New 990 Longer Than Old 990
Stephanie Strom of the New York Times has a story today about what the IRS is calling "the biggest thing the tax-exempt division (the non-profit side) has done in the last quarter-century." The biggest thing? What could it be? Are they making it tougher to become a non-profit? Are they revoking the status of those that have abused the privilege? Are they mandating that the for-profits that are masquerading as non-profits now must pay taxes on their multi-million dollar revenues?
Nah, they're proposing changes to the 990, the informational tax return that all non-profits are forced to file. While the new form is actually pretty good, this is a sad indictment of our federal charity regulatory system, in that proposed wording changes to a tax document passes for the "biggest thing the agency has done in 25 years."
That being said, as I said before (and in the Times article), the proposed new form is progress, at least in its current form. (It's only a draft document, and it's fair to assume that after they get done listening to charities complain about the burdensome reporting requirements for the next year, the document will only get shorter. Ms. Strom of the Times told me yesterday that the largest group of people at the press conference for the announcement of the new form were attorneys for charities and their professional associations, presumably sharpening their razors and getting ready to carve the document back into a less onerous size).
But without regulatory enforcement on the back-end of this new document, for organizations that aren't playing by the rules, either in their actions or their reporting responsibilities, it's just another document. It means nothing without a fear of reprisal for the outlaws, and the IRS has no plans to expand their enforcement of non-profits, just what they ask of the groups under their purported jurisdiction. It's akin to making the application for admission to Harvard even longer, with more questions, but then letting everyone who completes the form, no matter what their answers are, be admitted to the school.
In the end, good charities will welcome the new form, and dutifully fill it out. Bad charities will ignore the new reporting requirements, or even worse, simply find that it takes a few more pages to acknowledge that they're violating the public trust, knowing that the IRS and Congress are virtually powerless to stop their shenanigans.
Nah, they're proposing changes to the 990, the informational tax return that all non-profits are forced to file. While the new form is actually pretty good, this is a sad indictment of our federal charity regulatory system, in that proposed wording changes to a tax document passes for the "biggest thing the agency has done in 25 years."
That being said, as I said before (and in the Times article), the proposed new form is progress, at least in its current form. (It's only a draft document, and it's fair to assume that after they get done listening to charities complain about the burdensome reporting requirements for the next year, the document will only get shorter. Ms. Strom of the Times told me yesterday that the largest group of people at the press conference for the announcement of the new form were attorneys for charities and their professional associations, presumably sharpening their razors and getting ready to carve the document back into a less onerous size).
But without regulatory enforcement on the back-end of this new document, for organizations that aren't playing by the rules, either in their actions or their reporting responsibilities, it's just another document. It means nothing without a fear of reprisal for the outlaws, and the IRS has no plans to expand their enforcement of non-profits, just what they ask of the groups under their purported jurisdiction. It's akin to making the application for admission to Harvard even longer, with more questions, but then letting everyone who completes the form, no matter what their answers are, be admitted to the school.
In the end, good charities will welcome the new form, and dutifully fill it out. Bad charities will ignore the new reporting requirements, or even worse, simply find that it takes a few more pages to acknowledge that they're violating the public trust, knowing that the IRS and Congress are virtually powerless to stop their shenanigans.
Labels: 990, IRS, New York Times, Stephanie Strom
posted by Trent Stamp at 8:01 AM
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