonableness under
section 4958 does not control inclusion in
income for income tax purposes.
• All other compensatory benefits,
whether or not included in gross income
for income tax purposes.
• Taxable and nontaxable fringe benefits,
except fringe benefits described in section
132.
• Foregone interest on loans.
Written intent required to treat
benefits as compensation. An
economic benefit is not treated as
consideration for the performance of
services unless the organization providing
the benefit clearly indicates its intent to
treat the benefit as compensation when
the benefit is paid.
An applicable tax-exempt organization
(or entity that it controls) is treated as
clearly indicating its intent to provide an
economic benefit as compensation for
services only if the organization provides
written substantiation that is
contemporaneous with the transfer of the
economic benefits under consideration.
Ways to provide contemporaneous
written substantiation of its intent to
provide an economic benefit as
compensation include:
• The organization produces a signed
written employment contract;
• The organization reports the benefit as
compensation on an original Form W-2,
Form 1099, Form 990, or 990-EZ, or on
an amended form filed prior to the start of
an IRS examination; or
• The disqualified person reports the
benefit as income on the person’s original
Form 1040 or on an amended form filed
prior to the start of an IRS examination.
Exception. To the extent the
economic benefit is excluded from the
disqualified person’s gross income for
income tax purposes, the applicable
tax-exempt organization is not required to
indicate its intent to provide an economic
benefit as compensation for services. (For
example: employer provided health
benefits, and contributions to qualified
plans under section 401(a).)
What benefits are disregarded? The
following economic benefits are
disregarded for purposes of section 4958:
• Nontaxable fringe benefits. An
economic benefit that is excluded from
income under section 132.
• Benefits to volunteer. An economic
benefit provided to a volunteer for the
organization if the benefit is provided to
the general public in exchange for a
membership fee or contribution of $75 or
less per year.
• Benefits to members or donors. An
economic benefit provided to a member
of an organization due to the payment of
a membership fee, or to a donor as a
result of a deductible contribution, if a
significant number of nondisqualified
persons make similar payments or
contributions and are offered a similar
economic benefit.
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• Benefits to a charitable beneficiary. An
economic benefit provided to a person
solely as a member of a charitable class
that the applicable tax-exempt
organization intends to benefit as part of
the accomplishment of its exempt
purpose.
• Benefits to a governmental unit. A
transfer of an economic benefit to or for
the use of a governmental unit, as defined
in section 170(c)(1), if exclusively for
public purposes.
Is there an exception for initial
contracts? Section 4958 does not apply
to any fixed payment made to a person
pursuant to an initial contract. This is a
very important exception, since it would
potentially apply, for example, to all initial
contracts with new, previously unrelated
officers and contractors.
An initial contract is a binding written
contract between an applicable
tax-exempt organization and a person
who was not a disqualified person
immediately prior to entering into the
contract.
A fixed payment is an amount of cash
or other property specified in the contract,
or determined by a fixed formula that is
specified in the contract, which is to be
paid or transferred in exchange for the
provision of specified services or
property.
A fixed formula may, in general,
incorporate an amount that depends upon
future specified events or contingencies,
as long as no one has discretion when
calculating the amount of a payment or
deciding whether to make a payment
(such as a bonus).
Treatment as new contract. A
binding written contract providing that it
may be terminated or cancelled by the
applicable tax-exempt organization
without the other party’s consent (except
as a result of substantial
non-performance) and without substantial
penalty, is treated as a new contract, as
of the earliest date that any termination or
cancellation would be effective. Also, a
contract in which there is a material
change, which includes an extension or
renewal of the contract (except for an
extension or renewal resulting from the
exercise of an option by the disqualified
person), or a more than incidental change
to the amount payable under the contract,
is treated as a new contract as of the
effective date of the material change.
Treatment as a new contract may cause
the contract to fall outside the initial
contract exception, and it thus would be
tested under the fair market value
standards of section 4958.
Rebuttable Presumption of
Reasonableness
Payments under a compensation
arrangement are presumed to be
reasonable and the transfer of property
(or right to use property) is presumed to
be at fair market value, if the following
three conditions are met.
1. The transaction is approved by an
authorized body of the organization (or an
entity it controls) which is composed of
individuals who do not have a conflict of
interest concerning the transaction.
2. Prior to making its determination,
the authorized body obtained and relied
upon appropriate data as to
comparability. There is a special safe
harbor for small organizations. If the
organization has gross receipts of less
than $1 million, appropriate comparability
data includes data on compensation paid
by three comparable organizations in the
same or similar communities for similar
services.
3. The authorized body adequately
documents the basis for its determination
concurrently with making that
determination. The documentation should
include:
a. The terms of the approved
transaction and the date approved;
b. The members of the authorized
body who were present during debate on
the transaction that was approved and
those who voted on it;
c. The comparability data obtained
and relied upon by the authorized body
and how the data was obtained;
d. Any actions by a member of the
authorized body having a conflict of
interest; and
e. Documentation of the basis for the
determination before the later of the next
meeting of the authorized body or 60
days after the final actions of the
authorized body are taken, and approval
of records as reasonable, accurate and
complete within a reasonable time
thereafter.
Special rebuttable presumption rule
for nonfixed payments. As a general
rule, in the case of a nonfixed payment,
no rebuttable presumption arises until the
exact amount of the payment is
determined, or a fixed formula for
calculating the payment is specified, and
the three requirements creating the
presumption have been satisfied.
However, if the authorized body approves
an employment contract with a
disqualified person that includes a
nonfixed payment (for example,
discretionary bonus) with a specified cap
on the amount, the authorized body may
establish a rebuttable presumption as to
the nonfixed payment when the
employment contract is entered into by, in
effect, assuming that the maximum
amount payable under the contract will be
paid, and satisfying the requirements
giving rise to the rebuttable presumption
for that maximum amount.
An IRS challenge to the presumption
of reasonableness. The Internal
Revenue Service may refute the
presumption of reasonableness only if it
develops sufficient contrary evidence to
rebut the probative value of the
comparability data relied upon by the
authorized body. This provision gives
taxpayers added protection if they
faithfully find and use contemporaneous
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persuasive comparability data when they
provide the benefits.
Organizations that do not establish a
presumption of reasonableness. An
organization may still comply with section
4958 even if it did not establish a
presumption of reasonableness. In some
cases, an organization may find it
impossible or impracticable to fully
implement each step of the rebuttable
presumption process described above. In
such cases, the organization should try to
implement as many steps as possible, in
whole or in part, in order to substantiate
the reasonableness of benefits as timely
and as well as possible. If an organization
does not satisfy the requirements of the
rebuttable presumption of
reasonableness, a facts and
circumstances approach will be followed,
using established rules for determining
reasonableness of compensation and
benefit deductions in a manner similar to
the established procedures for section
162 business expenses.
Section 4958 Taxes
Tax on disqualified persons. An excise
tax equal to 25% of the excess benefit is
imposed on each excess benefit
transaction between an applicable
tax-exempt organization and a
disqualified person. The disqualified
person who benefited from the
transaction is liable for the tax. If the 25%
tax is imposed and the excess benefit
transaction is not corrected within the
taxable period, an additional excise tax
equal to 200% of the excess benefit is
imposed.
If a disqualified person makes a
payment of less than the full correction
amount, the 200% tax is imposed only on
the unpaid portion of the correction
amount. If more than one disqualified
person received an excess benefit from
an excess benefit transaction, all such
disqualified persons are jointly and
severally liable for the taxes.
To avoid the imposition of the 200%
tax, a disqualified person must correct the
excess benefit transaction during the
taxable period. The taxable period begins
on the date the transaction occurs and
ends on the earlier of the date the
statutory notice of deficiency is issued or
the section 4958 taxes are assessed.
This 200% tax may be abated if the
excess benefit transaction subsequently
is corrected during a 90-day correction
period.
Tax on organization managers. An
excise tax equal to 10% of the excess
benefit may be imposed on the
participation of an organization manager
in an excess benefit transaction between
an applicable tax exempt organization
and a disqualified person. This tax, which
may not exceed $20,000 with respect to
any single transaction, is only imposed if
the 25% tax is imposed on the
disqualified person, the organization
manager knowingly participated in the
transaction, and the manager’s
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participation was willful and not due to
reasonable cause. There is also joint and
several liability for this tax. An
organization manager may be liable for
both the tax on disqualified persons and
on organization managers in appropriate
circumstances.
An organization manager is any
officer, director, or trustee of an
applicable tax-exempt organization, or
any individual having powers or
responsibilities similar to officers,
directors, or trustees of the organization,
regardless of title. An organization
manager is not considered to have
participated in an excess benefit
transaction where the manager has
opposed the transaction in a manner
consistent with the fulfillment of the
manager’s responsibilities to the
organization. For example, a director who
votes against giving an excess benefit
would ordinarily not be subject to this tax.
A person participates in a transaction
knowingly if the person has actual
knowledge of sufficient facts so that,
based solely upon such facts, the
transaction would be an excess benefit
transaction. Knowing does not mean
having reason to know. The organization
manager ordinarily will not be considered
knowing if, after full disclosure of the
factual situation to an appropriate
professional, the organization manager
relied on the professional’s reasoned
written opinion on matters within the
professional’s expertise or if the manager
relied on the fact that the requirements for
the rebuttable presumption of
reasonableness have been satisfied.
Participation by an organization manager
is willful if it is voluntary, conscious, and
intentional. An organization manager’s
participation is due to reasonable cause if
the manager has exercised responsibility
on behalf of the organization with ordinary
business care and prudence.
Correcting an Excess Benefit
Transaction
A disqualified person corrects an excess
benefit transaction by undoing the excess
benefit to the extent possible, and by
taking any additional measures necessary
to place the organization in a financial
position not worse than that in which it
would be if the disqualified person were
dealing under the highest fiduciary
standards. The organization is not
required to rescind the underlying
agreement; however, the parties may
need to modify an ongoing contract with
respect to future payments.
A disqualified person corrects an
excess benefit by making a payment in
cash or cash equivalents equal to the
correction amount to the applicable
tax-exempt organization. The correction
amount equals the excess benefit plus
the interest on the excess benefit; the
interest rate may be no lower than the
applicable Federal rate. There is an
anti-abuse rule to prevent the disqualified
person from effectively transferring
property other than cash or cash
equivalents.
Exception. For a correction of an
excess benefit transaction described in
Donor advised funds (discussed earlier),
no amount repaid in a manner prescribed
by the Secretary may be held in a donor
advised fund.
Property. With the agreement of the
applicable tax-exempt organization, a
disqualified person may make a payment
by returning the specific property
previously transferred in the excess
benefit transaction. The return of the
property is considered a payment of cash
(or cash equivalent) equal to the lesser of:
• The fair market value of the property on
the date the property is returned to the
organization, or
• The fair market value of the property on
the date the excess benefit transaction
occurred.
Insufficient payment. If the payment
resulting from the return of the property is
less than the correction amount, the
disqualified person must make an
additional cash payment to the
organization equal to the difference.
Excess payment. If the payment
resulting from the return of the property
exceeds the correction amount described
above, the organization may make a cash
payment to the disqualified person equal
to the difference.
Churches and Section 4958
The regulations make it clear that the IRS
will apply the procedures of section 7611
when initiating and conducting any inquiry
or examination into whether an excess
benefit transaction has occurred between
a church and a disqualified person.
Revenue Sharing Transactions
Proposed intermediate sanction
regulations were issued in 1998. The
proposed regulations had special
provisions covering “any transaction in
which the amount of any economic
benefit provided to or for the use of a
disqualified person is determined in whole
or in part by the revenues of one or more
activities of the organization. . .” —
so-called revenue-sharing transactions.
Rather than setting forth additional rules
on revenue-sharing transactions, the final
regulations reserve this section.
Consequently, until the Service issues
new regulations for this reserved section
on revenue-sharing transactions, these
transactions will be evaluated under the
general rules (for example, the fair market
value standards) that apply to all
contractual arrangements between
applicable tax-exempt organizations and
their disqualified persons.
Revocation of Exemption and
Section 4958
Section 4958 does not affect the
substantive standards for tax exemption
under section 501(c)(3) or section
501(c)(4), including the requirements that
the organization be organized and
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operated exclusively for exempt
purposes, and that no part of its net
earnings inure to the benefit of any
private shareholder or individual. The
legislative history indicates that in most
instances, the imposition of this
intermediate sanction will be in lieu of
revocation. The IRS has indicated that the
following factors will be considered
(among other facts and circumstances) in
determining whether to revoke an
applicable tax-exempt organization’s
exemption status where an excess benefit
transaction has occurred:
• The size and scope of the
organization’s regular and ongoing
activities that further exempt purposes
before and after the excess benefit
transaction or transactions occurred;
• The size and scope of the excess
benefit transaction or transactions
(collectively, if more than one) in relation
to the size and scope of the
organization’s regular and ongoing
activities that further exempt purposes;
• Whether the organization has been
involved in multiple excess benefit
transactions with one or more persons;
• Whether the organization has
implemented safeguards that are
reasonably calculated to prevent excess
benefit transactions; and
• Whether the excess benefit transaction
has been corrected, or the organization
has made good faith efforts to seek
correction from the disqualified person(s)
who benefited from the excess benefit
transaction.
Appendix F: Forms and
Publications To File or Use
Internet. You can access the IRS
website 24 hours a day, 7 days a week, at
www.irs.gov to:
• Download forms, instructions, and
publications.
• Order IRS products online.
• Research your tax questions online.
• Search publications online by topic or
keyword.
• View Internal Revenue Bulletins (IRBs)
published in the last few years.
• Sign up to receive local and national
tax news by email.
CD for tax products. You can order
Publication 1796, IRS Tax Products CD,
and obtain:
• A CD that is released twice so you
have the latest products. The first release
ships in late December and the final
release ships in late February.
• Current-year forms, instructions, and
publications.
• Prior-year forms, instructions, and
publications.
• Tax Map: an electronic research tool
and finding aid.
• Tax law frequently asked questions
(FAQs).
• Tax Topics from the IRS telephone
response system.
• Fill-in, print, and save features for most
tax forms.
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• Internal Revenue Bulletins.
• Toll-free and email technical support.
Buy the CD from National Technical
Information Service (NTIS) at www.irs.
gov/cdorders for $35 (no handling fee) or
call 1-877-233-6767 toll free to buy the
CD for $35 (plus a $5 handling fee).
By phone and in person. You can
order forms and publications by calling
1-800-TAX-FORM (1-800-829-3676). You
can also get most forms and publications
at your local IRS office.
Other Forms That May Be
Required
Schedule A (Form 990 or 990-EZ).
Public Charity Status or Public Support.
Schedule B (Form 990, 990-EZ, or
990-PF). Schedule of Contributors.
Schedule C (Form 990 or 990-EZ).
Political Campaign and Lobbying
Activities.
Schedule D (Form 990). Supplemental
Financial Statements.
Schedule E (Form 990 or 990-EZ).
Schools.
Schedule F (Form 990). Statement of
Activities Outside the United States.
Schedule G (Form 990 or 990-EZ).
Supplemental Information Regarding
Fundraising or Gaming Activities.
Schedule H (Form 990). Hospitals.
Schedule I (Form 990). Grants and
Other Assistance to Organizations,
Governments and Individuals in the U.S.
Schedule J (Form 990). Compensation
Information.
Schedule K (Form 990). Supplemental
Information on Tax Exempt Bonds.
Schedule L (Form 990 or Form 990-EZ).
Transactions with Interested Persons.
Schedule M (Form 990). Non-Cash
Contributions.
Schedule N (Form 990 or 990-EZ).
Liquidation, Termination, Dissolution or
Significant Disposition of Assets.
Schedule O (Form 990). Supplemental
Information to Form 990.
Schedule R (Form 990). Related
Organizations and Unrelated
Partnerships.
Forms W-2 and W-3. Wage and Tax
Statement; and Transmittal of Wage and
Tax Statements.
Form W-9. Request for Taxpayer
Identification Number and Certification.
Form 940. Employer’s Annual Federal
Unemployment (FUTA) Tax Return.
Form 941. Employer’s QUARTERLY
Federal Tax Return. Used to report social
security, Medicare, and income taxes
withheld by an employer and social
security and Medicare taxes paid by an
employer.
Form 943. Employer’s Annual Tax
Return for Agricultural Employees.
Trust Fund Recovery Penalty. If
certain excise, income, social security,
and Medicare taxes that must be
collected or withheld are not collected or
withheld, or these taxes are not paid to
the IRS, a Trust Fund Recovery Penalty
may apply. The Trust Fund Recovery
Penalty may be imposed on all persons
(including volunteers) who the IRS
determines were responsible for
collecting, accounting for, and paying
over these taxes, and who acted willfully
in not doing so.
Item
This penalty does not apply to
volunteer unpaid members of any board
of trustees or directors of a tax-exempt
organization, if these members are solely
serving in an honorary capacity, do not
participate in the day-to-day or financial
activities of the organization, and do not
have actual knowledge of the failure to
collect, account for, and pay over these
taxes. However, the preceding sentence
does not apply if it results in no person
being liable for the penalty.
Form 1096. Annual Summary and
Transmittal of U.S. Information Returns.
Form 1098 series. Information returns
to report mortgage interest, student loan
interest, qualified tuition and related
expenses received, and a contribution of
a qualified vehicle that has a claimed
value of more than $500.
Form 1099 series. Information returns
to report acquisitions or abandonments of
secured property, proceeds from broker
and barter exchange transactions,
cancellation of debt, dividends and
distributions, certain government and
state qualified tuition program payments,
taxable distributions from cooperatives,
interest payments, payments of long-term
care and accelerated death benefits,
miscellaneous income payments,
distributions from an HSA, Archer MSA or
Medicare Advantage MSA, original issue
discount, distributions from pensions,
annuities, retirement or profit-sharing
plans, IRAs, insurance contracts, etc.,
and proceeds from real estate
transactions. Also, use certain of these
returns to report amounts that were
received as a nominee on behalf of
another person.
Form 1120-POL. U.S. Income Tax
Return for Certain Political Organizations.
Form 1128. Application To Adopt,
Change, or Retain a Tax Year.
Form 2848. Power of Attorney and
Declaration of Representative.
Form 3115. Application for Change in
Accounting Method.
Form 4506. Request for Copy of Tax
Return.
Form 4506-A. Request for Public
Inspection or Copy of Exempt or Political
Organization IRS Form.
Form 4562. Depreciation and
Amortization.
Form 4720. Return of Certain Excise
Taxes on Charities and Other Persons
Under Chapters 41 and 42 of the Internal
Revenue Code.
Form 5500. Annual Return/Report of
Employee Benefit Plan. Employers who
maintain pension, profit-sharing, or other
funded deferred compensation plans are
generally required to file the Form 5500.
This requirement applies whether or not
the plan is qualified under the Internal
Revenue Code and whether or not a
deduction is claimed for the current tax
year.
Form 5578. Annual Certification of
Racial Nondiscrimination for a Private
School Exempt From Federal Income
Tax.
The penalty is equal to the unpaid trust
fund tax. See Pub. 15 (Circular E),
Employer’s Tax Guide, for more details,
including the definition of responsible
persons.
Form 990-T. Exempt Organization
Business Income Tax Return. Filed
separately for organizations with gross
income of $1,000 or more from business
unrelated to the organization’s exempt
purpose. The Form 990-T is also filed to
pay the section 6033(e)(2) proxy tax. For
Form 990, see Part V, line 3 and its
instructions; for Form 990-EZ, see Part V,
line 35 and its instructions.
Form 990-W. Estimated Tax on
Unrelated Business Taxable Income for
Tax-Exempt Organizations.
Form 1023. Application for Recognition
of Exemption under Section 501(c)(3) of
the Internal Revenue Code.
Form 1024. Application for Recognition
of Exemption under Section 501(a).
Form 1040. U.S. Individual Income Tax
Return.
Form 1041. U.S. Income Tax Return for
Estates and Trusts. Required of section
4947(a)(1) nonexempt charitable trusts
that also file Form 990 or Form 990-EZ.
However, if such a trust does not have
any taxable income under Subtitle A of
the Code, it can file Form 990, or Form
990-EZ, and does not have to file Form
1041 to meet its section 6012 filing
requirement. If this condition is met,
complete Form 990, or Form 990-EZ, and
do not file Form 1041.
A section 4947(a)(1) nonexempt
charitable trust that normally has gross
receipts of not more than $25,000 (see
the gross receipts discussion in Appendix
B) and has no taxable income under
Subtitle A must complete Part V, line 12
and the signature block on page 1 of the
Form 990. On the Form 990-EZ, complete
line 43 and the signature block on page 4
of the return. In addition, complete only
the following items in the heading of Form
990 or Form 990-EZ:
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A
B
C
D
I
Tax year (fiscal year or short period, if
applicable)
Applicable checkboxes
Name, DBA, and address
Employer identification number (EIN)
Section 4947(a)(1) nonexempt
charitable trust box
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Form 5768. Election/Revocation of
Election by an Eligible Section 501(c)(3)
Organization To Make Expenditures To
Influence Legislation.
Form 7004. Application for Automatic
Extension of Time to File Corporation
Income Tax Return.
Form 8038 series. Tax Exempt Bonds.
Form 8274. Certification by Churches
and Qualified Church-Controlled
Organizations Electing Exemption from
Employer Social Security and Medicare
Taxes.
Form 8282. Donee Information Return.
Required of the donee of charitable
deduction property who sells, exchanges,
or otherwise disposes of donated property
within 3 years after receiving it. The form
is also required of any successor donee
who disposes of charitable deduction
property within 3 years after the date that
the donor gave the property to the original
donee. It does not matter who gave the
property to the successor donee. It may
have been the original donee or another
successor donee.
Form 8283. Noncash Charitable
Contributions.
Form 8300. Report of Cash Payments
Over $10,000 Received in a Trade or
Business. Used to report cash amounts in
excess of $10,000 that were received in a
single transaction (or in two or more
related transactions) in the course of a
trade or business (as defined in section
162). However, if the organization
receives a charitable cash contribution in
excess of $10,000, it is not subject to the
reporting requirement since the funds
were not received in the course of a trade
or business.
Form 8328. Carryforward Election of
Unused Private Activity Bond Volume
Cap.
Form 8718. User Fee for Exempt
Organization Determination Letter
Request.
Form 8821. Tax Information
Authorization.
Form 8822. Change of Address. Used to
notify the IRS of a change in mailing
address that occurs after the return is
filed.
Form 8868. Application for Extension of
Time to File an Exempt Organization
Return.
Form 8870. Information Return for
Transfers Associated With Certain
Personal Benefit Contracts. Used to
identify those personal benefit contracts
for which funds were transferred to the
organization, directly or indirectly, as well
as the transferors for, and beneficiaries
of, those contracts.
Form 8871. Political Organization Notice
of Section 527 Status.
Form 8872. Political Organization
Report of Contributions and Expenditures.
Form 8886. Reportable Transaction
Disclosure Statement.
Form 8886-T. Disclosure by Tax-Exempt
Entity Regarding Prohibited Tax Shelter
Transaction.
Form 8899. Notice of Income from
Donated Intellectual Property. Used to
report net income from qualified
intellectual property to the IRS and the
donor.
Form 8921. Applicable Insurance
Contracts Information Return.
Form SS-4. Application for Employer
Identification Number.
Form TD F 90-22.1. Report of Foreign
Bank and Financial Accounts.
Helpful Publications
Publication 15. Circular E, Employer’s
Tax Guide.
Publication 15-A. Employer’s
Supplemental Tax Guide (Fringe
Benefits).
Publication 463. Travel, Entertainment,
Gift, and Car Expenses.
Publication 525. Taxable and
Nontaxable Income.
Publication 526. Charitable
Contributions.
Publication 538. Accounting Periods
and Methods.
Publication 557. Tax-Exempt Status for
Your Organization.
Publication 561. Determining the Value
of Donated Property.
Publication 598. Tax on Unrelated
Business Income of Exempt
Organizations.
Publication 892. Organization Appeal
Procedures for Unagreed Issues
Publication 910. IRS Guide to Free Tax
Services.
Publication 946. How To Depreciate
Property.
Publication 1771. Charitable
Contributions — Substantiation and
Disclosure Requirements.
Publication 1828. Tax Guide for
Churches and Religious Organizations.
Publication 3079. Gaming Publication
for Tax-Exempt Organizations.
Publication 3386. Tax Guide for
Veterans Organizations.
Publication 3833. Disaster Relief,
Providing Assistance through Charitable
Organizations.
Publication 4220. Applying for 501(c)(3)
Tax-Exempt Status.
Publication 4221-PC. Compliance
Guide for 501(c)(3) Public Charities.
Publication 4221-PF. Compliance
Guide for 501(c)(3) Private Foundations.
Publication 4302. A Charity’s Guide to
Vehicle Donations.
Publication 4303. A Donor’s Guide to
Vehicle Donations.
Publication 4630. Exempt
Organizations Products and Services
Navigator.
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G. Use of Form 990, or
Form 990-EZ, To Satisfy
State Reporting
Requirements
Some states and local government units
will accept a copy of Form 990 or Form
990-EZ in place of all or part of their own
financial report forms. The substitution
applies primarily to section 501(c)(3)
organizations, but some of the other types
of section 501(c) organizations are also
affected. If the organization uses Form
990 or 990-EZ to satisfy state or local
filing requirements, such as those under
state charitable solicitation acts, note the
following discussions.
Determine State Filing
Requirements
The organization may consult the
appropriate officials of all states and other
jurisdictions in which it does business to
determine their specific filing
requirements. Doing business in a
jurisdiction may include any of the
following: (a) soliciting contributions or
grants by mail or otherwise from
individuals, businesses, or other
charitable organizations; (b) conducting
programs; (c) having employees within
that jurisdiction; (d) maintaining a
checking account; or (e) owning or renting
property there.
Monetary Tests May Differ
Some or all of the dollar limitations
applicable to Form 990 or 990-EZ when
filed with the IRS may not apply when
using Form 990 or 990-EZ in place of
state or local report forms. Examples of
the IRS dollar limitations that do not meet
some state requirements are the normally
$25,000 gross receipts minimum that
creates an obligation to file with the IRS
and the $100,000 minimum for listing
independent contractors in Form 990,
Part VII, Section B, or Form 990-EZ, Part
VI, line 51.
Additional Information May Be
Required
State or local filing requirements may
require the organization to attach to Form
990 or 990-EZ one or more of the
following: (a) additional financial
statements, such as a complete analysis
of functional expenses or a statement of
changes in net assets; (b) notes to
financial statements; (c) additional
financial schedules; (d) a report on the
financial statements by an independent
accountant; and (e) answers to additional
questions and other information. Each
jurisdiction may require the additional
material to be presented on forms they
provide. The additional information does
not have to be submitted with the Form
990 or 990-EZ filed with the IRS.
Even if the Form 990 or 990-EZ that
the organization files with the IRS is
accepted by the IRS as complete, a copy
of the same return filed with a state will
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not fully satisfy that state’s filing
requirement if (1) required information is
not provided, including any of the
additional information discussed above,
or (2) the state determines that the form
was not completed by following the
applicable Form 990 or 990-EZ
instructions or supplemental state
instructions. In such case, the state may
ask the organization to provide the
missing information or to submit an
amended return.
Use Of Audit Guides May Be
Required
To ensure that all organizations report
similar transactions uniformly, many
states require that contributions, gifts,
grants, etc., and functional expenses be
reported according to the AICPA industry
audit and accounting guide, Not-for-Profit
Organizations (New York, NY, AICPA,
2003), supplemented by Standards of
Accounting and Financial Reporting for
Voluntary Health and Welfare
Organizations (Washington, DC, National
Health Council, Inc., 1998, 4th edition).
Donated Services And Facilities
Even though reporting donated services
and facilities as items of revenue and
expense is called for in certain
circumstances by the two publications
named above, many states and the IRS
do not permit the inclusion of those
amounts in Parts VIII and IX of Form 990
or Part I of Form 990-EZ. The optional
reporting of donated services and
facilities is discussed in the instructions
for Part III for both Form 990 and Form
990-EZ.
Amended Returns
If the organization submits supplemental
information or files an amended Form 990
or 990-EZ with the IRS, it must also send
a copy of the information or amended
return to any state with which it filed a
copy of Form 990 or 990-EZ originally to
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meet that state’s filing requirement. If a
state requires the organization to file an
amended Form 990 or 990-EZ to correct
conflicts with the Form 990 or 990-EZ
instructions, the organization must also
file an amended return with the IRS.
Method of Accounting
Most states require that all amounts be
reported based on the accrual method of
accounting. See also General Instruction
D.
Time For Filing May Differ
The deadline for filing Form 990 or
990-EZ with the IRS differs from the time
for filing reports with some states.
Public Inspection
The Form 990 or 990-EZ information
made available for public inspection by
the IRS may differ from that made
available by the states, such as Schedule
B (Form 990, 990-EZ, or 990-PF).
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Index
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| File Type | application/pdf |
| File Title | C:\Batch\Users\Pagersvc[DS]\ITESTC\ITEST |
| File Modified | 2008-09-08 |
| File Created | 2008-09-03 |