By Steve Brettholtz
steve.brettholtz@mbcopa.com
The new Form 990 has produced a lot of new filing requirements and therefore reporting errors. According to the IRS, at least 1% of all 990's filed electronically had numerous filing errors.
According to the IRS, the following were the most common reporting errors:
- Identifying the president as both an officer and a key employee (Part VII, Section A);
- Reporting only salaries as compensation expense (Part IX, Line 5);
- Improperly reporting compensation reported in a prior Form 990 (Schedule J, Part II);
- Failing to include the annual actuarial increase of defined benefit plans (Part VII and Schedule J);
- Reporting only unrestricted income;
- Reporting support payments to a related organization as "other expense";
- Misidentifying the proper interested person (Schedule L, Part IV); and
- Showing details of related transactions with a section 501 (c) (3).
While these were the most common according to the IRS, we have found that other areas where nonprofits have been remiss. These include but are not limited to governance, inside transaction issues, policies, mission, and program descriptions.
Certainly the more experience nonprofits have with the new form and with help and guidance from their tax professionals, many of these reporting errors will eventually become a non-issue.
