TaxNewsFlash-Exempt Organizations

August 6, 2008
No. 2008-71

PRINTABLE VERSION

IRS Revises 2008 Form 990 Instructions

The IRS recently announced that it has completed its review of the public comments on the draft instructions for the 2008 Form 990, and discussed changes made to the instructions in response to public comments. These changes include the following:

A revised definition of “key employee” to include only those persons, other than officers, directors, and trustees, who

Had reportable compensation exceeding $150,000 for the year (the $150,000 test)

Had or shared organization-wide control or influence similar to that of an officer, director, or trustee, or managed or had authority or control over at least 10% of the organization’s activities (the responsibility test)

Were within that group of the organization’s top 20 highest paid persons for the year who satisfied both the $150,000 test and the responsibility test

A list of foreign countries within each of nine geographic regions to be used for reporting foreign activities on the Form 990, Schedule F, Statement of Activities Outside the United States.

Specific items for which the reporting organization may rely on “reasonable efforts” to obtain information required from interested persons or third parties.

A revised standard for determining independence of a voting member of the organization’s governing body, which replaces the previous “material financial benefit” test by looking to whether the member or a family member was involved in a transaction or relationship that was reportable on the current year’s Schedule L, Transactions with Interested Persons.

For Schedule H, Hospitals, a revised definition of "facility" for purposes of completing Part V, Facility Information. Organizations completing Schedule H will be required to list in Part V each hospital or other facility that is licensed, registered, or similarly recognized by a state as a “health care facility” including facilities other than licensed hospitals. This does not alter the definition of "hospital" for purposes of determining whether the organization must complete Schedule H. The revised Schedule H instructions will also clarify that physician clinics and skilled nursing facilities will be eligible for treatment as a subsidized health service in accordance with the generally applicable rules regarding subsidized health services.

For Schedule K, Supplemental Information for Tax-Exempt Bonds, the revised instructions will provide relief for refunding bonds issued after 2002 to refund pre-2003 bonds, by exempting such refunding bonds from having to be reported in Part III, Private Business Use. This change does not alter the transition relief for Schedule K, which requires completion of only Part I, Bond Issues, for 2008 tax years (2009 filing season).

The IRS anticipates the complete revised set of draft instructions for the core form and all schedules will be posted on the IRS Web site by August 15, 2008.

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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