Reporting and Disclosure

Most nonprofit organizations (those with annual gross receipts of $25,000 or more) are required to file annual returns with the Internal Revenue Service (Form 990 or Form 990-PF). These returns have been lengthy, complex, technical, and have addressed virtually every aspect of the organizations' sources and use of its income, its operations, and its relationships with stakeholders. New forms to be used for tax years after 2007 are even more complex and require even more disclosure than in prior years. It is critical that these returns be prepared to fully, accurately, and with careful attention to their public nature.

Exempt organization returns are public documents and must be made available for public inspection on demand. For some people, these documents serve 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 in these returns. As a result, we believe that these documents should be public-relations tools to make the public aware of the important role the organization plays in the community that it serves.

In addition to the annual returns, non-profit organizations having unrelated business taxable income are required to file annual income tax returns (Forms 990-T). Careful structuring of business arrangements as well is appropriate allocations of shared cost can minimize the tax due. Public disclosure of Forms 990-T is now required effective for returns filed after August 17, 2006. The returns must be made available for public inspection on demand under the same rules applicable to Forms 990 and 990-PF.

The Pension Protection Act of 2006 added annual notice requirements for organizations that currently do not have an annual filing requirement because their gross receipts are less than $25,000. The new provisions require certain exempt organizations to file an annual notice with the Service containing basic contact and financial information. Failure to file the required notice may result in automatic revocation of the organization's favored tax-exempt status and loss of ability to accept tax-deductible contributions from donors. The new requirement applies to notices and returns with respect to annual periods beginning after 2006.

We are familiar with all of these issues and prepare numerous tax-exempt organization returns each year. Ronnie served for a number of years as a contributing editor of the 990 Deskbook published by Practitioners Publishing Company in Fort Worth. This annual publication continues to be a roadmap to filing Forms 990 and meeting other filing requirements. Over the years, Ronnie was involved in editing virtually every chapter including those specifically related to private foundations and unrelated business income.

Our experience and expertise can benefit your organization in meeting its reporting and disclosure requirements, either through our preparation of your Forms 990, or our review of a draft that you prepare on behalf of the organization.

©2008 Ronnie C. McClure, PhD, CPA