AICPA Recommends Changes to IRS Form 990

By Christina Camara

The American Institute of CPAs (AICPA) believes the IRS should change Form 990, which is used by tax-exempt organizations to report financial information every year.
 
Form 990, Return of Organization Exempt from Income Tax, was rewritten in 2008, and some observers say the once-straightforward form has become more complex.
 
The AICPA believes the IRS should make it a requirement to report income from partnership interests using information from Form 1065, Schedule K-1. It is now optional under Announcement 2012-19. The AICPA says that a number of organizations, especially those with large endowments, have partnership investments that are recorded on a "mark-to-market" basis.
 
The recommendation letter to IRS stated, "Requiring the use of Schedule K-1 information for Form 990 reporting would generate significant differences between the organization's books and Form 990. This, in turn, would create significant reconciling items on the Form 990 in order to properly report net asset figures that are consistent with the organization's books and records."
 
On August 16, the AICPA submitted seventeen changes it recommends the IRS make to Form 990. 
 
Among those seventeen, the AICPA believes the IRS needs to:
  • Clarify the definition of audited financial statements in the form instructions.
  • Change wording on questions relating to policies.
  • Clarify the instructions by referencing Department of Treasury regulations on earmarked grants. In cases where one domestic public charity makes grants to another for use abroad, clearer guidance is needed.
  • Add a checkbox to one section of the form to avoid duplication of answers.
 
These high-priority recommendations, along with additional medium- or low-priority items, were made by the AICPA Exempt Organizations Taxation Technical Resource Panel. 
 
Related articles:

You may like these other stories...

School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...
Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.