IRS Issues 990 Guidelines to Its Agents

It's time to start thinking about filing your organization's 990. As you undoubtedly know, the new form looks very different from that in years past. The IRS has been providing its agents with guidelines that will help them evaluate the completed forms they receive. We thought you might want a copy of those guidelines so that you can be sure you are meeting the agency's expectations.

Governance Project: Guide Sheet for Completing the Project Check Sheet

1. Enter the Agent’s name and group number.

2. Enter the name of the organization examined.

3. Enter the EIN of the organization examined.

4. Enter the tax period or periods examined.

5. Enter the Form being examined (Form 990, Form 990-EZ,or Form 990-N). If different Forms were filed, enter the Form filed for the primary year under
examination. If the organization was not required to file a Form 990, Form 990-EZ,or Form 990-N, select Not Applicable.

6. Enter the organization’s foundation code.

7. Select Yes or No depending on whether the organization has a written mission statement that reflects its current I.R.C. § 501(c)(3) purpose(s). If the organization does not have a written mission statement, answer No. Likewise, if the organization has a written mission statement but its current activities do not reflect that mission statement, answer No even if the organization is fulfilling other appropriate I.R.C. §501(c)(3) purposes.

8. For each item, select Yes – just officers, Yes – just directors, or Yes – both, as appropriate, based upon whether the organization’s bylaws address the listed
information with respect to those individuals. Select No if the bylaws do not address the listed information at all, or N/A – No Bylaws if the organization has no bylaws.

9. Select the appropriate box or boxes corresponding to those individuals or groups of individuals to whom the organization provides copies of its most recent articles and bylaws.

10. Enter the number of board members with voting rights as of the first date of the primary tax year under examination.

11. a. Select the appropriate response (Once per year, Twice per year, Quarterly, Once per month, Twice per month, or Other) depending on the number of times the board met during the primary year under examination.
b. Select the appropriate response (Once per year, Twice per year, Quarterly, Once per month, Twice per month, or Other) depending on the number of times the board met during the primary year under examination. The board includes members with voting rights as well as those without voting rights. For purposes of this question, the term full board does not require that all board members actually be present.

Example: If all board members were invited to attend a meeting and the board
actually met, then this would qualify as a meeting of the full board.

12. Select the appropriate response (Yes-met the requirements, Yes-exceeded the requirements, No-did not meet the requirements) depending on whether the number of meetings actually held by the board met or exceeded the meeting requirements as set forth in the bylaws.

For example, if the bylaws provided that the board would meet monthly (twelve times in a year) and the board only met ten times during the primary year under examination, then the response would be No. If the board does not have bylaws, the appropriate response is N/A – No bylaws.

13. Select Yes or No depending on whether compensation arrangements for all officers, directors, trustees, and key employees are approved in advance by an authorized body of the organization composed of individuals with no conflict of interest with respect to the compensation arrangement. If anyone with a conflict of interest with respect to a particular compensation arrangement participated in the approval of that particular compensation arrangement, the appropriate response is No. Select N/A – No Compensation Provided as appropriate. For purposes of this question, officers,directors, trustees, and key employees are the same as the definitions contained under I.R.C. § 4958.

14. a. Select Always, Sometimes, or Never depending on whether the organization’s authorized body relies upon comparability data in making compensation determinations. Select N/A – No Compensation Provided as appropriate.
b. If you responded Always or Sometimes to 14a, select the appropriate box or boxes corresponding to the comparability data considered by the organization in making its compensation determinations.
c. If the Other response is selected for 14b, please write in a brief description of the other comparability data referred to.

15. Select Yes or No depending on whether the organization contemporaneously documents the basis for its compensation determinations. For example, do the organization’s meeting minutes or other documents, created at the time compensation is approved, reflect the reasons underlying particular compensation determinations?Select N/A – No Compensation Provided as appropriate.

16. a. Select Yes or No depending on whether any of the organization’s voting board members have either a family or business relationship with any other voting or nonvoting board member, officer, director, trustee, or key employee. Family relationships include those of spouses, brothers or sisters, spouses of brothers or sisters, ancestors, children, grandchildren, great grandchildren, and spouses of children, grandchildren and great grandchildren. For purposes of this question, officers, directors, trustees, and key employees are the same as the definitions contained under I.R.C. § 4958.
b. If you responded Yes to question 16a, enter the number of such family or business relationships that exist.
c. If you responded Yes to question 16a, enter the number of voting members with family relationships, the number of voting members with business relationships, and the number of voting members with both types of relationships with any other voting or non-voting board member, officer, director, trustee, or key employee. The number of family, business, or both relationships should equal the number of relationships indicated in question 16b.

Example: An organization has a total of ten board members. Husband and Wife both serve on the board. Wife and another board member are the sole shareholders in a for-profit corporation. In addition, Wife and Husband are partners in a for-profit organization. For 16a, the answer would be yes. For 16b, the total number relationships would be two. For 16c, the answer would be one business relationship (the relationship between Wife and the other board member) and one for both (since Husband and Wife have both a family relationship and business relationship.

17. Select Yes or No depending on whether effective control of the organization rests with a single or select few individuals. For example, is there a single individual or small group of individuals to whom the board typically defers?

18. a. Enter Yes or No depending on whether the organization has a written conflict of interest policy.
b. If you responded Yes to question 18a, select Yes or No depending on whether the conflict of interest policy addresses recusals. If you responded No to 18a, select Not Applicable.
c. If you respond Yes to 18a, select Yes or No depending on whether the conflict of interest policy requires annual written disclosures of conflicts of interest. If you responded No to 18a, select Not Applicable.
d. Select Never adhered to, Sometimes adhered to, Always adhered to, or Not
Applicable depending on whether the organization’s conflict of interest policy was adhered to. For example, did those with a conflict of interest on a particular matter recuse themselves from the corresponding decision making process? If you responded No to 18a, select Not Applicable. If no actual or potential conflicts of interest were disclosed during the primary year under examination, select Not Applicable.

19. Select Yes or No depending on whether the organization has systems or procedures in place intended to ensure that assets are used properly and consistently with the organization’s mission.

20. a. Select Never, Once per year, Twice per year, Quarterly, Once per month, Twice per month, or Other depending on how often the organization provided board members with written reports of the organization’s financial activities. The board includes members with voting rights as well as those without voting rights.
b. Select Never, Once per year, Twice per year, Quarterly, Once per month, Twice per month, or Other depending on how often the board discussed/considered reports of the organization’s financial activities. For example, look at whether the organization maintained complete, current, and accurate financial records, and whether the board had and exercised the opportunity to discuss/consider those reports and records. The board includes members with voting rights as well as those without voting rights.

21. Select Yes or No based on whether, prior to filing, the organization’s Form 990 was reviewed by either the full board or a designated committee. Please note that the question addresses a review of the Form 990 prior to filing, not merely receipt of the Form 990 prior to filing. If the organization was not required to file a Form 990,Form 990-EZ, or Form 990-N then select Not Applicable.

22. a. Select Yes or No depending on whether an independent accountant’s report was prepared during the primary year under examination.
b. If you responded Yes to 22a, select Yes or No depending on whether the
accountant’s report was discussed/considered by either the full board or a designated committee. If you responded No to 22a, select Not Applicable.

23. a. Select Yes or No depending on whether a management letter was prepared by an independent accountant during the primary year under examination.
b. If you responded Yes to 23a, select Yes or No depending on whether the
management letter was reviewed by either the full board or a designated committee. If you responded No to 23a, select Not Applicable.
c. If you responded Yes to 23a, select the appropriate response (Yes - adopted some, Yes – adopted all, or No – adopted none) based on whether the organization adopted any of the recommendations contained in the management letter. If you responded No to 23a, select Not Applicable.

24. a. Select Yes or No depending on whether the organization has a written policy for document retention and destruction.
b. If you responded Yes to 24a, select the appropriate response (Yes – all of the
time, Yes – some of the time, or No – none of the time) depending on whether the organization adhered to its written document retention and destruction policies during the primary year under examination. If you responded No to 24a, select Not Applicable.

25. Select the appropriate response (Yes – all of the time, Yes – some of the time, or No – none of the time) depending on how often the board of the organization contemporaneously documents its meetings and retains this documentation.

26. Select the appropriate response depending on whether your examination was hindered by a lack of necessary documentation. Consider whether documents that should have been available were never produced, prematurely destroyed, or otherwise unaccounted for.

27. Select the examination disposal code for the primary return from the drop down menu.

28. Select the principal issue codes for the primary return from the drop down menus.