Final Regulations On The Redesigned Form 990 For Exempt Organizations

The IRS finalized regulations (T.D. 9549) implementing the redesigned Form 990, Return of Organization Exempt from Income Tax.  The final regulations largely adopt the temporary and proposed regulations with some modifications.  The final regulations make permanent new threshold amounts for reporting compensation, require that compensation be reported on a calendar-year basis and change rules requiring information reporting upon a substantial contraction, and eliminate the advance ruling process for public charity or private foundation status. 

Among the differences in the final regulations from the temporary and proposed regulations is a change to the public support test for a public charity.  An organization failing to meet the public support test for two consecutive years will be treated as a private foundation as of the beginning of the second year of such failure for purposes of section 507 (termination of private foundation status), section 4940 (excise tax on investment income) and section 6033 (organizations required to file).  These regulations are effective as of September 8, 2011 and apply to tax years starting January 1, 2008.