IRS Releases New Form 990 Instructions

IRS Releases New Form 990 Instructions

News story posted in Forms and Instructions on 26 August 2008| comments
audience: National Publication | last updated: 18 May 2011
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Summary

The Service has released new Form 990 Instructions for the 2008 tax year. The new Form 990 consists of an 11-page, 11-part core form that is required to be completed by all organizations that file the Form 990, and Schedules to be completed by those organizations that satisfy the applicable requirements for each Schedule.

Note: For further information, go to http://www.irs.gov/irs/article/0,,id=186015,00.html

Full Text:


What's New
Redesigned Form 990 and Instructions for 2008 tax year

Overview and Major Changes. The Form 990 has been redesigned effective for 2008 tax years. The new form consists of an 11-page, 11-part core form that is required to be completed by all organizations that file the Form 990, and Schedules to be completed by those organizations that satisfy the applicable requirements for each Schedule.

The following provides a brief summary of some major changes and features of the new form, and an outline of the new core form and Schedules. This summary does not describe all of the new features or changes. Some of the information previously required by the Form 990 (2007) has been eliminated or revised, and the new Form 990 (2008) requires information not previously required by the prior form. Some information previously required of only certain types of organizations now is required of all types of organizations completing the form. The organization should carefully review the new form and instructions in order to make sure it satisfies the new form's reporting requirements. See the IRS website at www.irs.gov and click on the Charities & Non-Profits tab for more information.

Some areas of major changes in reporting requirements include governance and compensation of officers, directors, trustees, key employees, and highest compensated employees. For example, Part VI, Governance, Management, and Disclosure, is a new section that asks questions about the organization's governance structure, policies and disclosure practices. Part VII, Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors, also contains important changes, including new definitions of officer and key employee applicable to all organizations, and the extension of reporting compensation paid to the top five highest compensated employees from organizations described in section 501(c)(3) or 4947(a)(1), as was previously the case, to all organizations filing the Form 990, such as social welfare organizations, business leagues, trade associations, and social clubs.

Other areas of significant change include determination of public charity status and public support; supplemental financial statement reporting; and fundraising, special events and gaming. For organizations described in sections 501(c)(3) or 4947(a)(1), Schedule A has been revised to emphasize reporting of public charity status and public support. Schedule D contains new reporting requirements for conservation organizations; museums and other organizations maintaining collections of works of art and other items; credit counseling organizations and others holding funds in escrow or custodial arrangements; and organizations maintaining endowments. Schedule G requires reporting of certain information regarding arrangements with professional fundraisers, special events, and gaming activities. Other new Schedules include those for reporting foreign activities (Schedule F); hospitals (Schedule H); tax exempt bonds (Schedule K); non-cash contributions (Schedule M); and related organizations (Schedule R).

The following is an outline of the Parts of the core form and the new Schedules.

Core Form. The core form required to be completed by all organizations consists of the following eleven Parts:

  • Part I, Summary, which provides certain important information regarding the organization's mission, activities, and current and prior years' financial results;
  • Part II, Signature Block, which contains the signature of an organization's officer, and if applicable, paid preparer;
  • Part III, Statement of Program Service Accomplishments, which requires reporting of the organization's new, ongoing and discontinued exempt purpose achievements and related revenue and expenses;
  • Part IV, Checklist of Required Schedules, to be used by the organization to determine which Schedules it must complete and file with the IRS as part of the Form 990;
  • Part V, Statements Regarding Other IRS Filings and Tax Compliance, to be used by the organization to report its compliance with other federal tax reporting and substantiation requirements;
  • Part VI, Governance, Management, and Disclosure, which requires information regarding the organization's governing body and management, policies, and disclosure practices;
  • Part VII, Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors, to report compensation paid such persons by the organization and its related organizations that is reported on Forms W-2 and 1099-MISC, and certain other compensation;
  • Part VIII, Statement of Revenue, Part IX, Statement of Functional Expenses, and Part X, Balance Sheet, which comprise the financial statements of the organization for federal tax reporting purposes; and
  • Part XI, Financial Statements and Reporting, to report information regarding the organization's accounting methods and its compiled, reviewed, or audited financial

Schedules. The 16 Schedules. Each organization must complete Part IV, Checklist of Required Schedules, to determine those Schedules it must complete. These Schedules replace the prior form's schedules and most required attachments that previously had to be constructed and completed by the filing organization. The following is a list and brief description of the new Schedules:
  • Schedule A, Public Charity Status and Public Support, to be completed by organizations described in sections 501(c)(3) and 4947(a)(1) to provide information relevant to its status as a public charity, including satisfaction of applicable public support tests on an ongoing basis;
  • Schedule B, Schedule of Contributors, to be completed by organizations to provide information regarding contributions they report as revenues;
  • Schedule C, Political Campaign and Lobbying Activities, to be completed by organizations that conduct political campaign activities, organizations described in sections 501(c)(3) and 4947(a)(1) that conduct lobbying activities, and organizations subject to section 6033(e) notice and reporting requirements and potential proxy tax on certain membership dues, assessments and similar amounts;
  • Schedule D, Supplemental Financial Statements, to be completed by organizations to supplement certain balance sheet information, as well as conservation organizations, museums and other organizations maintaining collections, credit counseling organizations and others holding funds in escrow or custodial arrangements, and organizations maintaining endowments or donor advised funds and similar funds or accounts;
  • Schedule E, Schools, which is the private school questionnaire previously contained in former Schedule A;
  • Schedule F, Statement of Activities Outside the United States, to report the organization's activities conducted outside the United States;
  • Schedule G, Supplemental Information Regarding Fundraising or Gaming Activities, which requires reporting by organizations that reported certain amounts of professional fundraising expenses, revenue from special events, and revenue from gaming activities;
  • Schedule H, Hospitals, to be completed by organizations that operate one?or more facilities licensed or registered as a hospital under state law;
  • Schedule I, Grants and Other Assistance to Organizations, Governments and Individuals in the U.S., to report grants and other assistance provided by the organization to others within the United States;
  • Schedule J, Compensation Information, to be completed by organizations to provide detailed compensation information for certain current or former officers, directors, trustees, key employees, and highest compensated employees, and certain information regarding the organization's compensation practices and arrangements;
  • Schedule K, Supplemental Information for Tax Exempt Bonds, to be completed by organizations with outstanding tax-exempt bond liabilities;
  • Schedule L, Transactions with Interested Persons, to be completed by organizations that engage in certain types of relationships or transactions with interested persons, including excess benefit transactions, loans, grants or other financial assistance, and other financial or business transactions or arrangements;
  • Schedule M, Non-Cash Contributions, to report contributions other than cash received by the organization;
  • Schedule N, Liquidation, Termination, Dissolution or Significant Disposition of Assets, to report major dispositions of assets by the organization;
  • Schedule O, Supplemental Information to Form 990, to be used by organizations to provide supplemental information to describe or explain the organization's responses to questions contained in the core form or Schedules, and
  • Schedule R, Related Organizations and Unrelated Partnerships, to provide information regarding the organization's relationships with other exempt and taxable organizations.

Organizations should complete Part IV, Checklist of Required Schedules, to determine which of these Schedules they must file as part of the Form 990. All filers will be required to provide certain narrative responses on Schedule O.

Instructions, Glossary and Appendices. The Form 990 instructions also have been revised for 2008. The new instructions contain a sequencing list to help organizations determine the order in which to complete various portions of the form (see General Instruction C), revised general and specific instructions for the core form and Schedules, a glossary of key terms, and a compensation table to help organizations determine where and how to report types of compensation paid to officers, directors, trustees, key employees, and highest compensated employees (see Specific Instructions for Part VII). The new instructions also contain new appendices for reporting requirements and guidance regarding group returns (see Appendix E), and for organizations to report activities conducted indirectly through joint ventures and disregarded entities (see Appendix F).

Form 990-EZ Filing Amounts for 2008-2010

Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, may be filed by most organizations with gross receipts and total assets below certain amounts. For the 2008 tax year, most organizations with gross receipts less than $1,000,000 and total assets less than $2,500,000 may choose to file the Form 990 or Form 990-EZ. (For the 2007 tax year, these amounts were less than $100,000 gross receipts and $250,000 total assets.) For the 2009 tax year, most organizations with gross receipts less than $500,000 and total assets less than $1,250,000 may choose to file the Form 990 or Form 990-EZ. Beginning with the 2010 tax year, most organizations with gross receipts less than $200,000 and total assets less than $500,000 may file either the Form 990 or Form 990-EZ.

Although Form 990-EZ was not redesigned for 2008, some changes have been made so that certain information previously required to be submitted in attachments will now be reported on Schedules. Organizations that file Form 990-EZ (2008) must review the instructions for Schedules A, B, C, E, G, L, and N to determine whether they must report any of their activities Schedules. Form 990-EZ filers will not be required to complete any of the other 2008 Form 990 Schedules.

New annual electronic filing requirement for small tax-exempt organizations. Most small tax-exempt organizations now must file new Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. See the IRS website at www.irs.gov and click on the Form 990-N (e-Postcard) tab for more information.

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 and Form 990-EZ, and the Forms 990-T of 501(c)(3) organizations, are available for public inspection as required by section 6104. Schedule B, Schedule of Contributors (Form 990, 990-EZ, or 990-PF), is available for public inspection for section 527 organizations filing Form 990 or 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 their primary or sole source of information about a particular organization. How the public perceives an organization in such cases may be determined by 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.

2008 Instructions for Form 990

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)

Contents

      o What's New -- Explanation of Redesign

      o Purpose of Form

      o Phone Help [to be added]

      o Email Subscription [to be added]

      o Photographs of Missing Children [to be added]

      o General Instructions

A Who Must File
B Organizations Not Required to File Form 990
C Sequencing List to Complete the Form
D Accounting Periods and Methods
E When, Where, and How to File
F Extension of Time to File
G Amended Return/Final Return
H Failure-to-File Penalties
I Group Return
J Requirements for a Properly Completed Form 990

      o Specific Instructions

        Completing the Heading of Form 990
        Part I Summary
        Part II Signature Block
        Part III Statement of Program Service Accomplishments
        Part IV Checklist of Required Schedules
        Part V Statements Regarding Other IRS Filings and Tax
        Compliance
        Part VI Governance, Management, and Disclosure
        Part VII Compensation of Officers, Directors, Trustees, Key
        Employees, Highest Compensated Employees, and Independent
        Contractors
        Part VIII Statement of Revenue
        Part IX Statement of Functional Expenses
        Part X Balance Sheet
        Part XI Financial Statements and Reporting

      o Glossary

      o 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 Group Returns: Reporting Information on Behalf of the
        Group
F Disregarded Entities and Joint Ventures; Inclusion of
        Activities and Items
G Section 4958 Excess Benefit Transactions
H Forms and Publications To File or Use
I Use of Form 990, or Form 990-EZ, to Satisfy State
        Reporting Requirements

      o Index [to be added]

General Instructions

Overview of Form 990. The Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under Internal Revenue Code section 501(a), and certain political organizations and nonexempt charitable trusts. Parts I through XI of the form must be completed by all filing organizations, and require reporting on the organization's exempt and other activities, finances, governance, 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. By completing Part IV, the organization determines which schedules are required. The entire completed Form 990 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.

Helpful Hints. The following hints may help you more efficiently review these instructions and complete the form.

  • See General Instruction C for a sequencing list that provides guidance on the recommended order for completing the form and applicable schedules.
  • Throughout these instructions, terms that are highlighted in bold are defined in the Glossary.
  • Throughout these instructions, "the organization" and the "filing organization" both refer to the organization filing the Form 990.
  • The examples appearing throughout the Form 990 instructions are illustrative only and for the purpose of completing this Form, and are not all-inclusive.
  • Instructions to the Form 990 Schedules are published separately from these instructions.

Caution: Organizations that have total gross income from unrelated trades or businesses of at least $1,000 also 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.

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 2008, Form 990 must be filed by an organization exempt from income tax under Internal Revenue Code section 501(a) (including an organization that has not 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.

For purposes of Form 990 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 for a discussion of gross receipts.

Form 990-EZ. 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 for Form 990-EZ for more information. But see the special rules described herein regarding controlling organizations under section 512(b)(13) and sponsoring organizations of donor advised funds.

Electronic filing. Certain Form 990 filersmustfile electronically. See General Instruction E, When, Where, and How to File, for who must file electronically.

TIP: The Form 990 (including its schedules) has been 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 thresholds 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
 filed in 2009)           ‹ $1,000,000               ‹ $2,500,000

 2009  Form (generally
 filed in 2010)           ‹ $500,000                 ‹ $1,250,000

 2010 and later Forms     ‹ $200,000                 ‹ $500,000

Foreign and U.S. Possession organizations. Foreign organizations as well as domestic organizations described above must file Form 990 or 990-EZ unless specifically excepted under General Instruction B, Organizations Not Require to File Form 990. 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.

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.

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

    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


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, 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 nonexempt 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.

Returns when exempt status not established yet. An organization is required to file Form 990 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 tax-exempt status. In such case the organization must check the "application pending" checkbox in Item B of the Form 990 Header (whether or not a Form 1023 or 1024 has been filed) to indicate that the Form 990 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.

B. Organizations Not Required to File Form 990

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 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.

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 or the Instructions for Form 990-EZ.

    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.


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 in its final year of termination).

    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.


C. Sequencing List to Complete the Form and Schedules

You may find the following chart helpful. It limits jumping from one part of the form to another to make a calculation or determination needed to complete an earlier part, as certain later parts of the form must first be completed in order to complete earlier parts. In general, complete the core form first, and then alphabetically through Schedules A through O and Schedule R, except as provided below:


    1. Complete lines A through F and H(a) through M in the Heading of Form 990, on page 1.

    2. See Schedule R instructions and determine the organization's related organizations required to be listed in Schedule R.

    3. Determine the organization's officers, directors, trustees, key employees, and five highest compensated employees required to be listed in Form 990, Part VII, Section A.

    4. Complete Parts VIII, IX, and X of Form 990.

    5. Complete line G in the Heading of Form 990, on page 1.

    6. Complete Parts III, V, VII, and XI of Form 990.

    7. See Schedule L instructions and complete Schedule L (if required).

    8. Complete Part VI of Form 990. Transactions reported in Schedule L are relevant to determining independence of members of the governing body under Form 990, Part VI, line 1b.

    9. Complete Part I of Form 990 based on information derived from other parts of the form.

    10. Complete Part IV of Form 990 to determine which Schedules must be completed by the organization.

    11. Complete applicable Schedules.(for which "Yes" boxes were checked in Part IV). Use Schedule O to provide required supplemental information and other narrative explanations.

    12. Complete Part II of Form 990, Signature Block.


TIP: A public charity described in section 170(b)(1)(A)(iv) or (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 or Form 990-EZ.

D. Accounting Periods and Methods

TIP: See IRS Publication 538, Accounting Periods and Methods, about reporting changes to accounting periods and methods.

ACCOUNTING PERIODS

Calendar year. Use the 2008 Form 990 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 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 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 to file for such short year.

Accounting period change. If the organization changes its accounting period, it must file a Form 990 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 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 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 Schedule D (Supplemental Financial Statements), Parts XI through XIV, of Form 990.

State reporting. Most states that accept Form 990 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 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 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 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 prepared for that state is acceptable for the IRS reporting purposes if the state reporting requirement does not conflict with the Form 990 instructions.

An organization should keep a reconciliation of any differences between its books of account and the Form 990 that is filed. Organizations with audited financial statements are required to provide such reconciliations in Schedule D, Parts XI through XIII.

E. When, Where, and How to File

File Form 990 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), explain in Schedule O 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 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. "Returns" 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.

F. 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.

G. 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 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 Schedule O which parts and schedules of the Form 990 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, Request for Copy of Tax Return, 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 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 return (or information provided to the IRS supplementing the return) to the state with which it filed a copy of Form 990 originally to meet that state's filing requirement. A state may require an organization to file an amended Form 990 to satisfy state reporting requirements, even if the original return was accepted by the IRS.

H. 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.

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;

    (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.


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.

I. Group Return

A central, parent, or like organization can file a group return on Form 990 for two or more subordinate or local organizations that are:


    1. Affiliated with the central organization at the time its annual accounting period ends,

    2. Subject to the central organization's general supervision or control,

    3. Exempt from tax under a group exemption letter that is still in effect, and

    4. Using the same accounting period as the central organization.


The central organization cannot use a Form 990-EZ for the group return.

A subordinate organization covered by a group exemption ruling may file a separate return instead of being included in the group return. If a subordinate organization is not required to file a return, it need not be included in the group return or file a separate return.

If the central organization is required to file a return for itself, it must file a separate return and may not be included in the group return. See General Instruction B for a list of organizations not required to file.

Every year, each subordinate organization must authorize the central organization in writing to include it in the group return and must declare, under penalty of perjury, that the authorization and the information it submits to be included in the group return are true and complete.

The central organization should send the annual information update required to maintain a group exemption ruling (a separate requirement from the annual return) to the:


    Department of the Treasury
    Internal Revenue Service Center
    Ogden, UT 84201-0027
For Special Instructions regarding answering certain Form 990 questions, parts or schedules in the context of a group return, see Appendix E.

J. Requirements for a Properly Completed Form 990

All organizations must complete Parts I through XI of the Form 990, and any schedules for which a "Yes" response is indicated in Part IV.

Public inspection. In general, all information the organization reports on or with its Form 990, 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. Make sure the forms and schedules are clear enough to photocopy legibly. For more information on public inspection requirements, see Appendix D, Accounting Periods and Methods, and Pub. 557.

Signature. A Form 990 is not complete without a proper signature. For details, see the instructions to Part II,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. Form 990, Part VI, line 14 asks whether the organization has a document retention and destruction policy.

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.

All filers must file Schedule O (certain questions require all filers to provide an explanation in Schedule O). In general, answers may be explained or supplemented in Schedule O if the allotted space in the form or other schedule is insufficient, or if a "Yes" or "No" answer is required but the organization wishes to explain its answer.

Reporting proper amounts. Some lines request information reported on other forms filed by the organization (such as Form W-2 or Form 990-T). If the organization is aware that the amount actually reported on the other form is incorrect, it must report on Form 990 the information that should have been reported on the other form (in addition to filing an amended form with the proper amount).

Inclusion of activities and items of disregarded entities and joint ventures. An organization must report in its Form 990 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 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. For special instructions regarding the treatment of disregarded entities and joint ventures for various parts of the form, see Appendix F, Disregarded Entities and Joint Ventures.

Assembling Form 990, schedules, and attachments. Before filing the Form 990, assemble the package of form, schedules, and attachments in the following order:


    1. core form with Parts I through XI completed, filed in numerical order

    2. schedules, completed as applicable, filed in alphabetical order (see Form 990, Part IV for required schedules)

    3. attachments, completed as applicable (including name change amendment to organizing document required by Header Item B instructions; list of subordinate organizations included in group return required by Header Item H instructions; request and determination letter regarding termination of exempt status required by Schedule N instructions; and articles of merger or dissolution, resolutions, and plans of liquidation or merger required by Schedule N instructions)


Do not attach materials not authorized in the instructions.

2008 Instructions for Form 990
(Core Form)

GLOSSARY

NOTES:

      o Words in bold within a definition are defined elsewhere within
        the Glossary.

      o All section references are to the Internal Revenue Code (Title
        26 of U.S. Code) or regulations under Title 26, unless
        otherwise specified.

      o Definitions are for purposes of filing Form 990 (and
        Schedules) only.

35% controlled entity

      An entity that is owned, directly or indirectly (e.g., under
 constructive ownership rules of section 267(c)), by a given person,
 such as the organization's current or former officers, directors,
trustees, or key employees listed in Form 990, Part VII,
 Section 1, or the family members thereof (listed persons) as
 follows:

      1. A corporation in which listed persons own more than 35% of
      the total combined voting power;

      2. A partnership in which listed persons own more than 35% of
      the profits interest; or

      3. A trust or estate in which listed persons own more than 35%
      of the beneficial interest.

accountable plan

      A reimbursement or other expense allowance arrangement that
 satisfies the requirements of section 62(c) by meeting the
 requirements of business connection, substantiation, and returning
 amounts in excess of substantiated expenses. See Regulations section
 1.62-2(c)(2).

activities conducted outside the United States

      For purposes of Schedule F, Statement of Activities Outside the
 United States, include grantmaking, fundraising, unrelated
trade or business, program services, or maintaining offices,
employees, or agents in particular regions outside the  United
States.

applicable tax-exempt organization

      A section 501(c)(3) or a section 501(c)(4) organization, or that
 was such an organization at any time during the 5-year period ending
 on the day of the excess benefit transaction.

art

      See works of art.

audited financial statement

      A formal opinion of an organization's financial records and
 practices by an independent, certified public accountant with the
 objective of assessing the accuracy and reliability of the
 organization's financial statements.

audit committee

      A committee, generally established by the governing body
 of an organization, with the responsibilities to oversee the
 organization's financial reporting process, monitor choice of
 accounting policies and principles, monitor internal control
 processes, and oversee hiring and performance of any external
 auditors.

board-designated endowment

      See quasi-endowment.

bingo

      A game of chance played with cards that are generally printed
 with five rows of five squares each. Participants place markers over
 randomly called numbers on the cards in an attempt to form a
 pre-selected pattern such as a horizontal, vertical, or diagonal
 line, or all four corners. The first participant to form the
 pre-selected pattern wins the game. To be a bingo game, the game must
 be of the type described in which wagers are placed, winners are
 determined, and prizes or other property are distributed in the
 presence of all persons placing wagers in that game. Certain
 consolation bingo games within a progressive bingo game may also
 qualify as bingo.

bond issue

      An issue of two or more bonds which are:

      1. sold at substantially the same time;

      2. sold pursuant to the same plan of financing; and

      3. payable from the same source of funds.

 See Regulations section 1.150-1(c).

business relationship

      Business relationships between two persons include the
 following:

      1) One person is employed by the other in a sole proprietorship
      or by an organization with which the other is associated as a
trustee, director, officer, key
     employee, or greater-than-35% owner.

      2) One person is transacting business with the other (other than
      in the ordinary course of either party's business on the same
      terms as are generally offered to the public), directly or
      indirectly, in one or more contracts of sale, lease, license,
      loan, performance of services, or other transaction involving
      transfers of cash or property valued in excess of $10,000 in the
      aggregate during the organization's tax year. Indirect
      transactions are transactions with an organization with which
      the one person is associated as a trustee, director, officer,
      key employee, or greater-than-35% owner.

      3) The two persons are each a director, trustee, officer, or
      greater than 10% owner in the same business or investment
      entity.

 Ownership is measured by stock ownership (either voting power or
 value) of a corporation, profits or capital interest in a partnership
 or limited liability company, membership interest in a nonprofit
 organization, or beneficial interest in a trust. Ownership includes
 indirect ownership (e.g., ownership in an entity that has ownership
 in the entity in question); there may be ownership through multiple
 tiers of entities.

cash contributions

Contributions received in the form of cash, checks, money
 orders, credit card charges, wire transfers, and other transfers and
 deposits to a cash account of the organization.

central organization

      The parent organization in a group exemption, which
 exercises general supervision and control over the subordinate
organizations in the group exemption.

CEO, executive director, or top management official certified
historic structure

      See top management official. "CEO" stands for
 chief executive officer.

      Any building or structure listed in the National Register as
 well as any building certified as being of historic significance to a
 registered historic district. See section 170(h)(4)(B) for special
 rules that apply to contributions made after August 17, 2006.

church

      Certain characteristics are generally attributed to churches.
 These attributes of a church have been developed by the IRS and by
 court decisions. They include: distinct legal existence; recognized
 creed and form of worship; definite and distinct ecclesiastical
 government; formal code of doctrine and discipline; distinct
 religious history; membership not associated with any other church or
 denomination; organization of ordained ministers; ordained ministers
 selected after completing prescribed courses of study; literature of
 its own; established places of worship; regular congregations;
 regular religious services; Sunday schools for the religious
 instruction of the young; schools for the preparation of its
 ministers. The IRS generally uses a combination of these
 characteristics, together with other facts and circumstances, to
 determine whether an organization is considered a church for federal
 tax purposes. A convention or association of churches is generally
 treated like a church for federal tax purposes. See Publication 1828,
Tax Guide for Churches and Religious Organizations.

closely held stock

      Generally, shares of stock in a closely held company that is not
 available for sale to the general public or which is not widely
 traded (see further explanation in instructions for Part IX, line 12
 and Schedule M, Non-Cash Contributions, line 10).

collections of works of art, historical treasures, and other
similar assets

      Include collections, as described in SFAS 116, of
works of art, historical treasures, and other similar
 assets held for public exhibition, education, or research in further
 of public service.

collectibles

      Include autographs, sports memorabilia, dolls, stamps, coins,
 books (other than books and publications reported on line 4 of
 Schedule M, Non-Cash Contributions), gems, jewelry (other than
 costume jewelry reportable on line 5 of Schedule M).

compensation

      Unless otherwise provided, all forms of cash and non-cash
 payments or benefits provided in exchange for services, including
 salary and wages, bonuses, severance payments, deferred payments,
 retirement benefits, fringe benefits, and other financial
 arrangements or transactions such as personal vehicles, meals,
 housing, personal and family educational benefits, below-market
 loans, payment of personal or family travel, entertainment, and
 personal use of the organization's property. See also deferred
compensation,  nonqualified deferred compensation, and
reportable compensation.

compilation (compiled financial statements)

      A compilation is a presentation of financial statements
 and other information that is the representation of the management or
 ownership of an organization and which has not been reviewed or
 audited by an independent accountant.

conflict of interest policy

       A policy that defines conflict of interest, identifies the
 classes of individuals within the organization covered by the policy,
 facilitates disclosure of information that may help identify
 conflicts of interest, and specifies procedures to be followed in
 managing conflicts of interest. A conflict of interest arises when a
 person is in a position of authority over an organization, such as an
officer, director or manager, may benefit financially
 from a decision he or she could make in such capacity, including
 indirect benefits such as to family members or businesses with
 which the person is closely associated. For this purpose, a conflict
 of interest does not include questions involving a person's competing
 or respective duties to the organization and to another organization,
 such as by serving on the boards of both organizations, that do not
 involve a material financial interest of, or benefit to, such person.

conservation easement

      A restriction on the use that may be made of, or changes made
 to, real property that is granted in perpetuity to a qualified
 organization exclusively for conservation purposes. Conservation
 purposes include protection of natural habitat, the preservation of
 open space; or the preservation of property for historic,
 educational, or recreational purposes. Qualified organizations
 include governmental units and certain tax-exempt
 organizations described in section 501(c)(3) that have a commitment
 to protect the conservation purposes of the easement and the
 resources to enforce the restrictions. For more information see
 Notice 2004-41, 2004-28 I.R.B. 31. See also qualified conservation
contribution.

contributions

      Unless otherwise provided, includes donations, gifts, bequests,
 grants, and other transfers of money or property to the extent that
 adequate consideration is not provided in exchange and that the
 contributor intends to make a gift, whether or not made for
 charitable purposes. A transaction may be a partly a sale and partly
 a contribution. See also cash contributions and noncash
contributions.

control

      For purposes of determining related organizations,
 control means, in regards to nonprofit organizations, whether
 taxable or tax-exempt:

      In the case of a parent/subsidiary relationship:

      o power to remove and replace (or to appoint or elect, if such
        power includes a continuing power to appoint or elect
        periodically or in the event of vacancies) a majority of the
        nonprofit organization's or other organization's
directors or trustees,

      o management or board overlap where a majority of the subsidiary
        organization's directors or trustees are trustees, directors,
officers, employees, or agents of the parent
        organization.

      In the case of brother/sister nonprofit organizations:

      o the same persons constitute a majority of the members
       of the governing body of both organizations.

      In the case of stock corporations and other organizations with
 owners or persons having beneficial interests, whether such
 organization is taxable or tax-exempt, control means any of the
 following relationships:

      o ownership of more than 50% of the stock (by voting power or
        value) of a corporation,

      o ownership of more than 50% of the profits or capital interest
        in a partnership,

      o ownership of more than 50% of the profits or capital interest
        in a limited liability company taxed as a partnership,
        regardless of the designation under state law of the ownership
        interests as stock, membership interests, or otherwise,

      o being a managing partner or managing member in a partnership
        or limited liability company which has three or fewer managing
        partners or managing members (regardless of which partner or
        member has the most actual control),

      o being a general partner in a limited partnership which has
        three or fewer general partners (regardless of which partner
        has the most actual control),

      o being the sole member of a disregarded entity, or

      o ownership of more than 50% of the beneficial interest in a
        trust.

      See Regulations sections 301.7701-2, 3, and 4 for more
 information on classification of corporations, partnerships,
disregarded entities, and trusts.

      Control may be indirect. In other words, if the organization
 controls Entity A which in turn controls (under the definition of
control above) Entity B, the organization will be treated as
 controlling Entity B. To determine indirect control through
 constructive ownership of a corporation, the principles of the rules
 under section 318 (relating to constructive ownership of stock) shall
 apply for purposes of determining constructive ownership of another
 entity (a partnership or trust). If an entity (X) controls an entity
 taxed as a partnership by being one of three or fewer partners or
 member, then an organization that controls X also controls the
 partnership.

controlled entity

      An organization controlled by a controlling organization
under section 512(b)(13). For the definition of control in this
 context, see section 512(b)(13)(C) and Regulations section
 1.512(c)-1(L)(4).

controlling organization under section 512(b)(13)

      An exempt organization that controls a controlled entity.
 Section 512(b)(13) treats payments of interest, annuity, royalties,
 and rent from a controlled entity to a controlling organization as
 unrelated business taxable income under certain circumstances. For
 the definition of control in this context, see section 512(b)(13)(C).

credit counseling services

      Include the providing of information to the general public on
 budgeting, personal finance, and saving and spending practices, or
 assisting individuals and families with financial problems by
 providing them with counseling. See section 501(q)(4)(A).

current year

      The tax year for which the Form 990 is being filed; see
 also fiscal year.

defeasance escrow

      An irrevocable escrow established to redeem the bonds on their
 earliest call date in an amount that, together with investment
 earnings, is sufficient to pay all the principal of, and interest and
 call premiums on, bonds from the date the escrow is established to
 the earliest call date. See Regulations section 1.141-12(d)(5).

debt management plan services

      Services related to the repayment, consolidation, or
 restructuring of a consumer's debt, including the negotiation with
 creditors of lower interest rates, the waiver or reduction of fees,
 and the marketing and processing of debt management plans. See
 section 501(q)(4)(B).

deferred compensation

Compensation that is earned or accrued in, or is
 attributable to, one year and deferred to a future year for any
 reason, whether or not funded, vested, or subject to a substantial
 risk of forfeiture. Deferred compensation may or may not be included
 in reportable compensation for the current year.

director

      See director or trustee.

director or trustee

      A member of the organization's governing body, but
 only if the member has any voting rights. A member of an advisory
 board that does not exercise any governance authority over the
 organization is not considered a director or trustee.

disqualified person

      1. For purposes of section 4958; Form 990 Part IX; and Schedule
 L, Transactions With Interested Persons, Parts I and II, 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. A disqualified person includes:

      o A disqualified person's family member

      o A 35% controlled entity of (1) a disqualified person
        and/or (2) family members of the disqualified person.

      o A donor or donor advisor to a donor advised fund

      o An investment advisor of a sponsoring organization

      The disqualified persons of a supported
organization include the disqualified persons of a section
 509(a)(3) supporting organization that supports the supported
 organization.

      See Appendix G for more information on disqualified
persons and 4958 excess benefit transactions.

      2. For purposes of Form 990 Schedule A, Public Charity Status
 and Public Support; section 4946; and section 509(a)(3), a
 disqualified person is:

      a. A substantial contributor. A substantial contributor is any
      person who gave an aggregate amount of more than $5,000, if that
      amount is more than 2% of the total contributions the
      foundation or organization received from its inception through
      the end of the year in which that person's contributions were
      received. If the organization is a trust, a substantial
      contributor includes the creator of the trust (without regard to
      the amount of contributions the trust received from the creator
      and related persons).

           o Any person who is a substantial contributor at any time
             generally remains a substantial contributor for all
             future periods even if later contributions by others push
             that person's contributions below the 2% figure discussed
             above.

           o Gifts from the contributor's spouse are treated as gifts
             from the contributor.

           o Gifts are generally valued at fair market value as of the
             date the organization received them.

      b. An officer, director, or trustee of the
      organization or any individual having powers or responsibilities
      similar to those of officers, directors, or trustees.

      c. An owner of more than 20% of the voting power of a
      corporation, profits interest of a partnership, or beneficial
      interest of a trust or an unincorporated enterprise that is a
      substantial contributor to the organization.

      d. A family member of an individual in the first three
      categories.

      e. A corporation, partnership, trust, or estate in which persons
      described in a through d above own more than 35% of the voting
      power, profits interest, or beneficial interest.

      For purposes of Form 990 Schedule A, section 4946, and section
 509(a)(3), disqualified persons do not include foundation
 managers or organizations described in section 509(a)(1) or
 509(a)(2)).

disregarded entity/entities

      An entity wholly owned by the organization that is not a
 separate entity for Federal tax purposes. See Regulations sections
 301.7701-2 and -3.

domestic organization

      A corporation or partnership is domestic if created or organized
 in the U.S. or under the law of the U.S. or of any state or
 possession. A trust is domestic if a court within the U.S. or a
U.S. possession is able to exercise primary supervision over
 the administration of the trust, and one or more U.S. persons (or
 persons in possessions of the U.S.) have the authority to control all
 substantial decisions of the trust.

donor advised fund

      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.

      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.

donor advisor

      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.

EIN

      Employer identification number, a nine-digit number. Use Form
 SS-4 to apply for an EIN.

employee

      Any individual who, under the usual common law rules applicable
 in determining the employer-employee relationship, has the status of
 an employee, and any other individual who is treated as an employee
 for federal employment tax purposes under section 3121(d). See Pub.
 1779, Independent Contractor or Employee, for more information.

endowment

      See term endowment, permanent endowment, and
quasi endowment. See also SFAS 117.

escrow or custodial account

      Refers to an account (whether a segregated account at a
 financial institution or a set-aside on the organization's books and
 records) over which the organization has signature authority, in
 which the funds are held for the benefit of other organizations or
 individuals, regardless of whether the funds are reported on Part X,
 line 21, and regardless of whether the account is labeled as
 "escrow account," "custodial account," "trust
 account," or some similar term.

excess benefit transaction

      In the case of an applicable tax-exempt organization, any
 transaction in which an excess benefit is provided by the
 organization, directly or indirectly to, or for the use of, any
disqualified person as defined in section 4958. Excess benefit
 means the excess of the economic benefit received from the applicable
 organization over the consideration given (including services) by a
 disqualified person. See Appendix G for more information.

Donor advised fund. For a donor advised fund, an
 excess benefit transaction also includes a grant, loan,
compensation, or similar payment from the fund to a:

      o Donor or donor advisor

      o Family member of a donor, or donor advisor

      o 35% controlled entity of a donor, or donor advisor

      o 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 payments.
        For additional information see the Instructions for Form 4720.

Supporting organization. For any supporting
organization, defined in section 509(a)(3), an excess benefit
 transaction also includes grants, loans, compensation, or
 similar payments provided by the supporting organization to a:

      o Substantial contributor

      o Family member of a substantial contributor

      o 35% controlled entity of a substantial contributor

      o 35% controlled entity of a family member of a substantial
        contributor.

      The excess benefit in this transaction is the amount of the
 grant, loan, compensation , or similar payments. 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)).

      For more information, see the Instructions for Form 4720.

exempt bond

      See tax-exempt bond.

family member, family relationship

      Unless specified otherwise, the family of an individual includes
 only his or her spouse, ancestors, brothers and sisters (whether
 whole or half blood), children (whether natural or adopted),
 grandchildren, great grandchildren, and spouses of brothers, sisters,
 children, grandchildren, and great grandchildren.

FIN 48

      Financial Accounting Standards Board (FASB) Interpretation No.
 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement No. 109. The organization may be
 required to provide in Schedule D, Supplemental Financial Statements,
 the text of the footnote to its financial statements regarding
 the organization's liability for uncertain tax positions under FIN
 48.

financial statements

      An organization's statements of revenue and expenses and balance
 sheet, or similar statements prepared regarding the financial
 operations of the organization.

fiscal year

      An annual accounting period ending on the last day of a month
 other than December. See also tax year and current
year.

foreign government

      A governmental agency or entity, or a political subdivision
 thereof, that is not classified as a United States agency or
governmental unit, regardless of where it is located or
 operated.

foreign individual

      A person, including a U.S. citizen or resident, who lives or
 resides outside the United States. For purposes of Form 990,
 Part IX and Schedule F, Statement of Activities Outside the United
 States, a person who lives or resides outside the United States at
 the time the person receives a grant is a foreign individual.

foreign organization

      A foreign estate or trust, nonprofit or other non-governmental
 organization, partnership, corporation, or other business entity that
 is not created or organized in the United States or under the
 laws of the United States. A foreign organization includes an
 affiliate that is organized as a legal entity separate from the
 filing organization, but does not include any branch office, account,
 or employee of the organization located outside the United
 States.

fundraising

      See fundraising activities.

fundraising activities

      Activities undertaken to induce potential donors to contribute
 money, securities, services, materials, facilities, other assets, or
 time. They include publicizing and conducting fundraising
 campaigns; maintaining donor mailing lists; conducting fundraising
events, preparing and distributing fundraising manuals,
 instructions, and other materials; and conducting other activities
 involved with soliciting contributions from individuals,
 foundations, governments, and others. Fundraising activities do not
 include gaming (other than gaming that is incidental to a
 fundraising activity) or the conduct of any trade or business that is
 regularly carried on.

fundraising events

      For purposes of Schedule G, Supplemental Information Regarding
 Fundraising or Gaming Activities, fundraising events include
 dinners/dances, door-to-door sales of merchandise, concerts,
 carnivals, sports events, auctions, and casino nights that are not
 regularly carried on. Fundraising events do not include sales of
 gifts or goods or services of only nominal value, sweepstakes,
 lotteries or raffles where the names of contributors or other
 respondents are entered in a drawing for prizes, raffle or lotteries
 where prizes have only nominal value or solicitation campaigns that
 generate only contributions.

GAAP

      See generally accepted accounting principles.

gaming

      Includes (but is not limited to): bingo, pull
tabs/instant bingo (including satellite and progressive
 bingo), Texas Hold-Em Poker and other card games, 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.

generally accepted accounting principles

      The accounting principles set forth by the Financial Accounting
 Standards Board (FASB) and the American Institute of Certified Public
 Accountants (AICPA) that guide the work of accountants in reporting
 financial information and preparing audited financial
statements for organizations.

governing body

      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).

government official

      A federal, state or local official described within section
 4946(c).

governmental issuer

      A State or local governmental unit which issues a tax-exempt
bond.

governmental unit

      A State, a possession of the United States, a
political subdivision of a State or U.S. possession, the
 United States, or the District of Columbia. Section 170(c)(1).

grants and other assistance

      Includes awards, prizes, cash allocations, stipends,
 scholarships, fellowships, research grants, and similar payments and
 distributions made by the organization during the tax year. It does
 not include salaries or other compensation to
employees.

gross proceeds

      For purposes of Schedule K, Supplemental Information on Tax
 Exempt Bonds, generally any sale proceeds, investment
 proceeds, transferred proceeds, and replacement proceeds of an issue.
 See Regulations section 1.148-1(b),(c).

gross receipts

      See Appendix B (How to Determine Whether an Organization's Gross
 Receipts Are Normally $25,000 (or $5,000) or Less) and Appendix C,
 Speical Test for Determining Exempt Status of Section 501(c)(7) and
 501(c)(15) Organizations.

group exemption

      Tax exemption of a group of organizations all exempt under the
 same Code section, applied for and obtained by a central
organization on behalf of the subordinate organizations
 under the central organization's general supervision or control. See
 Rev. Proc. 80-27 and Appendix E, Group Returns: Reporting
 Information on Behalf of the Group, for more information.

group return

      A Form 990 filed by the central organization of a
group exemption for two or more of the subordinate
organizations that are in the group at the close of the central
 organization's tax year. See General Instructions and Appendix
 E, Group Returns: Reporting Information on Behalf of the Group, for
 more information.

highest compensated employee

      One of the five highest compensated employees of the
 organization (including employees of a disregarded entity of
 the organization) other than officers or key employees.
 The five highest compensated employees are determined by the amounts
 of reportable compensation for the calendar year ending with
 or within the organization's tax year.

historical treasure

      A building, structure, area, or property (real or personal) with
 recognized cultural, aesthetic, or historical value that is
 significant in the history, architecture, archeology, or culture of a
 country, state, or city.

hospital

      For purposes of Schedule H, Hospitals, a hospital is a facility
 that is, or is required to be, licensed, registered or similarly
 recognized by a state as a hospital. This includes a hospital that is
 operated through a disregarded entity or a joint
venture taxed as a partnership. It does not include hospitals
 that are located outside the United States. It also does not
 include hospitals that are operated by entities organized as separate
 legal entities from the organization that are taxable as a
 corporation for federal tax purposes (except for members of a
group exemption included in a group return filed by the
 organization).

Hospital (or cooperative hospital service organization):

      For purposes of Schedule A, Public Charity Status and Public
 Support, a hospital (or cooperative hospital service organization)
 is an organization whose main purpose is to provide hospital or
 medical care. For purposes of Schedule A, a rehabilitation
 institution or an outpatient clinic may qualify as a hospital if its
 principal purposes or functions are the providing of hospital or
 medical care, but the term does not include medical schools, medical
 research organizations, convalescent homes, homes for children or the
 aged, or vocational training institutions for handicapped
 individuals.

household goods

      Include furniture, furnishings, electronics, appliances, linens,
 and other similar items. They do not include (1) food, (2) paintings,
 antiques, and other objects of art, (3) jewelry and gems (other than
 costume jewelry reportable on this line), and other collectibles.

independent contractor

      A person who provides services to the organization but who is
 not treated as an employee. See Pub. 1779, Independent
 Contractor or Employee, for more information.

independent voting member of governing body

      A voting member of the governing body, if all three of
 the following circumstances applied at all times during the
 organization's tax year:

      1. The member was not compensated as an officer or other
employee of the organization or of a related
     organization (see instructions for Schedule R, Related
      Organizations and Unrelated Partnerships), except as provided in
      the religious exception discussed in instructions for Form 990,
      Part VI.

      2. The member did not receive total compensation or
      other payments exceeding $10,000 during the organization's tax
      year from the organization or from related organizations as an
independent contractor, other than reimbursement of
      expenses under an accountable plan or reasonable
     compensation for services provided in the capacity as a
member of the governing body. For example, a person who
      receives reasonable expense reimbursements and reasonable
      compensation as a director of the organization does not
      cease to be independent merely because he or she also receives
      payments of $7,500 from the organization for other arrangements.

      3. Neither the member, nor any family member of the
      member, was involved in a transaction with the organization
      (whether directly or indirectly through affiliation with another
      organization) that is required to be reported in Schedule L,
      Transactions With Interested Persons, for the organization's
      tax year, or in a transaction with a related organization of a
      type and amount that would be reportable on Schedule L if
      required to be filed by the related organization.

      A member of the governing body is not considered to lack
 independence merely because of the following circumstances:

      1. the member is a donor to the organization, regardless of the
      amount of the contribution;

      2. The member has taken a bona fide vow of poverty and either (A)
      receives compensation as an agent of a religious
     order or a 501(d) religious or apostolic organization, but
      only under circumstances in which the member does not receive
      taxable income (see, e.g., Rev. Ruls.77-290, 80-332); or (B)
      belongs to a religious order that receives sponsorship or
      payments from the organization which do not constitute taxable
      income to the member; or

      3. the member receives financial benefits from the organization
      solely in the capacity of being a member of the charitable or
      other class served by the organization in the exercise of its
      exempt function, such as being a member of a section 501(c)(6)
      organization, so long as the financial benefits comply with the
      organization's terms of membership .

initial contract

      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.

instant bingo

      See pull tabs.

institutional trustee

      A trustee that is not an individual or natural person but
 an organization. For instance, a bank or trust company serving as the
 trustee of a trust is an institutional trustee.

joint venture

      Unless otherwise provided, a partnership, limited liability
 company, or other entity treated as a partnership for federal tax
 purposes, as described in Regulations sections 301.7701-1 through
 301.7701-3.

key employee

      For purposes of Form 990 reporting, an employee of the
 organization (other than an officer, director, or
trustee) who meets all three of the following tests:

      1. $150,000 Test. Receives reportable compensation
      from the organization and all related organizations in
      excess of $150,000 for the calendar year ending with or
      within the organization's tax year;

2. Responsibility Test. The employee:

           (a) has responsibilities, powers or influence over the
           organization as a whole that is similar to those of
           officers, directors, or trustees;

           (b) manages a discrete segment or activity of the
           organization that represents 10% or more of the activities,
           assets, income, or expenses of the organization, as
           compared to the organization as a whole; or

           (c) has or shares authority to control or determine 10% or
           more of the organization's capital expenditures, operating
           budget, or compensation for employees.

3. Top 20 Test. Is one of the 20 employees (that satisfy
      the $150,000 Test and Responsibility Test) with the highest
      reportable compensation from the organization and related
     organizations for the calendar year ending with or within
      the organization's tax year.

legislation

      Includes action by Congress, any state legislature, any local
 council, or similar governing body with respect to acts, bills,
 resolutions, or similar items or by the public in referenda, ballot
 initiatives, constitutional amendments or similar procedures. It does
 not include actions by executive, judicial or administrative bodies.

Lobbying

      See lobbying activities.

lobbying activities

      All activities intended to influence foreign, national, state or
 local legislation. Such activities include direct lobbying
 (attempting to influence the legislators) and grassroots lobbying
 (attempting to influence legislation by influencing the general
 public).

maintaining offices, employees or agents

      For purposes of Schedule F, Statement of Activities Outside the
 United States, includes principal, regional, district, or branch
 offices, such offices maintained by agents, and persons situated at
 those offices paid wages for services performed. "Agent" is
 defined under traditional agency principles, but does not include
volunteers).

management company

      An organization that performs management duties for another
 organization customarily performed by or under the direct supervision
 of the other organization's officers, directors, trustees, or
key employees. These management duties include, but are not
 limited to, hiring, firing, and supervising personnel; planning or
 executing budgets or financial operations; and supervising exempt
 operations or unrelated trades or businesses.

medical research

      For purposes of a medical research organization operated in
 conjunction with a hospital (see Schedule A, Public Charity Status
 and Public Support), medical research means investigations, studies
 and experiments performed to discover, develop, or verify knowledge
 relating to physical or mental diseases and impairments and their
 causes, diagnosis, prevention, treatment, or control.

member of the governing body
      A person who serves on an organization's governing body,
 including a director or trustee, but not if the person
 lacks voting power.

non-cash contributions

Contributions of property, tangible or intangible, other
 than money. Non-cash contributions include, but are not limited to,
 stocks, bonds, and other securities; real estate; works of
art; stamps, coins, and other collectibles; clothing and
household goods; vehicles, boats, and airplanes; inventories
 of food, medical equipment or supplies, books, or seeds; intellectual
 property, including patents, trademarks, copyrights, and trade
 secrets; donated items that are sold immediately after donation, such
 as publicly traded stock or used cars; and items donated for sale at
 a charity auction. Non-cash contributions do not include
volunteer services performed for the reporting organization or
 use of facilities.

nonexempt charitable trust

      A trust that meets the following conditions:

      o it is not exempt from tax under section 501(a),

      o all of its unexpired interests are devoted to charitable
        purposes, and

      o a charitable deduction was allowed for contributions to
        the trust under section 170, 545(b)(2), 642(c), 2055,
        2106(a)(2), or 2522, or for amounts paid to or permanently set
        aside by the trust under section 642(c).

nonqualified deferred compensation

Deferred compensation that is earned pursuant to a
 nonqualified plan or nongovernmental section 457 plan. Different
 rules may apply for purposes of identifying arrangements subject to
 sections 83, 409A, 457(f), and 3121(v). Earned but unpaid incentive
 compensation may be deferred pursuant to a nonqualified deferred
 compensation plan.

officer

      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 are determined by
 reference to its organizing document, bylaws, or resolutions of its
 governing body, or as otherwise designated consistent with state law,
 but at a minimum include those officers required by applicable state
 law. For purposes of Form 990 reporting, treat the organization's
top management official and top financial official (the person
 who has ultimate responsibility for managing the organization's
 finances) as officers.

"on behalf of" issuer

      A corporation organized under the general nonprofit corporation
 law of a state whose obligations are considered obligations of a
 state or local governmental unit. See Rev. Proc. 82-26 for a
 description of the circumstances under which the Service will
 ordinarily issue an advance ruling that the obligations of a
 nonprofit corporation were issued on behalf of a state or local
 governmental unit. See also Rev. Rul. 63-20, 1963-1 C.B. 24; Rev.
 Rul. 59-41, 1959-1 C.B. 13; and Rev. Rul. 54-296, 1954-2 C.B. 59. An
 on behalf of issuer also includes any corporation organized by a
 state or local governmental unit specifically to issue tax-exempt
bonds to further public purposes. See Rev. Rul. 57-187.

organization manager

      For purposes of section 4958, 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.

permanent (true) endowment

      Endowment funds that are maintained to provide a permanent
 source of income, with the stipulation that principal must be
 invested and kept intact in perpetuity, while only the income
 generated can be used by the organization. See SFAS 117.

political campaign activities

      All activities that support or oppose candidates for elective
 federal, state or local public office. It does not matter whether the
 candidate is elected. A candidate is one who offers himself or is
 proposed by others for the public office. Political campaign activity
 does not include any activity to encourage participation in the
 electoral process, such as voter registration or voter education,
 provided that the activity does not directly or indirectly support or
 oppose any candidate.

political subdivision

      A division of any state or local governmental unit which
 is a municipal corporation or which has been delegated the right to
 exercise part of the sovereign power of the unit. Sovereign power
 includes the power to make and enforce laws.

possession of the United States

      Includes the Commonwealth of Puerto Rico, the Commonwealth of
 the Northern Mariana Islands, Guam, American Samoa, and the United
 States Virgin Islands.

private business use

      For purposes of Schedule K, Supplemental Information on Tax
 Exempt Bonds, use by the organization or another 501(c)(3)
 organization in an unrelated trade or business. Private
 business use also generally includes any use by a nongovernmental
 person other than a 501(c)(3) organization unless otherwise permitted
 through an exception or safe harbor provided under the Regulations or
 a revenue procedure.

private foundation

      An organization described in section 501(c)(3) that is not a
public charity. Some private foundations are classified as
 operating foundations (also known as private operating foundations)
 under section 4942(j)(3) or exempt operating foundations under
 section 4940(d)(2). A private foundation retains its private
 foundation status until such status is terminated under section 507.
 Thus, a tax-exempt private foundation becomes a taxable private
 foundation if its 501(c)(3) status is revoked.

proceeds

      For purposes of Schedule K, Supplemental Information on Tax
 Exempt Bonds, generally the sale proceeds of an issue (other than
 those sale proceeds used to retire bonds of the issue that are not
 deposited in a reasonably required reserve or replacement fund).
 Proceeds also include any investment proceeds from investments that
 accrue during the project period (net of rebate amounts attributable
 to the project period). See Regulations section 1.141-1(b).

professional fundraising services

      Services performed for the organization requiring the exercise
 of professional judgment or discretion consisting of planning,
 management, the preparation of materials (e.g., direct mail
 solicitation packages), the provision of advice and consulting
 regarding solicitation of contributions, and the direct
 solicitation of contributions. However, "professional
 fundraising" does not include purely ministerial tasks, such as
 printing, mailing services, or receiving and depositing contributions
 to a charity, such as the services provided by a bank or caging
 service.

program-related investment

      Investments made primarily to accomplish the organization's
 exempt purposes rather than to produce income. Examples of
 program-related investments include student loans and notes
 receivable from other exempt organizations that obtained the funds to
 pursue the filing organization's exempt function.

public charity

      An organization described in section 501(c)(3) and section
 509(a)(1) (which cross-references sections 170(b)(1)(A)(i) through
 (vi)), section 509(a)(2), section 509(a)(3), or section 509(a)(4).

publicly traded securities

      Generally, include common and preferred stocks, bonds (including
 governmental obligations such as bonds and Treasury bills), and
 mutual fund shares that are listed and regularly traded in an
 over-the-counter market or an established exchange and for which
 market quotations are published or are otherwise readily available.
 (See further explanation in instructions for Part IX, line 11 and
 Schedule M, Non-Cash Contributions, line 9)

pull-tabs

      Includes games in which an individual places a wager by
 purchasing preprinted cards that are covered with pull-tabs. Winners
 are revealed when the individual pulls back the sealed tabs on the
 front of the card and compares the patterns under the tabs with the
 winning patterns preprinted on the back of the card. Included in the
 definition of pull-tabs are "instant bingo," "mini
 bingo," and other similar scratch-off cards. Satellite, internet,
 and progressive bingo are games conducted in many different places
 simultaneously and the winners are not all present when the wagers
 are placed, the winners are determined and the prizes are
 distributed. Revenue and expenses associated with satellite,
 internet, and progressive bingo should be included under this
 category.

qualified 501(c)(3) bond

      A tax-exempt bond the proceeds of which are used by a
 501(c)(3) organization in furtherance of its charitable purpose.
 Requirements generally applicable to a qualified 501(c)(3) bond under
 section 145 include:

      1. all property financed by the bond issue is to be owned by a
      501(c)(3) organization or a govern mental unit; and

      2. at least 95% of the net proceeds of the bond issue are
      used either by a governmental unit or a 501(c)(3)
      organization in activities which do not constitute unrelated
     trades or businesses (determined by applying section 513).

qualified conservation contribution

      Any contribution of a qualified real property interest
 exclusively for conservation purposes. A "qualified real property
 interest" means any of the following interests in real property:

      1. The entire interest of the donor,

      2. A remainder interest,

      3. A restriction (e.g., an easement), granted in perpetuity, on
      the use which may be made of the real property.

      A "conservation purpose" means:

      1. The preservation of land areas for outdoor recreation by, or
      the education of, the general public,

      2. The protection of a relatively natural habitat of fish,
      wildlife, plants, or similar ecosystems,

      3. The preservation of open space (including farmland and forest
      land) where such preservation is for the scenic enjoyment of the
      general public or is in accordance with governmental
      conservation policy, or

      4. The preservation of an historically important land area or a
      certified historic structure.

      See section 170(h) for additional information, including special
 rules with respect to the conservation purpose requirement for
 buildings in registered historic districts. See also conservation
easement.

qualified state or local political organization

      A type of political organization that meets the following
 requirements:

      o It limits its exempt function to the selection process
        relating solely to any state or local public office or office
        in a state or local political organization;

      o It is required under a state law to report to a state agency
        (and does report) information that otherwise would be required
        to be reported on Form 8872 or it is required to report under
        state law (and does report) at least the following
        information:

           o The name and address of every person who contributes a
             total of $500 or more during the calendar year and the
             amount of each contribution;

           o The name and address of every person to whom the
             organization makes expenditures aggregating $800 or more
             during the calendar year, and the amount of each
             expenditure; and

           o Any additional information specified in section
             527(j)(3), if the state law requires the reporting of
             that information to the state agency.

      o The state agency makes the reports filed by the organization
        publicly available;

      o The organization makes the reports filed with the state agency
        publicly available in the manner described in section 6104(d);
        and

      o No federal candidate or office holder controls or materially
        participates in the direction of the organization, solicits
contributions to the organization, or directs any of
        the organization's disbursements.

quasi-endowment

      Funds functioning as an endowment that are established by the
 organization itself, either from donor or institutional funds, and
 which must retain the purpose and intent as specified by the donor or
 source of the original funds. See SFAS 117.

reasonable compensation.

      The value that would ordinarily be paid for like services by
 like enterprises under like circumstances.

reasonable effort

      For purposes of Part VI, lines 1b and 2; Part VII, Section A;
 and Schedule L, Transactions With Interested Persons, Parts III and
 IV, refers to a reasonable amount of effort in information gathering
 that the organization is expected to undertake in order to answer the
 question. See the specific instructions for Part VI, lines 1b and 2;
 Part VII, Section A; and Schedule L, Parts III and IV for examples of
 reasonable efforts.

refunding escrow

      One or more funds established as part of a single transaction or
 a series of related transactions, containing proceeds of a
refunding issue and any other amounts to provide for payment
 of principal or interest on one or more prior issues. See Regulations
 section 1.148-1(b).

refunding issue

      An issue of obligations the proceeds of which are used to
 pay principal, interest, or redemption price on another issue (a
 prior issue), including the issuance costs, accrued interest,
 capitalized interest on the refunding issue, a reserve or replacement
 fund, or similar costs, if any, properly allocable to that refunding
 issue. A current refunding issue is a refunding issue that is issued
 not more than 90 days before the last expenditure of any proceeds of
 the refunding issue for the payment of principal or interest on the
 prior issue. An advance refunding issue is a refunding issue that is
 not a current refunding issue. See Regulations section
 1.150-1(d)(1),(3),(4).

related organization

      An organization that stands in one or more of the following
 relationships to the filing organization:

      o Parent -- an organization that controls (see examples
        of control in definition above) the filing organization

      o Subsidiary -- an organization controlled (see examples of
control in definition above) by the filing organization

      o Brother/Sister -- an organization controlled (see examples of
control in definition above) by the same person or
        persons that control the filing organization

      o Supporting/Supported -- an organization that is (or claims to
        be) at any time during the organization's tax year (i) a
supporting organization of the filing organization
        within the meaning of section 509(a)(3), if the filing
        organization is a supported organization within the
        meaning of section 509(f)(3), or (ii) a supported
        organization, if the filing organization is a supporting
        organization

religious order

      An organization described in Rev. Proc. 91-20.

reportable compensation

Compensation that is reported on Form W-2, box 5 (or box
 1 if the employee's compensation is not reported in box 5), or Form
 1099-MISC, box 7, filed for the calendar year ending with or within
 the organization's tax year.

research

      For purposes of Schedule H, Hospitals, any study or
 investigation that is internally funded and/or receives funding from
 a tax-exempt or government entity, and of which the goal is to
 generate generalizable knowledge that is made available to the
 public, such as about underlying biological mechanisms of health and
 disease; natural processes or principles affecting health or illness;
 evaluation of safety and efficacy of interventions for disease such
 as clinical trials and studies of therapeutic protocols;
 laboratory-based studies; epidemiology, health outcomes and
 effectiveness; behavioral or sociological studies related to health,
 delivery of care, or prevention; studies related to changes in the
 health care delivery system; and communication of findings and
 observations (including publication in a medical journal).

review of financial statements

      An examination of an organization's financial records and
 practices by an independent accountant with the objective of
 assessing whether the financial statements are plausible,
 without the extensive testing and external validation procedures of
 an audit.

school

      An organization the primary function of which is the
 presentation of formal instruction, and which regularly has a
 faculty, curriculum, an enrolled body of students, and a place where
 educational activities are regularly conducted.

security/securities

      Any bond, debenture, note, or certificate or other evidence of
 indebtedness issued by a corporation or a government or political
subdivision, share of stock, voting trust certificate, or any
 certificate of interest or participation in, certificate of deposit
 or receipt for, temporary or interim certificate for, or warrant or
 right to subscribe to or purchase, any of the foregoing.

SFAS 116

      Statement of Financial Accounting Standards No. 116, Accounting
 for Contributions Received and Contributions Made.

SFAS 117

      Statement of Financial Accounting Standards No. 117, Financial
 Statements of Not-for-Profit Organizations.

short accounting period

      An accounting period of less than 12 months, which exists when
 an organization changes its annual accounting period, and which may
 exist in its initial or final year of existence (see tax
year).

short period

      See short accounting period.

significant disposition of net assets

      A disposition of net assets, consisting of a sale, exchange,
 disposition or other transfer of more than 25% of the fair market
 value of the organization's net assets during the year, regardless of
 whether the organization received full or adequate consideration. A
 significant disposition of net assets involves:

      1. One or more dispositions during the organization's tax
     year amounting to more than 25% of the fair market value of
      the organization's net assets as of the beginning of its tax
     year; or

      2. One of a series of related dispositions or events commenced
      in a prior year, that when combined comprise more than 25% of
      the fair market value of the organization' s net assets as of
      the beginning of the tax year when the first disposition
      in the series was made. Whether a significant disposition of net
      assets occurred through a series of related dispositions depends
      on the facts and circumstances in each case.

      Examples of the types of transactions that are "a
 significant disposition of net assets" required to be reported in
 Schedule N, Liquidation, Termination, Dissolution or Significant
 Disposition of Assets, Part II include:

      o taxable or tax-free sales or exchanges of exempt assets for
        cash or other consideration (such as a social club described
        in section 501(c)(7) selling land or an exempt organization
        selling assets it had used to further its exempt purposes);

      o sales, contributions or other transfers of assets to
        establish or maintain a partnership, joint venture, or
        a corporation (for-profit or nonprofit), regardless of
        whether such sales or transfers are governed by section 721 or
        section 351, whether or not the transferor receives an
        ownership interest in exchange for the transfer;

      o Sales of assets by a partnership or joint venture in which the
        exempt partner has an ownership interest;

      o transfers of assets pursuant to a reorganization in which the
        organization is a surviving entity; and

      o a contraction of net assets resulting from a grant or
        charitable contribution of assets to another organization
        described in section 501(c)(3).

sponsoring organization

      Any organization which:

      o is described in section 170(c), except for governmental
        entities or organizations described in section 170(c)(1) or
        170(c)(2)(A);

      o is not a private foundation as defined in section
        509(a); and

      o maintains one or more donor advised funds.

state of legal domicile

      For a corporation, enter the state of incorporation (country of
 incorporation for a foreign corporation formed outside the U.S.). For
 a trust or other entity, enter the State whose law governs the
 organization's internal affairs (the foreign country whose law
 governs for a foreign organization other than a corporation).

subordinate organization

      One of the organizations, typically local in nature, that is
 recognized as exempt in a group exemption ruling, and is
 subject to the general supervision and control of a central
organization.

supported organization

      A public charity described in section 509(a)(1) or
 509(a)(2)) that is supported by a supporting organization
 described in section 509(a)(3).

supporting organization

      A public charity described in section 509(a)(3). A
 supporting organization is organized and operated to support
supported organizations. Supporting organizations are
 classified as either Type I (operated, supervised, or controlled by
 one or more supported organizations), Type II (supervised or
 controlled in connection with one or more supported organizations),
 Type III functionally integrated (operated in connection with one or
 more supported organizations, if the supporting organization's
 activities perform the functions of, or carrying out the purposes of,
 such supported organizations, and but for the supporting
 organization's involvement, such activities would normally be engaged
 in by the supported organizations themselves), or Type III other
 (operated in connection with one or more supported organizations and
 not functionally integrated).

tax-exempt bond

      An obligation issued by or on behalf of a governmental
issuer on which the interest paid is excluded from the holder's
 gross income under section 103. For this purpose, a bond can be in
 any form of indebtedness under federal tax law, including a bond,
 note, loan, or lease-purchase agreement.

tax year

      The annual accounting period for which the Form 990 is being
 filed, whether the calendar year ending December 31st or a
 fiscal year ending on the last day of any other month. The
 organization may have a "short" tax year in its first year of
 existence, in any year when it changes its annual accounting period
 (e.g., from December 31 year-end to a June 30 year-end), and in its
 last year of existence, e.g., when it merges into another
 organization or dissolves. See also current year, fiscal
year, and short period.

term endowment

      An endowment fund maintained to provide a source of income for
 either a specified period of time or until a specific event occurs.
 See SFAS 117.

top management official

      A person who has ultimate responsibility for implementing the
 decisions of the organization's governing body or for
 supervising the management, administration, or operation of the
 organization; for example, the organization's CEO or executive
 director.

Top financial official

      The person who has ultimate responsibility for managing the
 organization's finances.

total assets

      The amount reported in Form 990, Part X, line 16, column (B).

trustee

      See director or trustee.

United States

      Unless otherwise provided, includes the 50 States, the District
 of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
 Northern Mariana Islands, Guam, American Samoa, and the United States
 Virgin Islands.

unrelated business

      See unrelated trade or business.

unrelated business income

      Income from an unrelated trade or business as defined in
 section 513.

unrelated business gross income

      Gross income from an unrelated trade or business as
 defined in section 513.

unrelated organization

      An organization that is not a related organization with
 respect to the filing organization.

unrelated trade or business

      Any trade or business, the conduct of which is not substantially
 related to the exercise or performance by the organization of its
 charitable, educational, or other purpose or function constituting
 the basis for its exemption. See Publication 598 and Form 990-T
 Instructions for a discussion of what is an unrelated trade or
 business.

U.S. possession

      See possession of the United States.

volunteer

      A person who serves the organization without compensation.
 "Compensation" for this purpose includes tips and non-cash
 benefits, except for:

      o reimbursement of expenses under an accountable plan,

      o liability insurance coverage for acts performed on behalf of
        the exempt organization, and

      o de minimis fringe benefits.

voting member of the governing body

      A member of the organization's governing body with power
 to vote on all matters that may become before the governing body
 (other than a conflict of interest that disqualifies the member from
 voting).

works of art

      Include paintings, sculptures, prints, drawings, ceramics,
 antiques, decorative arts, textiles, carpets, silver, photography,
 film, video, installation and multimedia arts, rare books and
 manuscripts, historical memorabilia, and other similar objects. Art
 does not include collectibles.

year of formation

      The year in which the organization was created or formed under
 applicable state law (if a corporation, the year of incorporation).

2008 Instructions for Form 990
(Core Form)

Appendix of Special Instructions to Form 990

Contents

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 Section 501(c)(15) Organizations
D Public Inspection of Returns
E Group Returns: Reporting Information on Behalf of the Group
F Disregarded Entities and Joint Ventures; Inclusion of
 Activities and Items
G Section 4958 Excess Benefit Transactions
H Forms and Publications To File or Use
I 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 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                    501(c)(1)
 Congress

 Title Holding Corporations                             501(c)(2)

 Charitable, Religious, Educational,                    501(c)(3)
 Scientific, etc. Organizations

 Civic Leagues and Social Welfare                       501(c)(4)
 Organizations

 Labor, Agricultural, and Horticultural                 501(c)(5)
 Organizations

 Business Leagues, etc.                                 501(c)(6)

 Social and Recreation Clubs                            501(c)(7)

 Fraternal Beneficiary and Domestic                     501(c)(8) & (c)(10)
 Fraternal Societies and Associations

 Voluntary Employees' Beneficiary                       501(c)(9)
 Associations

 Teachers' Retirement Fund Associations                 501(c)(11)

 Benevolent Life Insurance Associations,
 Mutual Ditch or Irrigation Companies,                  501(c)(12)
 Mutual or Cooperative Telephone
 Companies, etc.

 Cemetery Companies                                     501(c)(13)

 State Chartered Credit Unions, Mutual                  501(c)(14)
 Reserve Funds

 Insurance Companies or Associations                    501(c)(15)
 Other than Life

 Cooperative Organizations to Finance                   501(c)(16)
 Crop Operations

 Supplemental Unemployment Benefit                      501(c)(17)
 Trusts

 Employee Funded Pension Trusts                         501(c)(18)
 (created before 6/25/1959)

 Organizations of Past or Present                       501(c)(19) & (c)(23)
 Members of the Armed Forces

 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                501(c)(26)
 Individuals

 State-Sponsored Workmen's
 Compensation and Insurance and                         501(c)(27)
 Reinsurance Organizations

 Religious and Apostolic Associations                   501(d)

 Cooperative Hospital Service                           501(e)
 Organizations

 Cooperative Service Organizations of                   501(f)
 Operating Educational Organizations

 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.

Caution: Do not use the definition of gross receipts described inAppendix C: 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 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 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).

Warning: College fraternities or sororities or other organizations that charge 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.

Caution: The alternate test does not apply if any employee of the mutual 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.


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 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).

TIP: Note that a section 527 political 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 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.

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   Must mail the copy of the requested
 a copy,                          documents (or the requested parts)
                                  within 30 days from the date it
                                  receives the request.

 Mails the copy of the            Is deemed to have provided the copy
 requested document,              on the 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 request or payment    Is deemed to have received it 7
 by mail,                         days after the date of the
                                  postmark, absent evidence to the
                                  contrary.

 Receives a request transmitted   Is deemed to have received it the
 by electronic mail or            day the request is transmitted
 facsimile,                       successfully.

 Receives a written request       Must notify the requester of the
 without payment or with an       prepayment policy and the amount
 insufficient payment, when       due within 7 days from the date of
 payment in advance is            the request's receipt.
 required,

 Receives consent from an         May provide a copy of the requested
 individual making a request,     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 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 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 (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.

Appendix E: Group Returns: Reporting Information on Behalf of the Group

Except where otherwise instructed, where a line calls for a dollar amount or numerical data, the central organization filing the group return must aggregate the data from all the subordinates included in the group return and report the aggregate number. For example, in answering Form 990, Part I, line 6, the total number of volunteers for all of the subordinate organizations would be reported.

For purposes of Form 990, Part III, report on an aggregate basis for the mission and activities of all of the subordinates (in effect, treating all of the subordinates as one entity).

In general, if a line requires a Yes/No answer and the answer is not the same for all subordinates to which the line applies, then state "Yes" and explain the answer in the Schedule supplemental information (if applicable) or in Schedule O. For the following lines, however, state "No" if the answer is "No" for any of the subordinates to which the line applies, and explain in Schedule O):


    Form 990, Part V, lines 1c, 2b, 3b, 5c, 6b, 7b, 7g, and 7h
    Form 990, Part VI, lines 8a, 8b, 9b, 12b, and 12c
    Form 990, Schedule C (Political Campaign and Lobbying
    Activities), Part I-B, lines 3 and 4a
    Form 990, Schedule C, Part I-C, line 4
    Form 990, Schedule C, Part II-A, line 1j
    Form 990, Schedule C, Part II-B, line 2d
    Form 990, Schedule C, Part III-A, lines 1-3
    Form 990, Schedule D (Supplemental Financial Statements), Part
    I, lines 5 and 6
    Form 990, Schedule D, Part II, lines 5 and 8
    Form 990, Schedule E (Schools), lines 1-4d and 7
    Form 990, Schedule F (Statement of Activities Outside the United
    States), Part I, line 1
    Form 990, Schedule G (Supplemental Information Regarding
    Fundraising or Gaming Activities), Part III, line 9a
    Form 990, Schedule I (Grants and Other Assistance to
    Organizations, Governments and Individuals in the U.S.), Part I,
    line 1
    Form 990, Schedule J (Compensation Information), Part I, lines
    1b and 2 Form 990, Schedule M (Non-Cash Contributions), Part I,
    line 31
    Form 990, Schedule N (Liquidation, Termination, Dissolution or
    Significant Disposition of Assets), Part I, lines 3, 5b, 6, and
    7b
The following is a list of other special instructions for group returns:

    1. Header Item B. Termination. If the group is terminating its group exemption and filing its final group return, do not check the termination box. Refer to Rev. Proc. 80-27, 1980-1 C.B. 677, for procedures for terminating the group exemption.

    2. Header Item D. EIN. Use the special EIN (separate from the central organization's EIN) that is issued solely for purposes of the group return. The central organization must have received a group ruling before it can file a group return.

    3. Header Items E, F, J. Enter information for central organization only.

    4. Header Item H. Group returns. Enter the four-digit group exemption number (GEN). Also, if not all affiliated subordinate organizations are included in the group return, then

    5. Header Item J. Website. Enter the Website of the central organization (if any).

    6. Header Item K. Type of organization. Check "other" if the group has more than one type of organization.

    7. Header Item L. Year of formation. Leave blank for group return.

    8. Header Item M. State of legal domicile. Leave blank for group return.

    9. Part IV, lines 14b-19, 21-22, and 29 dollar thresholds. Apply the dollar thresholds with respect to the aggregate data for the group as a whole, not subordinate by subordinate.

    10. Part IV, line 20. Hospitals. Answer "Yes," if any affiliate included within the group return operated a hospital facility.

    11. Part VI, line 2. Relationships among officers, etc. Describe in Schedule O only relationships between officers, directors, etc. of the same subordinate organization, not relationships between officers, etc. of one subordinate and officers, etc. of another subordinate.

    12. Part VI, line 4. Significant changes to organizational documents. Report only changes to standardized organizational documents maintained by the central organization that subordinates are required to adopt.

    13. Part VI, line 20. Person who possesses books and records. Identify the person who possesses the information furnished by the subordinate organizations used in compiling the group return.

    14. Part VII. Compensation of officers, etc. File a single consolidated Form 990, Part VII showing the officers, directors, trustees, and key employees of each subordinate included in the group return, and a single consolidated Schedule J (Compensation Information), Part II for all such officers, directors, trustees, and key employees above the compensation thresholds. Report the five highest compensated employees and independent contractors above $100,000 for the whole group of subordinates, not for each subordinate. If one or more officers, directors, trustees, key employees, or highest compensated employees received compensation from more than one organization in the group, the person's compensation from the several organizations must be reported in column (D)

    15. Part VII. Compensation from related organizations. Report compensation from an organization that is included in the group ruling but that is not among the subordinates included in the group return as compensation from a related organization in Column (E), even if the related organization is not required to be reported in Schedule R (Related Organizations and Unrelated Partnerships).

    16. Part XI, lines 2a and b. Compiled, reviewed, or audited financial statements. Answer "Yes" only if all the subordinates in the group had their financial statements compiled, reviewed, or audited individually (rather than on a consolidated basis).

    17. Schedule A. Part I. Reason for public charity status. If the subordinates do not all have the same public charity status, then check the public charity status box for the largest number of subordinates in the group, and explain in Schedule A, Public Charity Status and Public Support, Part IV. However, if any 509(a)(3) organizations are among the subordinates in the group return, then also check the box on line 11e and complete lines 11f through 11h.

    18. Schedule A, Parts II and III. Support Schedules. Report aggregate data for all subordinates with the public charity status corresponding to Part II or III.

    19. Schedule B. Contributors. Report a consolidated Schedule B for all subordinates included in the group return. Apply the dollar and percentage thresholds (including the greater of $5000 or 2% threshold for organizations described in sections 509(a)(1) and 170(b)(1)(A)(vi)) subordinate by subordinate, not on a group basis.

    20. Schedule C. Part II-A. Lobbying expenditures and affiliated groups. Complete Part II-A, column (b) for the group as a whole. In column (a), except on lines g and h, include the amounts that apply to all electing members of the group if they are included in the group return. If the group return includes organizations that belong to more than one affiliated group, show in column (b) the totals for all such groups.

    21. Schedule D. Part X. Other liabilities. The filing organization may summarize that portion, if any, of the FIN 48 footnote that applies to the liability of multiple organizations including the organization (for example, as a member of a group with consolidated financial statements), to describe the filing organization's share of the liability.

    22. Schedule H. Hospitals. Complete one Schedule H for all of the hospitals operated by subordinates in the group, and report aggregate data from all such hospitals.

    23. Schedule J. Compensation from related organizations. See the Part VII instructions above.

    24. Schedule N. Liquidation or significant disposition of assets. Explain in Schedule N, Part III which of the subordinates have undergone a liquidation, termination, dissolution, or significant disposition of assets during the tax year.

    25. Schedule R. Related organizations. See Instructions to Schedule R regarding determining when related organizations of a member of a group exemption must be included in Schedule R. In general, central organizations and subordinate organizations of a group exemption are not required to be listed as related organizations in Schedule R, Part II; and all other related organizations of the central organization or of a subordinate organization are required to be listed in Schedule R in the applicable part. Even if a related organization is not required to be listed in Part II of Schedule R, however, as described in the Schedule R, Part V instructions, the organization must report its transactions with the related organization in Part V.


Appendix F : Disregarded Entities and Joint Ventures; Inclusion of Activities and Items.

Disregarded Entities

A disregarded entity, as described in Regulations sections 301.7701-1 through 301.7701-3, is treated as a branch or division of its parent organization for federal tax purposes. Therefore, financial and other information applicable to a disregarded entity must be reported as the parent organization's information.

An organization must report in its Form 990, including Parts VIII through X, all of the revenues, expenses, assets, liabilities, and net assets or funds of a disregarded entity of which it is the sole member. The organization also must report the activities of a disregarded entity in the appropriate parts (including Schedules) of the Form 990. For example, support of a disregarded entity must be taken into account by the filing organization for purposes of the public support tests set forth in Schedule A. Similarly, political campaign activity or lobbying activity conducted by a disregarded entity of which the organization is the sole member must be reported in Schedule C, Political Campaign and Lobbying Activities.

The following is a list of special instructions for the Form and Schedules regarding the reporting of a disregarded entity of which the organization is the sole member. These items are described to illustrate special applications of the rule described above that a disregarded entity's activities and items must be reported in the organization's Form 990 and applicable Schedules.


    1. Part I, line 5. Number of employees. See instruction for Part V, lines 1 and 2 below.

    2. Part I, line 6. Number of volunteers. The total number of volunteers to be reported may, but is not required to, include volunteers of any disregarded entity.

    3. Part III. Program service accomplishments. Consider activities and accomplishments of all disregarded entities when answering this Part.

    4. Part IV, line 12. Audited financial statement. The organization is not to answer "Yes," to this question merely because it received an audited statement of one or more disregarded entities, if the statement of the filing organization was not audited.

    5. Part IV, lines 31-32. Liquidation or significant disposition of assets. See instruction for Schedule N below.

    6. Part IV, lines 35-36. Transactions with related organizations. See instruction for Schedule R below.

    7. Part V, lines 1 and 2. Forms 1096 and W-3. The total number of information returns and employees to be reported, and compliance with backup withholding rules, includes all backup withholding, information returns and employees of any disregarded entity, regardless of whether the disregarded entity has a separate EIN for employment tax and information reporting purposes.

    8. Part V, line 7. Organizations that may receive deductible contributions. For purposes of Form 990 reporting, lines 7a through 7h are to be answered by taking into account any contributions made to a disregarded entity.

    9. Part VI, Section A, lines 1-11. Governing body and management. Members of the governing body, officers, directors, trustees, and employees of a disregarded entity will not be treated as governing body members, officers, directors, or trustees of the filing organization, but such persons may constitute a key employee or highest compensated employee of the filing organization by virtue of compensation paid by the disregarded entity, or the person's responsibilities and authority over operations of the disregarded entity when compared to the filing organization as a whole. See instructions to Form 990, Part VII, Section A, Disregarded entities.

    10. Part VI, Section B, lines 12 through 16. Policies. The organization is to check "Yes," or "No," based on the filing organization's policies, but for each "Yes" response must report in Schedule O whether the policy applies to all of the organization's disregarded entities (if any).

    11. Part VII, line 1a. Definitions of key employee and highest compensated employee. Officers, directors, trustees, and employees of a disregarded entity may constitute a key employee or highest compensated employee of the filing organization by virtue of compensation paid by the disregarded entity, or the person's responsibilities and authority over operations of the disregarded entity when compared to the filing organization as a whole. See instructions to Form 990, Part VII, Section A, Disregarded entities.

    12. Part XI, line 3. OMB and Single Audit Act audits. The organization must check "Yes" if a disregarded entity was required to undergo an audit or audits.

    13. Schedule L. Transactions with interested persons. Reportable transactions include transactions involving disqualified persons who have such status because of their relationship with a disregarded entity (such as an employee of the disregarded entity who qualifies as a key employee of the organization as a whole). A transaction between an interested person and a disregarded entity of the organization is reportable on Schedule L.

    14. Schedule N. Liquidation or significant disposition of assets. The organization is not to prepare Part I to report a termination, liquidation, or dissolution of a disregarded entity if the filing organization continues to operate. Transfers to (or by) a filing organization by (or to) its disregarded entity are not to be reported in Part II, but transfers by or contractions of a disregarded entity are to be taken into account to determine whether a reportable event (based on 25% of the filing organization's net assets, including those of its disregarded entities) has occurred.

    15. Schedule R, Part V, line 2. Transactions with related organizations. Specified payments to a disregarded entity by a controlled entity of the filing organization, and transfers by a disregarded entity to an exempt non-charitable entity, are to be reported in Schedule R, Part V, line 2.


Joint Ventures Taxed as a Partnership

If the organization participates as a partner or member of a joint venture, partnership, LLC, or other entity treated as a partnership for federal tax purposes (referred to here as a "joint venture"), as described in Regulations sections 301.7701-1 through 301.7701-3, then the organization in general must report the activities of the joint venture as its own activities, to the extent of the organization's proportionate interest in the joint venture. For example, a proportionate share of the political campaign activity or lobbying activity conducted by a joint venture of which the organization is a member must be reported in Schedule C, Political Campaign and Lobbying Activities. If the joint venture is a member of a second joint venture, which is a member of a third joint venture, etc., the activities similarly pass through all joint ventures to the organization.

The following is a list of special instructions for the Form and Schedules regarding the reporting of a joint venture of which the organization is a member:


    1. Part I, line 2. Disposition of 25% of assets. See instruction for Schedule N below.

    2. Part I, line 7. Unrelated business income. Include the organization's share (whether or not distributed) of income or loss of the joint venture that is unrelated business income in determining the organization's gross and net unrelated business income.

    3. Part IV, lines 3-5. Political campaign and lobbying activities. See instruction for Schedule C below.

    4. Part IV, line 7. Conservation easements. See instruction for Schedule D below.

    5. Part IV, lines 14-16. Activities outside the U.S. See instruction for Schedule F below.

    6. Part IV, lines 17-19. Fundraising and gaming. See instruction for Schedule G below.

    7. Part IV, line 20. Hospitals. See instruction for Schedule H below.

    8. Part IV, line 21-22. Grants in the U.S. See instruction for Schedule I below.

    9. Part IV, lines 26-28. Loans, grants, and business transactions involving interested persons. See instruction for Schedule L below.

    10. Part IV, line 32. Disposition of 25% of assets. See instruction for Schedule N below.

    11. Part IV, lines 34-37. Related organizations and unrelated partnerships. See instruction for Schedule R below.

    12. Part V, line 3a. Unrelated business income. Include the organization's share (whether or not distributed) of income or loss of the joint venture that is unrelated business income in determining the organization's gross unrelated business income.

    13. Part VI. Governance, management, and disclosure. Do not take into account a joint venture for purposes of Part VI (except for line 16).

    14. Part VII. Compensation. See instruction for Schedule J below.

    15. Parts VIII, IX, and X. Financial Statements. Report in accordance with the organization's books and records.

    16. Part XI. Financial statements and reporting. Disregard a joint venture.

    17. Schedule C. Political campaign and lobbying activities. Report the organization's share of political campaign or lobbying activities conducted by a joint venture.

    18. Schedule D, Part II. Conservation easements. Include conservation easements held by a joint venture formed for the purpose of holding such easements.

    19. Schedule F. Activities outside the U.S. Include activities of a joint venture, including grants to organizations or individuals outside the U.S.

    20. Schedule G. Fundraising and gaming. Include activities of a joint venture and the organization's share of revenues and expenses. In Part III, line 12, check "Yes" if the joint venture was formed to administer charitable gaming.

    21. Schedule H. Hospitals. See Schedule H instructions to determine how to report an organization's share of a joint venture's activities and items for purposes of that schedule.

    22. Schedule I. Grants in the U.S. Include grants from a joint venture to organizations, governments, or individuals in the U.S. 23.

    23. Schedule J. Compensation. If an officer, director, trustee, or employee of the organization receives compensation from a joint venture, the compensation is not treated as paid pro rata by the organization. The compensation may need to be reported, however, as compensation from a related organization if the joint venture is a related organization.

    24. Schedule K, Part III, line 1. Private business use. Report certain joint ventures that owned property financed by tax-exempt bonds.

    25. Schedule L, Parts II-IV. Loans, grants, and business transactions involving interested persons. Report loans and grants made to an interested person by a joint venture. Also report certain joint ventures with interested persons.

    26. Schedule N, Part II. Disposition of 25% of assets. In determining whether the organization made a disposition of more than 25% of its assets, take into account its share of dispositions by a joint venture.

    27. Schedule R. Related organizations. Report relationships with certain joint ventures in Parts III and VI, and certain transactions with joint ventures in Part V.


Appendix G: 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 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 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 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 or Form 990, 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.
  • 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 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 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 inDonor 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 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 H: Forms and Publications To File or Use

Internet. You can access the IRS website 24 hours a day, 7 days a week, atwww.irs.govto:

  • 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.
  • 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.

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.

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:

Item

A Tax year (fiscal year or short period, if applicable)
B Applicable checkboxes
C Name, DBA, and address
D Employer identification number (EIN)
I Section 4947(a)(1) nonexempt charitable trust box

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.

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. Exempt 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.

I. 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.

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 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 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).

SPECIFIC INSTRUCTIONS

Completing the Heading of Form 990

Complete all of items A through M.

Item A. Accounting period. 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 D for additional information about accounting periods.

Item B. Checkboxes

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 Form 990-EZ.

If the organization 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 agreement signed by
                           the trustee.

 An unincorporated         Amendments to the articles of association,
 association               constitution, bylaws, or other organizing
                           document, with the signatures of at least
                           two officers/members.

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 section 4947(a)(1) trust. For example, an organization should check this box when it has ceased operations and dissolved or has had its exemption revoked by the IRS. 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. State in Schedule O which Parts and Schedules of the Form 990 were amended and describe the amendments. See General Instruction G, Amended Return/Final Return, 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 and any required schedules.

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, enter the alternate name in the "Doing Business As" (DBA) box. If multiple DBA names will not fit in the box, list one in the box and the others in Schedule O.

If the organization receives its mail in care of a third party (such as an accountant or an attorney), enter on the street address "C/O" followed by the third party's name and street address or P.O. Box.

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.

For foreign addresses, enter the information in the following order: city, province or state, and the name of the country. Follow the country's practice in placing the postal code in the address. Do not abbreviate the country name.

If a change in address occurs after the return is filed, use Form 8822 to notify the IRS of the new address.

Item D. Employer identification number (EIN). Use the EIN provided to the organization for filing its Form 990 and federal tax returns.

The organization must have only one EIN. If it has more than one and has not been advised which to use, notify the:


    Department of the Treasury
    Internal Revenue Service Center
    Ogden, UT 84201-0027
State what numbers the organization has, the name and address to which each EIN was assigned, and the address of the organization's principal office. The IRS will advise the organization which number to use.

TIP: A subordinate organization in a group exemption that is filing an individual Form 990 return must use its own EIN, not that of the central organization or of the group return.

TIP: A section 501(c)(9) voluntary employees' beneficiary 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.

Item F. Name and address of principal officer. The address provided must be a complete mailing address to enable the IRS to communicate with the officer if necessary. If the officer prefers to be contacted at the organization's address listed in item C, state "same as C above." For purposes of this item, "principal officer" means a person who, regardless of title, has ultimate responsibility for implementing the decisions of the organization's governing body, or for supervising the management, administration, or operation of the organization.

Item G. Gross receipts. Add lines 6b (both columns), 7b (both columns), 8b, 9b, 10b, and 12, Column A of Form 990, Part VIII, and enter the total here. See the exceptions from filing Form 990 based on gross receipts and total assets, as described in General Instruction A, Who Must File, General Instruction B, Organizations Not Required to File Form 990, Appendix B, How to Determine Whether an Organization's Gross Receipts Are Normally $25,000 (or $5,000) or Less, and Appendix C, Special Gross Receipts Tests to Determine Exempt Status of Section 501(c)(7) and Section 501(c)(15 Organizations.

Item H. Group returns. If the organization answers "Yes" to line H(a) but "No" to H(b), attach a list (not in Schedule O) showing the name, address, and EIN of each affiliated organization included in the group return. A central or subordinate organization filing an individual return should not attach such a list. Enter in line H(c) the four-digit group exemption number (GEN) if the organization is filing a group return, or if the organization is a central or subordinate organization in a group exemption and is filing a separate return. Do not confuse the four-digit GEN number with the nine-digit EIN number reported in item D of the form's heading. A central organization filing a group return must not report its own EIN in item D but the special EIN issued for use with the group return.

If attaching a list:

  • Show the form number ("Form 990") and tax year;
  • Show the organization's name and EIN;
  • Enter the four-digit group exemption number (GEN);
  • Use the same size paper as the form.

Item I. Tax-exempt status. If the organization is exempt under section 501(c), check the first box and insert the appropriate subsection number within the parentheses (for example, "3" for a 501(c)(3) organization).

Item J. Website. Enter the organization's website address. If the organization does not maintain a website, enter "N/A" (not applicable).

Item K. Type of organization. Check the box describing the organization's legal entity form or status under State law in its state of legal domicile. These include corporations, trusts, unincorporated associations, and other (e.g., partnerships and limited liability companies).

Item L. Year of formation. State the year in which the organization was legally created under State or foreign law (if a corporation, the year of incorporation).

Item M. State of legal domicile. For a corporation, enter the state of incorporation (country of incorporation for a foreign corporation formed outside the United States). For a trust or other entity, enter the State whose law governs the organization's internal affairs (the foreign country whose law governs for a foreign organization other than a corporation).

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