IRS advice can help as foundations near filing time

April 30, 2012 at 11:04 am Leave a comment

IRS Exempt Organization Director Lois Lerner  recently shared some advice and updates of interest to the foundation community as it nears (for many) a mid-May filing deadline.

First, she reminded those who complete the Form 990/990-PF to make sure that no Social Security numbers are included anywhere on the return. Not on any schedules. Not on any attachments that may be appended to the return. The IRS doesn’t ask for Social Security numbers on the 990 forms and its agents legally can’t redact any that appear. Ms. Lerner cited a recent Chronicle of Philanthropy article that reported nearly 20 percent of exempt organizations had submitted forms with one or more Social Security numbers of employees, donors and even scholarship winners. In this age of identity theft, Lerner urged nonprofits to carefully review the form to make sure it doesn’t include this private information.

Lerner also shared some of the findings about the relationship between governance practices and tax compliance – something that has been a major IRS focus over the last several years. The conclusions are based on statistical analysis of data from over 1,300 IRS nonprofit examinations. The analysis shows that compliant organizations are more likely to:

  • Have a written mission statement;
  • Always use comparability data when making compensation decisions;
  • Have procedures in place for the proper use of charitable assets; and
  • Have the entire board of directors review the Form 990.

While cautioning that the data are not statistically representative, Lerner commented that, “The results seem to me to be generally consistent with the premise that good governance and tax compliance go hand in hand.”

On a final note of her remarks, Ms. Lerner reminded nonprofits to make sure they file the correct form; apparently some large organizations have filed both the 990-N (the e-postcard form for small exempt organizations) and the 990 in the same year.

The IRS website has a wealth of information  to assist nonprofits in filing the required returns.


Entry filed under: Commentaries, Finance & Investments.

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