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Tuesday, May 29, 2012

Is the IRS making changes to the review process of the Form 990?

Posted by Armanino Nonprofit Team

At a recent nonprofit conference on April 19, Lois Lerner, Director of the exempt organization division of the IRS, commented by saying, “Organizations where the 990 was reviewed by the entire board of directors are more likely to be compliant. This is an important point and one I’d like to highlight. It indicates that having your entire board engaged in what is being reported on the 990 is not only helpful, but it correlates to better compliance.”

What does this mean for organizations?  Should the Form 990, in its entirety, be reviewed by the full board before filing?  Has the IRS changed its requirements for the review process of the Form 990 before filing?

Reviewing the 2011 Form 990 instructions, the IRS requires that a copy of the Form 990 be provided, whether in paper or electronic form, to each voting member of the governing body before filing.

At this point, organizations are not required to have the entire board review the Form 990 but many question whether Lois Lerner’s comments will have the IRS move towards having the Form 990 reviewed by the entire governing body before filing. This could call for additional time for the board to review or hold special board meetings before the organization is able to file its Form 990.

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