New IRS Form 990 Requirements
During 2008, the Internal Revenue Service released new regulations that revamp IRS Form 990 and specify new reporting requirements for tax exempt organizations. Total Compensation Solutions (TCS) monitors these new regulations because they impact the reporting of executive compensation arrangements among our clients in the nonprofit industry sector.
The IRS issued final new Form 990 and associated instructions in January 2009 for use in filing Form 990 applicable to the 2008 tax year and beyond. Initial filing will phase in over a one-to-three year period depending on size of the organization. Smaller organizations will be allowed more time to phase in their compliance with the new form.
The revised Form 990 is designed to report more detailed information in a variety of areas, specifically compensation and governance information. Schedule J, which is used to: report compensation information for certain officers, directors, individual trustees, and highest compensated employees, and information on certain compensation practices of the organization requires more disclosure on compensation and compensation policy than tax-exempt organizations are accustomed. These disclosures are more closely aligned with those required by publicly traded organizations and even provide for supplemental information that allow for the explanation or descriptions of plans and policies.