The document summarizes IRS filing requirements for Form 990, 990-EZ, and 990-N for tax-exempt organizations based on annual gross receipts and total assets. It provides guidance on reporting compensation, functional expenses, fundraising activities, unrelated business income, and other requirements. Requirements vary depending on the tax year and level of annual receipts and assets. Failure to properly file can result in penalties.

1. 990 – THE LEARNING
CURVE
Sunny Wong, Partner
January 22, 2010

2. Filing Requirements
2007 Tax Year (Filed in 2008 or 2009)
Gross receipts normally ≤ $25,000
File 990-N
Gross receipts > $25,000 and < $100,000, and
Total assets < $250,000
File 990-EZ or 990
Gross receipts ≥ $100,000, or
Total assets ≥ $250,000
File 990

3. Filing Requirements - continued
2008 Tax Year (Filed in 2009 or 2010)
Gross receipts normally ≤ $25,000
File 990-N
Gross receipts > $25,000 and < $ 1 million, and
Total assets < $2.5 million
File 990-EZ or 990
Gross receipts ≥ $1 million, or
Total assets ≥ $2.5 million
File 990

4. Filing Requirements - continued
2009 Tax Year (Filed in 2010 or 2011)
Gross receipts normally ≤ $25,000
File 990-N
Gross receipts > $25,000 and < $500,000, and
Total assets < $1.25 million
File 990-EZ or 990
Gross receipts ≥ $500,000, or
Total assets ≥ $1.25 million
File 990

5. Filing Requirements - continued
2010 Tax Year and later (Filed in 2011 and later)
Gross receipts normally ≤$50,000
File 990-N
Gross receipts > $50,000 and < $200,000, and
Total assets < $500,000
File 990-EZ or 990
Gross receipts ≥ $200,000, or
Total assets ≥ $500,000
File 990

6. Failure to File Penalty
If annual gross receipts below $1 million
$20 per day up to $10,000 or 5% of gross receipts
If annual gross receipts $1 million or more
$100 per day up to $50,000
No penalty is imposed if reasonable cause can be
shown

7. Section 4958 Penalties
Penalty can be imposed on excess benefit
transactions with disqualified persons and private
inurement within tax-exempt organizations
Penalty amounts:
Tier 1 (individual benefitted) – 25 % of EB
Tier 2 (entity managers) – 10% up to $20,000; 200% of EB
if not corrected within a year

8. 990 EZ – How EZ Is It?
Regardless of gross revenue amount, 990 or 990-
EZ must be filed if the Entity is a sponsoring
organization of “Donor Advised Funds” or controlling
organization of one or more controlled entities
If yes answered on Part IV of 990, may be required
to attach corresponding schedules to 990 EZ
Applicable schedules
A, B, C, E, G, L and/or N

9. 990 EZ – How EZ Is It? – continued
509 (a)(3) supporting organizations must file 990 or
990 EZ even if gross receipts are below $25K
Examples
University endowment funds and organizations that provide
essential services for hospital systems, and/or education
foundation for school districts
A California Charity must file 990 with the Attorney
General even if it is below $25K threshold under
certain circumstances

10. Compensation of Officers
Part VII of core form
Section A - Must list the following officers, directors,
trustees, and employees whose reportable compensation
from the Organization and related organizations exceeded
the following:
Current officers, directors, and trustees regardless of amount
of compensation
Current key employees whose reportable compensation was
$150K or more
Current five highest compensated employees other than those
above, whose reportable compensation was $100K or more
Former officers, key employees, and highest compensated
employees with $100K or more compensation
Former directors and trustees with $10K or more
compensation
* Reportable compensation is generally amount reported on Form W-2, box 5, and form 1099-MISC, box 7.
* For the purpose of determining “former”, use five year look back period.

11. Compensation of Officers - continued
Current vs. Former
A “Current” officer, director, or trustee is a person that was
an officer, director, or trustee at any time during the
Organization’s tax year
A “Current” key employee or highest compensated
employee is a person who was a key employee or highest
compensated employee for the calendar year ending with
or within the Organization’s tax year
Examples:
ED whose compensation shown on 2008 W-2, box 5, was 160K.
She resigned effective 5/31/2009. The Organization’s tax year
ended 6/30/2009. ED should be classified as “current” key
employee on 990 for the year ending 6/30/2009.
For the same Organization, a director, who resigned as of
6/30/2008, received $10,500 for consulting services rendered on
12/31/09. He should be classified as a “former” director who
exceeded $10,000 threshold.

12. Compensation of Officers - continued
Payments from related organizations for the purpose
of Part VII, Columns (D) & (E):
There are few exceptions to reporting requirement
Reasonable effort to obtain and report compensation from
a related organization to a person listed should be made
If information could not be obtained, report the efforts
undertaken on Schedule O

13. Compensation Information
Schedule J of 990 is required if Part VII, section A is
filled out
Schedule J requires further breakdown of
compensation reported on Part VII as well as
disclosure of nontaxable benefits even ones not
normally shown on W-2s, such as health insurance
benefits.

14. Compensation Information - continued
Reasonable Compensation Policy
Policy should include all top management officials
Use the following to establish compensation:
Compensation Committee
Independent Compensation Consultant
Form 990 of other organizations
Written employment contract
Compensation survey or study
Approval by the board or compensation committee

15. Expense Reimbursement Policy
Need a written policy specifically addressing the
following if applicable:
First-class or charter travel
Housing allowance or residence for personal use
Travel for companions
Payments for business use of personal residence
Tax indemnification and gross-up payments
Health or social club dues or initiation fees
Discretionary spending account
Personal services (e.g., made, chauffeur, chef)

16. Charitable Contributions
Issue an acknowledgement if $250 or more
In writing
Be contemporaneous
State the amount of cash received
State any goods or services given in return
Describe goods or services received

17. Noncash Contributions
Must file Schedule M if reported $25,000 or more
noncash contributions
Noncash donations should be recorded at the time
of receipt at FMV, using the following methods:
Comparable sales
Replacement costs
Opinion of experts
Resale value/annual sale revenue
Gain/loss is recognized when disposed

18. Noncash Contributions - continued
Thrift Shop/auction items:
No need to recognize or record revenue at the time of
receipt for bulk donations of clothing, household goods,
and other similar items intended for resale
Donations of services or the use of facilities are not
reported

19. Noncash Contribution - continued
Noncash donation of $5,000 or more must be
acknowledged on the Form 8283
If the item reported on 8283 is sold within 3 years of
receiving it, the Form 8282 should be filed and given
to donor if proceeds exceed $500
Include review of non-standard gifts in the gift
acceptance policy
Non-standard gift:
Not reasonably expected to be used to satisfy or further
the Organization’s exempt purpose
There is no ready market to sell
Difficult to ascertain the value

20. Functional Expenses
Part IX of Core Form
Program Service - Activities that further the Entity’s exempt
purposes
Management & General - Expenses related to the Entity’s
overall operations and management.
Fundraising - Expenses incurred in soliciting contributions,
gifts and grants.
Allocate directly if possible

21. Functional Expenses - continued
New line items added:
Under fees for service, management, lobbying &
investment management fees
Advertising and promotion
Office expense
Information technology
Royalties
Payments of travel or entertainment for any federal, state,
or local public officials
Payments to affiliates
Insurance

22. Functional Expenses - continued
Line items removed:
Supplies
Telephone
Postage and shipping
Equipment rental and maintenance
Printing and publication
Unlimited list of other expenses
Expenses grouped and labeled as Misc. can’t
exceed 5% of total expenses

23. Functional Expenses - continued
Office Expense includes: supplies, telephone,
postage, equipment rental, bank fees and general
printing costs.
Occupancy costs include: rent, heat, light, power,
property insurance, real estate taxes, mortgage
interest.

24. Fundraising or Gaming Activities
Schedule G is required when the Entity reported
more than $15,000 on the following:
- Professional Fundraising Services
- Gross revenue from fundraising events
- Gross revenue from gambling activities
Report only events that generated gross receipts of
$5,000 or more. Only the two largest ones are
reported in separate columns.

25. Fundraising or Gaming Activities
- continued
Gaming includes:
Bingo
Pull tabs,
Reverse draws
Raffles
All direct expenses related to fundraising events and
gaming activities must be reported separately and
not included in fundraising expenses column of
functional expenses section.
Must have gaming license from applicable states

26. Unrelated Business Income
Form 990-T is required to be filed if $1,000 or more
of gross income comes from unrelated business
Due the 15th day of the 5th month after year end
Net UBI is subject to corporate tax rates as well as
estimated tax rules

27. UBI and FIN 48
The Entity must provide the text of the footnote to its
financial statements, if applicable, regarding the
Entity’s liability for uncertain tax positions under FIN
48 on Schedule D.
Liabilities accrued as a result of application of FIN
48 could involve UBI or tax that may be assess as a
result of the revocation of exempt status.