Wednesday, December 24, 2008
Also very helpful, the Service has posted a Filing Phase-In table. Many smaller organizations will not have to file the New 990, but rather may file the 990-EZ or even the 990-N, the "e-postcard" filing.
Thursday, December 18, 2008
Another notable gift to the exempt organization community, the IRS recently issued a notice(pdf) that it has amended the requirement that organizations adopt a written plan under 403(b) by January 1, 2008. The Service has stated that:
This notice provides considerable relief for organizations who faced being penalized, or their employees retirement benefits taxed, for failure to provide a written plan. The additional time should allow organizations to prepare and implement written 403(b) plans. The IRS will also be issuing model 403(b) plans in the coming year in order to assist organizations with compliance.
The IRS will treat these plans as meeting the requirements of 403(b) and the regulations during the 2009 calendar year if:
- By December 31, 2009, the plan sponsor of the plan has adopted a written 403(b) plan that is intended to satisfy the requirements of 403(b) and the regulations.
- During 2009, the plan sponsor operates the plan in accordance with a reasonable interpretation of 403(b) and the related regulations.
- By the end of 2009, the plan sponsor makes its best effort to retroactively correct any operational failure during the 2009 calendar year to conform to the written plan.
Monday, December 1, 2008
The IRS also published the Remarks of Steven Miller (pdf), Commissioner of Tax Exempt and Government Entities (TE/GE), made at the Western Conference of Tax Exempt Organizations in Los Angeles on November 20. Much of Commissioner Miller's discussion was focused on the New Form 990, which many exempt organizations will begin filing for the years 2008 and following. In particular, Commissioner Miller addressed the IRS's new emphasis on the governance of nonprofit organizations, which has not been an area the IRS has had much say over until recently. Mr. Miller concluded his remarks with these thoughts:
One may argue the states can address the issue of governance. Or that the sector can articulate and somehow ensure the application of principles of good governance and the adoption of best practices. It is clearly true that both the states and the sector can and must play important roles in promoting good governance. Indeed I think they have the principal role to play in keeping the tax exempt sector strong and healthy. Now more than ever you have an important opportunity to lead in discussions about the future of governance in your organization.
But the Internal Revenue Service has a robust role as well. I believe that the need for good governance, and its magnifying glass, transparency, has actually increased in the wake of the economic downturn. There are always a few who use the worst of times, and others’ desperate situations, to misuse exempt organizations and line their own pockets.
Thus, it is clear that the IRS has set its sights on this area and has no intention of backing away from it. Every exempt organization needs to begin a comprehensive review its structures, policies and procedures in order to begin working towards compliance in this area.
Lisa notes: Although the Form 990 appears to indicate a "right" and "wrong" answer, there is no one correct form of governance, nor is there a legal requirement that certain policies be in writing. Therefore, it is important for an organization to evaluate, with its legal counsel, whether any changes to either its structure or its operations are appropriate and, if so, what these changes should be, and how they should be implemented. Changes should NOT be made, simply so that the organization "fits" into what the IRS seems to imply is best. And, it cannot be emphasized enough, that IT IS BETTER NOT TO ADOPT A POLICY, THAN TO HAVE A POLICY THAT IS NOT FOLLOWED.