Academic journal article Journal of Accountancy

Common Reporting Errors on Form 990

Academic journal article Journal of Accountancy

Common Reporting Errors on Form 990

Article excerpt

The redesigned Form 990, Return of Organization Exempt From Income Tax, has been the subject of much discussion since the IRS released it in 2007. As the exempt sector and practitioners have been adjusting to the new filing requirements, areas of confusion have been identified. Earlier this year, an IRS official reported filing errors in approximately 1% of redesigned Forms 990 filed electronically during 2010. Common errors include failure to file Schedule O, Supplemental Information to Form 990 or 990-EZ, and failure to complete required lobbying details when a section 501(h) election has been made.

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The comprehensive nature of the types of compensation required to be reported, the complicated and unique nature of many compensation packages, and the common practice of sharing employees among affiliated organizations generate numerous questions regarding who must be listed and on which organization's Form 990, what compensation must be reported, and when and where such compensation is to be reported.

EIGHT COMMON REPORTING ISSUES

Common errors identified on the redesigned Form 990 include:

1. Identifying the president as both an officer and a key employee (Part VII, Section A);

2. Reporting only salaries as compensation expense (Part IX, Line 5);

3. Improperly reporting compensation reported in a prior Form 990 (Schedule J, Part II);

4. Failing to include the annual actuarial increase of defined benefit plans (Part VII and Schedule J);

5. Reporting only unrestricted income;

6. …

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