AICPA Urges Changes to IRS Form 990 and Related Instructions

July 21, 2016

More than 20 recommended changes to Form 990, Return of Organization Exempt from Income Tax, and its related instructions for 2016 have been submitted to the Internal Revenue Service (IRS) by the American Institute of CPAs (AICPA).

In its June 30 letter, the AICPA indicated the importance and urgency of each of its recommendations.  Eight of the 21 recommendations were ranked “high” for both importance and urgency.  They include:

  • In the instructions, change the definition of “reasonable efforts” so that it aligns with changes made in Schedule L in 2014;

  • On Parts IV and X of Form 990, update the trigger questions so that the definition of “interested persons” aligns with the definition on the Schedule L instructions so that Form 990 filers are sure to understand that a Schedule L disclosure is necessary;

  • On Sections A and B, Part VII of Form 990, adjust the instructions to indicate that payments received from the filing organization, reported on Form 1099-MISC, box 6, are also reportable compensation; and

  • On Line 1, Part VIII of Form 990 clarify the definition of “contributions” so it’s understood that contributions include unrestricted, temporarily restricted and permanently restricted contributions received during the tax year.