Department of the Treasury 2005 Internal Revenue Service

Instructions for Form 990

and Form 990-EZ

Return of Organization Exempt From Income Tax and

Short Form Return of Organization Exempt From Income Tax

Under Section 501(c), 527, or 4947(a)(1) of the Internal Revenue Code

(except black lung benefit trust or private foundation)

Caution: Form 990-EZ is for use by organizations with gross receipts of less than $100,000 and

total assets of less than $250,000 at the end of the year.

Section references are to the Internal Revenue Code unless otherwise noted.

whether organizations have offices in foreign Contents Page Contents Page countries and if so, to list the countries where

the offices are located. • What’s New ............... 1 R Group Return . . . . . . . . . . . . . . 14

• Purpose of Form ............ 1 S Organizations in Foreign Purpose of Form Countries and U.S. Possessions 14 • Phone Help ................ 1 Form 990 and Form 990-EZ are used by

tax-exempt organizations, nonexempt T Public Interest Law Firms . . . . . . 14 • Email Subscriptions .......... 1 charitable trusts, and section 527 political

U Political Organizations . . . . . . . . 14 organizations to provide the IRS with the • Photographs of Missing Children 2 information required by section 6033. V Information Regarding Transfers • General Instructions .......... 2 An organization’s completed Form 990, or Associated With Personal Benefit Form 990-EZ, is available for public inspection A Who Must File .............. 2 Contracts . . . . . . . . . . . . . . . . . 14 as required by section 6104. Schedule B (Form

B Organizations Not Required To W Requirements for a Properly 990, 990-EZ, or 990-PF), Schedule of

Contributors, is open for public inspection for File ...................... 2 Completed Form 990 or Form section 527 organizations filing Form 990 or

C Exempt Organization Reference 990-EZ . . . . . . . . . . . . . . . . . . . 15 Form 990-EZ. For other organizations that file

Form 990 or Form 990-EZ, parts of Schedule B Chart .................... 3 • Specific Instructions for Form 990 may be open to public inspection. See the

D and Table of Contents for These Instructions for Schedule B for more details. Forms and Publications To File or Specific Instructions . . . . . . . . . . 17 Use . . . . . . . . . . . . . . . . . . . . . 3 Some members of the public rely on Form

• Specific Instructions for Form 990, or Form 990-EZ, as the primary or sole E Use of Form 990, or Form 990-EZ and Table of Contents for source of information about a particular 990-EZ, To Satisfy State organization. How the public perceives an These Specific Instructions . . . . . 37 Reporting Requirements ...... 4 organization in such cases may be determined

• Index . . . . . . . . . . . . . . . . . . . . 46 by the information presented on its return. F Other Forms as Partial Substitutes Therefore, the return must be complete, for Form 990 or Form 990-EZ . . . 5 accurate, and fully describe the organization’s

programs and accomplishments. G Accounting Periods and Methods 5

What’s New Use Form 990 or Form 990-EZ, to send a H When and Where To File ...... 6 required election to the IRS, such as the Several changes were made to Form 990 and election to capitalize costs under section 266. Form 990-EZ for 2005. These changes include: I Extension of Time To File ...... 6 • New checkboxes for foreign grants in Part J Amended Return/Final Return . . 6 III-Statement of Program Service

Accomplishments for Forms 990 and 990-EZ. K Penalties ................. 6 • The previous Part V of Form 990 is now Part Phone Help

V-A. Three new questions were added If you have questions and/or need help L Contributions ............... 7 concerning relationships with other entities and completing Form 990, or Form 990-EZ, please

M Public Inspection of Returns, etc. 8 control of the organization. call 1-877-829-5500. This toll-free telephone

• New Part V-B has been added to Form 990. service is available Monday through Friday.

N Disclosures Regarding Certain It requests information about compensation or

Information and Services other benefits that former officers, directors,

Furnished . . . . . . . . . . . . . . . . . 11 trustees, and key employees received from the

organization. Email Subscription

O Disclosures Regarding Certain • New line 91b has been added to Form 990 The IRS has established a new

Transactions and Relationships 11 (line 42b on Form 990-EZ). These lines ask subscription-based email service for tax

whether the organization had an interest in or professionals and representatives of P Intermediate Sanction signature authority over any foreign financial tax-exempt organizations. Subscribers will

Regulations—Excess Benefit accounts, and if so, to list the countries where receive periodic updates from the IRS

Transactions . . . . . . . . . . . . . . . 11 the accounts are located. regarding exempt organization tax law and

• New line 91c has been added to Form 990 regulations, available services, and other

Q Erroneous Backup Withholding . . 14 (line 42c on Form 990-EZ). These lines ask information. To subscribe, visit www.irs.gov/eo.

Cat. No. 22386X
Corporation Income Tax Return, as exceptions to filing Form 1041, U.S. Income

appropriate. Tax Return for Estates and Trusts. Photographs of Missing Any section 501(c)(15) mutual insurance If an Organization’s Exemption Children company that does not meet the above test Application is Pending must meet an alternate test requiring both (1) The Internal Revenue Service is a proud If the organization’s application for exemption gross receipts that are equal to or less than partner with the National Center for Missing is pending, check the Application pending box $150,000, and (2) premiums that equal more and Exploited Children. Photographs of in the heading of the return and complete the than 35% of total gross receipts. If the mutual missing children selected by the Center may return. insurance company does not meet either test, appear in instructions on pages that would

otherwise be blank. You can help bring these then it must file Form 1120-PC or Form 1120 (if Organizations That Filed a Return in the organization is not entitled to insurance children home by looking at the photographs the Prior Year But Are Not Required To reserves) instead of Form 990, as appropriate. and calling 1-800-THE-LOST (1-800-843-5678) File in The Current Year

if you recognize a child. The alternate test does not apply if any Organizations that previously filed Form 990 or employee of the mutual insurance Form 990-EZ and meet exemption 15 under company or a member of the General Instruction B do not have to file a CAUTION

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employee’s family is an employee of another General Instructions return even if they received a Form 990

The General Instructions company that is exempt under section Package. apply to both Form 501(c)(15)(or would be exempt if this provision 990 and Form 990-EZ. See also the Specific Exempt organizations that filed Form 990, did not apply). Instructions for each of these forms. or Form 990-EZ, but are no longer required to The anti-abuse rule found in section file because they meet a specific exemption 501(c)(15)(C), explains how gross receipts (other than exemption 15 in General Instruction A. Who Must File (including premiums) from all members of a B) should advise their IRS area office so their

controlled group are aggregated in calculating filing status can be updated. Filing Tests the above tests. Exempt organizations that are not sure of If the organization does not meet any of the Premiums consist of all amounts received their area office may call the IRS at the Phone exceptions listed in General Instruction B, and as a result of entering into an insurance Help line, 1-877-829-5500. Exempt its annual gross receipts are normally more contract. organizations that stop filing Form 990, or than $25,000, it must file Form 990 or Form For information about the reporting of Form 990-EZ, without notifying their area office 990-EZ. See the gross receipts discussion in premiums, see instructions for Part I, line 2 and may receive service center correspondence General Instruction B. Part VII, Lines 93(a) through (g). inquiring about their returns. When responding If the organization’s gross receipts during to these inquiries, these organizations should Political Organizations the year are less than $100,000 and its total give the specific reason for not filing. assets at the end of the year are less than Tax-exempt political organizations must file

$250,000, it may file Form 990-EZ instead of Form 990 or Form 990-EZ (if applicable) Failure to File and Its Effect on

Form 990. Even if the organization meets this unless the organization is excepted from filing Contributions

test, it can still file Form 990. under exemption 14 or 15 of General Organizations that are eligible to receive tax

Organizations required to file Schedule A Instruction B. A qualified state or local political deductible contributions are listed in

organization (defined below) must file Form Publication 78, Cumulative List of (Form 990 or 990-EZ), Organization Exempt

Under Section 501(c)(3), that do not meet the 990 (not Form 990-EZ) only if it has gross Organizations described in Section 170(c) of receipts of $100,000 or more. support tests discussed in the instructions for the Internal Revenue Code of 1986. An

Part IV of that schedule should contact the IRS Qualified state or local political organization may be removed from this listing if

at the following address to re-evaluate their organizations. This is a political organization our records show that it is required to file Form

determination-of-filing requirements. that meets all of the following requirements. 990, or Form 990-EZ, but it does not file a

1. The organization’s exempt functions are return or advise us that it is no longer required

Internal Revenue Service solely for the purpose of influencing or to file. However, contributions to such an

TE/GE EO Determinations attempting to influence the selection, organization may continue to be deductible by

P.O. Box 2508 nomination, election, or appointment of any the general public until the IRS publishes a

Cincinnati, OH 45201 individual to any state or local public office or notice to the contrary in the Internal Revenue

office in a state or local political organization. Bulletin. Section 501(a), (e), (f), (k), and (n) 2. The organization is subject to state law Organizations that requires it to report the information that is Except for those types of organizations listed in B. Organizations Not Required To similar to that required on Form 8872. General Instruction B, an annual return on 3. The organization files the required File

Form 990, or Form 990-EZ, is required from reports with the state. every organization exempt from tax under 4. The state makes such reports public Organizations not required to file Form

section 501(a), including foreign organizations and the organization makes them open to 990, or Form 990-EZ with the IRS may

and cooperative service organizations public inspection in the same manner that wish to use it to satisfy state reporting

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described in sections 501(e) and (f); child care organizations must make Form 8872 available requirements. For details, see General

organizations described in section 501(k); and Instruction E. for public inspection. charitable risk pools described in section The following types of organizations exempt 501(n). For additional information, including the from tax under section 501(a) (section 527 for prohibition of involvement in the organization of Section 501(c)(3), 501(e), (f), (k), and (n) political organizations) do not have to file Form a federal candidate or office holder, see organizations must also attach a completed 990, or Form 990-EZ, with the IRS. However, if section 527(e)(5). Schedule A (Form 990 or 990-EZ) to their the organization chooses to file a Form 990 or

Form 990 or Form 990-EZ. Disregarded Entities Form 990-EZ, it must also attach the schedules

and statements described in the instructions for For purposes of these instructions, the A disregarded entity, as described in these forms. term section 501(c)(3) includes Regulations sections 301.7701-1 through

organizations exempt under sections 301.7701-3, is treated as a branch or division 1. A church, an interchurch organization of

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501(e), (f), (k), and (n). of its parent organization for federal tax local units of a church, a convention or

purposes. Therefore, financial and other association of churches, an integrated auxiliary Section 501(c)(15) Organizations information applicable to a disregarded entity of a church (such as a men’s or women’s

Section 501(c)(15) organizations that normally organization, religious school, mission society, must be reported as the parent organization’s have gross receipts of more than $25,000 for or youth group). information.

the tax year must file Form 990, or Form 2. Church-affiliated organizations that are Section 4947(a)(1) Nonexempt 990-EZ (if applicable). However, any section exclusively engaged in managing funds or

501(c)(15) insurance company (other than life maintaining retirement programs and are Charitable Trusts

insurance) that does not have both (1) gross Any nonexempt charitable trust (described in described in Rev. Proc. 96-10, 1996-1

receipts equal to or less than $600,000, and (2) section 4947(a)(1)) not treated as a private C.B. 577.

premiums that equal more than 50% of total foundation is also required to file Form 990, or 3. A school below college level affiliated

gross receipts must file Form 1120-PC, U.S. Form 990-EZ, along with a completed with a church or operated by a religious order.

Property and Casualty Insurance Company Schedule A (Form 990 or 990-EZ). See the 4. A mission society sponsored by, or

Income Tax Return, or Form 1120, U.S. discussion in General Instruction D for affiliated with, one or more churches or church

-2- General Instructions for Form 990 and Form 990-EZ
denominations, if more than half of the 990-EZ. M added back the costs and expenses Employee Funded Pension Trusts society’s activities are conducted in, or directed it had deducted on lines 5b ($2,000); 6b (created before 6/25/59) ......... 501(c)(18) at, persons in foreign countries. ($1,500); and 7b ($500) to its total revenue of

5. An exclusively religious activity of any $50,000 and determined that its gross receipts Organizations of Past or Present 501(c)(19)

religious order. for the tax year were $54,000. Members of the Armed Forces . . . . . & (23)

6. A state institution whose income is b. Gross receipts when acting as agent. Black Lung Benefit Trusts .......... 501(c)(21) excluded from gross income under If a local chapter of a section 501(c)(8) section 115. Withdrawal Liability Payment Funds . . . 501(c)(22) fraternal organization collects insurance 7. An organization described in section premiums for its parent lodge and merely Title Holding Corporations or Trusts . . . 501(c)(25) 501(c)(1). Section 501(c)(1) organizations are sends those premiums to the parent without corporations organized under an Act of asserting any right to use the funds or State-Sponsored Organizations

Congress that are: otherwise deriving any benefit from collecting Providing Health Coverage for

• Instrumentalities of the United States, them, the local chapter should not include the High-Risk Individuals ........... 501(c)(26)

and premiums in its gross receipts. The parent State-Sponsored Workmen’s • Exempt from federal income taxes. lodge should report them instead. The same Compensation and Insurance and 8. A private foundation exempt under treatment applies in other situations in which Reinsurance Organizations ....... 501(c)(27) section 501(c)(3) and described in section one organization collects funds merely as an 509(a). Use Form 990-PF, Return of Private agent for another. Religious and Apostolic Associations . . 501(d)

Foundation. c. $25,000 gross receipts test. An Cooperative Hospital Service 9. A black lung benefit trust described in organization’s gross receipts are considered Organizations ................ 501(e) section 501(c)(21). Use Form 990-BL, normally to be $25,000 or less if the Information and Initial Excise Tax Return for Cooperative Service Organizations of organization is: Black Lung Benefit Trusts and Certain Related Operating Educational Organizations 501(f) i. Up to a year old and has received, or Persons. donors have pledged to give, $37,500 or less Child Care Organizations .......... 501(k) 10. A stock bonus, pension, or profit-sharing during its first tax year; trust that qualifies under section 401. Use Charitable Risk Pools ............ 501(n)

Form 5500, Annual Return/Report of Employee ii. Between 1 and 3 years old and

averaged $30,000 or less in gross receipts Political Organizations . . . . . . . . . . . . 527 Benefit Plan.

11. A religious or apostolic organization during each of its first 2 tax years; or

described in section 501(d). Use Form 1065, iii. Three (3) years old or more and

U.S. Return of Partnership Income. averaged $25,000 or less in gross receipts for D. Forms and Publications

12. A foreign organization whose annual the immediately preceding 3 tax years To File or Use

gross receipts from sources within the U.S. are (including the year for which the return would

normally $25,000 or less (Rev. Proc. 94-17, be filed). Internet. You can access the IRS

1994-1 C.B. 579). See the $25,000 gross website 24 hours a day, 7 days a week, receipts test in 15c. at www.irs.gov to:

13. A governmental unit or affiliate of a C. Exempt Organization • Download forms, instructions, and governmental unit described in Rev. Proc. publications. 95-48, 1995-2 C.B. 418. Reference Chart • Order IRS products online. 14. A political organization that is: • Research your tax questions online. • A state or local committee of a political To determine how the instructions for • Search publications online by topic or party; Form 990 and Form 990-EZ apply to keyword. • A political committee of a state or local you, you must know the Code section

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• View Internal Revenue Bulletins (IRBs) candidate; under which you are exempt. published in the last few years. • A caucus or association of state or local

Type of I.R.C. • Sign up to receive local and national tax officials;

Organization Section news by email. • An authorized committee (as defined in

section 301(6) of the Federal Election Corporations Organized Under Act of CD-ROM for tax products. You can Campaign Act of 1971) of a candidate for Congress ................... 501(c)(1) order Publication 1796, IRS Tax federal office; Products CD, and obtain: • A national committee (as defined in Title Holding Corporations ......... 501(c)(2)

section 301(14) of the Federal Election • A CD that is released twice so you have the Charitable, Religious, Educational, Campaign Act of 1971) of a political party; latest products. The first release ships in late Scientific, etc., Organizations ...... 501(c)(3) • A United States House of December and the final release ships in late

Representatives or United States Senate Civic Leagues and Social Welfare February.

campaign committee of a political party Organizations ................ 501(c)(4) • Current-year forms, instructions, and

committee; publications. Labor, Agricultural, and Horticultural • Required to report under the Federal • Prior-year forms, instructions, and Organizations ................ 501(c)(5) Election Campaign Act of 1971 as a political publications.

committee (as defined in section 301(4) of Business Leagues, etc. ........... 501(c)(6) • Tax Map: an electronic research tool and

such Act); or finding aid. Social and Recreation Clubs ........ 501(c)(7) • An organization described under section • Tax law frequently asked questions (FAQs).

6033(g)(3)(G). Fraternal Beneficiary and Domestic 501(c)(8) • Tax Topics from the IRS telephone response

15. An organization whose annual gross Fraternal Societies and Associations & (10) system.

receipts are normally $25,000 or less. • Fill-in, print, and save features for most tax Voluntary Employees’ Beneficiary forms. a. Calculating gross receipts. The Associations ................. 501(c)(9) • Internal Revenue Bulletins. organization’s gross receipts are the total Teachers’ Retirement Fund Associations 501(c)(11) • Toll-free and email technical support. amount it received from all sources during its

annual accounting period, without subtracting Benevolent Life Insurance Associations, Buy the CD-ROM from National Technical

any costs or expenses. Mutual Ditch or Irrigation Companies, Information Service (NTIS) at www.irs.gov/

Mutual or Cooperative Telephone cdorders for $25 (no handling fee) or call i. Form 990. Gross receipts are the sum

of lines 1d, 2, 3, 4, 5, 6a, 7, 8a (both columns), Companies, etc. .............. 501(c)(12) 1-877-233-6767 toll free to buy the CD-ROM

9a, 10a, and 11 of Part I. Gross receipts can for $25 (plus a $5 handling fee). Cemetery Companies ............ 501(c)(13) also be calculated by adding back the amounts By phone and in person. You can order

on lines 6b, 8b (both columns), 9b, and 10b to State Chartered Credit Unions, Mutual forms and publications by calling the total revenue reported on line 12. Reserve Funds ............... 501(c)(14) 1-800-TAX-FORM (1-800-829-3676). You can ii. Form 990-EZ. Gross receipts are the also get most forms and publications at your Insurance Companies or Associations sum of lines 1, 2, 3, 4, 5a, 6a, 7a, and 8 of Part Other Than Life local IRS office. ............... 501(c)(15) I. Gross receipts can also be calculated by Schedule A (Form 990 or 990-EZ). adding back the amounts on lines 5b, 6b, and Cooperative Organizations To Finance Organization Exempt Under Section 501(c)(3) 7b to the total revenue reported on line 9. Crop Operations .............. 501(c)(16) (Except Private Foundation) and Section

Example. Organization M reported 501(e), 501(f), 501(k), 501(n), or Section Supplemental Unemployment Benefit

$50,000 as total revenue on line 9 of its Form 4947(a)(1), Nonexempt Charitable Trust. An Trusts ..................... 501(c)(17)

General Instructions for Form 990 and Form 990-EZ -3-
organization is not required to file Schedule A taxable income under Subtitle A must complete Form 8283. Noncash Charitable

(Form 990 or 990-EZ) if its gross receipts are line 92 and the signature block on page 8 of Contributions.

normally $25,000 or less. See the gross the Form 990. On the Form 990-EZ, complete Form 8300. Report of Cash Payments Over receipts discussion in General Instruction B. line 43 and the signature block on page 3 of $10,000 Received in a Trade or Business.

Schedule B (Form 990, 990-EZ, or 990-PF). the return. In addition, complete only the Used to report cash amounts in excess of

Schedule of Contributors. Schedule B (Form $10,000 that were received in a single following items in the heading of Form 990 or

990, 990-EZ, or 990-PF) provides contributor transaction (or in two or more related Form 990-EZ:

information for line 1 of Form 990 and 990-EZ. transactions) in the course of a trade or

All Form 990 and 990-EZ filers must complete business (as defined in section 162). Item

and attach this schedule to their return unless A Tax year (fiscal year or short period, if However, if the organization receives a they meet an exception, and check the box in applicable) charitable cash contribution in excess of

item M of Form 990 (item H on Form 990-EZ). B Applicable checkboxes $10,000, it is not subject to the reporting

Forms W-2 and W-3. Wage and Tax C Name and address requirement since the funds were not received

Statement; and Transmittal of Wage and Tax D Employer identification number (EIN) in the course of a trade or business.

Statements. J Section 4947(a)(1) nonexempt charitable Form 8822. Change of Address. Used to trust box Form W-9. Request for Taxpayer Identification notify the IRS of a change in mailing address

Number and Certification. that occurs after the return is filed. Form 1096. Annual Summary and Transmittal Form 940. Employer’s Annual Federal of U.S. Information Returns. Form 8868. Application for Extension of Time

Unemployment (FUTA) Tax Return. To File an Exempt Organization Return. Form 1098 series. Information returns to

Form 941. Employer’s Quarterly Federal Tax report student loan interest, qualified tuition Form 8870. Information Return for Transfers

Return. Used to report social security, and related expenses received, and a Associated With Certain Personal Benefit

Medicare, and income taxes withheld by an contribution of a qualified vehicle that has a Contracts. Used to identify those personal

employer and social security and Medicare claimed value of more than $500. benefit contracts for which funds were

taxes paid by an employer. transferred to the organization, directly or Form 1099 series. Information returns to Form 943. Employer’s Annual Tax Return for indirectly, as well as the transferors for, and report acquisitions or abandonments of Agricultural Employees. beneficiaries of, those contracts. secured property, proceeds from broker and

Trust Fund Recovery Penalty. Form 8871. Political Organization Notice of If certain barter exchange transactions, cancellation of

excise, income, social security, and Medicare Section 527 Status. debt, dividends and distributions, certain

taxes that must be collected or withheld are not government and state qualified tuition program Form 8872. Political Organization Report of

collected or withheld, or these taxes are not payments, taxable distributions from Contributions and Expenditures.

paid to the IRS, a Trust Fund Recovery Penalty cooperatives, interest payments, payments of Form 8899. Notice of Income from Donated

may apply. The Trust Fund Recovery Penalty long-term care and accelerated death benefits, Intellectual Property. Used to report net income may be imposed on all persons (including miscellaneous income payments, distributions from qualified intellectual property to the IRS volunteers) who the IRS determines were from an HSA, Archer MSA or Medicare+Choice and the donor.

responsible for collecting, accounting for, and MSA, original issue discount, distributions from Form TD F 90-22.1. Report of Foreign Bank paying over these taxes, and who acted pensions, annuities, retirement or profit-sharing and Financial Accounts. willfully in not doing so. plans, IRAs, insurance contracts, etc., and Publication 463. Travel, Entertainment, Gift, This penalty does not apply to volunteer proceeds from real estate transactions. Also, and Car Expenses. unpaid members of any board of trustees or use certain of these returns to report amounts Publication 525. Taxable and Nontaxable directors of a tax-exempt organization, if these that were received as a nominee on behalf of

Income. members are solely serving in an honorary another person.

capacity, do not participate in the day-to-day or Publication 526. Charitable Contributions. Form 1120-POL. U.S. Income Tax Return for

financial activities of the organization, and do Certain Political Organizations. Publication 538. Accounting Periods and

not have actual knowledge of the failure to Methods. Form 1128. Application To Adopt, Change, or collect, account for, and pay over these taxes. Retain a Tax Year. Publication 598. Tax on Unrelated Business

However, the preceding sentence does not Income of Exempt Organizations. Form 3115. Application for Change in apply if it results in no person being liable for Accounting Method. Publication 910. IRS Guide to Free Tax the penalty. Services. Form 4506. Request for Copy of Tax Return. The penalty is equal to the unpaid trust fund Publication 946. How To Depreciate tax. See Pub. 15 (Circular E), Employer’s Tax Form 4506-A. Request for Public Inspection Property. Guide, for more details, including the definition or Copy of Exempt or Political Organization

of responsible persons. IRS Form. Publication 1771. Charitable Contributions—

Substantiation and Disclosure Requirements. Form 990-T. Exempt Organization Business Form 4562. Depreciation and Amortization.

Income Tax Return. Filed separately for Form 4720. Return of Certain Excise Taxes

organizations with gross income of $1,000 or on Charities and Other Persons Under E. Use of Form 990, or Form

more from business unrelated to the Chapters 41 and 42 of the Internal Revenue 990-EZ, To Satisfy State Reporting organization’s exempt purpose. The Form Code. Requirements 990-T is also filed to pay the section 6033(e)(2) Form 5500. Annual Return/Report of proxy tax. For Form 990, see line 85 and its Some states and local government units will Employee Benefit Plan. Employers who instructions; for Form 990-EZ, see line 35 and accept a copy of Form 990, or Form 990-EZ, maintain pension, profit-sharing, or other its instructions. Schedule A (Form 990 or 990-EZ), and funded deferred compensation plans are Schedule B (Form 990, 990-EZ, or 990-PF) in Form 990-W. Estimated Tax on Unrelated generally required to file the Form 5500. This place of all or part of their own financial report Business Taxable Income for Tax-Exempt requirement applies whether or not the plan is Organizations. forms. The substitution applies primarily to qualified under the Internal Revenue Code and section 501(c)(3) organizations, but some of Form 1040. U.S. Individual Income Tax whether or not a deduction is claimed for the the other types of section 501(c) organizations Return. current tax year. are also affected.

Form 1041. U.S. Income Tax Return for Form 5768. Election/Revocation of Election by If you use Form 990, or Form 990-EZ, to Estates and Trusts. Required of section an Eligible Section 501(c)(3) Organization To satisfy state or local filing requirements, such 4947(a)(1) nonexempt charitable trusts that Make Expenditures To Influence Legislation. as those under state charitable solicitation also file Form 990 or Form 990-EZ. However, if Form 8282. Donee Information Return. acts, note the following discussions. such a trust does not have any taxable income Required of the donee of charitable deduction under Subtitle A of the Code, it can file Form property who sells, exchanges, or otherwise Determine State Filing Requirements

990, or Form 990-EZ, and does not have to file disposes of donated property within 2 years You should consult the appropriate officials of Form 1041 to meet its section 6012 filing after receiving it. The form is also required of all states and other jurisdictions in which the requirement. If this condition is met, complete any successor donee who disposes of organization does business to determine their Form 990, or Form 990-EZ, and do not file charitable deduction property within 2 years specific filing requirements. Doing business in Form 1041. after the date that the donor gave the property a jurisdiction may include any of the following:

A section 4947(a)(1) nonexempt charitable to the original donee. It does not matter who (a) soliciting contributions or grants by mail or

trust that normally has gross receipts of not gave the property to the successor donee. It otherwise from individuals, businesses, or

more than $25,000 (see the gross receipts may have been the original donee or another other charitable organizations; (b) conducting

discussion in General Instruction B) and has no successor donee. programs; (c) having employees within that

-4- General Instructions for Form 990 and Form 990-EZ
jurisdiction; (d) maintaining a checking correct conflicts with Form 990, or Form • Part IV (but complete lines 59, 66, and 74,

account; or (e) owning or renting property 990-EZ, instructions, it must also file an columns (A) and (B)).

there. amended return with the IRS. Form 990-EZ.

Monetary Tests May Differ Method of Accounting • Lines 10 through 16 of Part I (but complete

lines 17 through 21). Some or all of the dollar limitations applicable Most states require that all amounts be • Part II (but complete lines 25 through 27, to Form 990, or Form 990-EZ, when filed with reported based on the accrual method of columns (A) and (B)). the IRS may not apply when using Form 990, accounting. See also General Instruction G. If an organization substitutes Form LM-2 or or Form 990-EZ, in place of state or local Time For Filing May Differ LM-3 for any of the Form 990, or Form 990-EZ, report forms. Examples of the IRS dollar

The deadline for filing Form 990, or Form parts or line items mentioned above, it must limitations that do not meet some state

990-EZ, with the IRS differs from the time for attach a reconciliation sheet to show the requirements are the $25,000 gross receipts

minimum that creates an obligation to file with filing reports with some states. relationship between the amounts on the DOL

the IRS (see the gross receipts discussion in forms and the amounts on Form 990 or Form

General Instruction B) Public Inspection 990-EZ. This is particularly true of the and the $50,000

minimum for listing professional fees in Part II The Form 990, or Form 990-EZ, information relationship of disbursements shown on the

made available for public inspection by the IRS DOL forms and the total expenses on line 17, of Schedule A (Form 990 or 990-EZ). may differ from that made available by the Part I, of both Form 990 and Form 990-EZ. The Additional Information May Be states. See the discussion of Schedule B organization must make this reconciliation

Required (Form 990, 990-EZ, or 990-PF) in General because the cash disbursements section of the

State or local filing requirements may require Instruction L. DOL forms includes nonexpense items. If the

organization substitutes Form LM-2, be sure to you to attach to Form 990, or Form 990-EZ, complete its separate schedule of expenses. one or more of the following: (a) additional F. Other Forms as Partial financial statements, such as a complete

analysis of functional expenses or a statement Substitutes for Form 990 or Form G. Accounting Periods and of changes in net assets; (b) notes to financial 990-EZ

statements; (c) additional financial schedules; Methods

Except as provided below, the Internal (d) a report on the financial statements by an Revenue Service will not accept any form as a For more information about these independent accountant; and (e) answers to substitute for one or more parts of Form 990 or topics, see Pub. 538. additional questions and other information. Form 990-EZ. Each jurisdiction may require the additional

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material to be presented on forms they provide. Labor Organizations (section 501(c)(5)) Accounting Periods The additional information does not have to be A labor organization that files Form LM-2, submitted with the Form 990, or Form 990-EZ, Calendar year. Use the 2005 Form 990, or Labor Organization Annual Report, or the filed with the IRS. Form 990-EZ, to report on the 2005 calendar shorter Form LM-3, Labor Organization Annual

Report, with the U.S. Department of Labor year accounting period. A calendar year Even if the Form 990, or Form 990-EZ, that accounting period begins on January 1 and the organization files with the IRS is accepted (DOL) can attach a copy of the completed DOL ends on December 31. by the IRS as complete, a copy of the same form to Form 990, or Form 990-EZ, to provide

return filed with a state will not fully satisfy that some of the information required by Form 990 Fiscal year. If the organization has

state’s filing requirement if required information or Form 990-EZ. This substitution is not established a fiscal year accounting period,

is not provided, including any of the additional permitted if the organization files a DOL report use the 2005 Form 990, or Form 990-EZ, to

information discussed above, or if the state that consolidates its financial statements with report on the organization’s fiscal year that

determines that the form was not completed by those of one or more separate subsidiary began in 2005 and ended 12 months later. A

following the applicable Form 990, or Form organizations. fiscal year accounting period should normally

990-EZ, instructions or supplemental state coincide with the natural operating cycle of the Employee Benefit Plans (Section instructions. If so, the organization may be organization. Be certain to indicate in the

asked to provide the missing information or to 501(c)(9), (17), or (18)) heading of Form 990, or Form 990-EZ, the

submit an amended return. An employee benefit plan may be able to date the organization’s fiscal year began in

substitute Form 5500 for part of Form 990 or 2005 and the date the fiscal year ended in the Use Of Audit Guides May Be Required Form 990-EZ. The substitution can be made if year 2006.

To ensure that all organizations report similar the organization filing Form 990, or Form Short period. A short accounting period is a transactions uniformly, many states require 990-EZ, and the plan filing Form 5500, meet all period of less than 12 months. that contributions, gifts, grants, etc., and the following tests: If the Form 990, or Form 990-EZ, for the functional expenses be reported according to 1. The Form 990, or Form 990-EZ, filer is short year is not available until the subsequent the AICPA industry audit and accounting guide, organized under section 501(c)(9), (17), or year, use the prior year Form 990, or Form Not-for-Profit Organizations (New York, NY, (18); 990-EZ, to meet your filing requirement. Cross AICPA, 2003), supplemented by Standards of 2. The Form 990, or Form 990-EZ, filer out the year on the form and show the short Accounting and Financial Reporting for and Form 5500 filer are identical for financial year. Voluntary Health and Welfare Organizations reporting purposes and have identical receipts, (Washington, DC, National Health Council, Accounting period change. If the disbursements, assets, liabilities, and equity organization changes its accounting period, it Inc., 1998, 4th edition). accounts; must file a return on Form 990, or Form Donated Services And Facilities 3. The employee benefit plan does not 990-EZ, for the short period resulting from the include more than one section 501(c) Even though reporting donated services and change. Write “Change of Accounting Period” organization, and the section 501(c) facilities as items of revenue and expense is at the top of this short-period return. organization is not a part of more than one called for in certain circumstances by the two If the organization changed its accounting employee benefit plan; publications named above, many states and period within the 10-calendar-year period that 4. The organization’s accounting year and the IRS do not permit the inclusion of those includes the beginning of the short period, and the employee plan year are the same. If they amounts in Parts I and II of Form 990 or Part I it had a Form 990, or Form 990-EZ, filing are not, you may want to change the of Form 990-EZ. The optional reporting of requirement at any time during that 10-year organization’s accounting year, as explained in donated services and facilities is discussed in General Instruction G, period, it must also attach a Form 1128 to the so it will coincide with the instructions for Part III for both Form 990 short-period return. See Rev. Proc. 85-58, the plan year. and Form 990-EZ. 1985-2 C.B. 740.

Amended Returns Allowable Substitution Areas Group return. When affiliated organizations

authorize their central organization to file a If the organization submits supplemental Whether an organization files Form 990, or group return for them, the accounting period of information or files an amended Form 990, or Form 990-EZ, for a labor organization or for an the affiliated organizations and the central Form 990-EZ, with the IRS, it must also send a employee benefit plan, the areas of Form 990, organization must be the same. See General copy of the information or amended return to or Form 990-EZ, for which other forms can be Instruction R. any state with which it filed a copy of Form substituted are the same. These areas are:

990, or Form 990-EZ, originally to meet that Form 990. Accounting Methods state’s filing requirement. • Lines 13 through 15 of Part I (but complete Unless instructed otherwise, the organization

If a state requires the organization to file an lines 16 through 21); should generally use the same accounting

amended Form 990, or Form 990-EZ, to • Part II; and method on the return to figure revenue and

General Instructions for Form 990 and Form 990-EZ -5-
expenses as it regularly uses to keep its books Send the return to the: Use Form 4506 to obtain a copy of a

and records. To be acceptable for Form 990, or Internal Revenue Service Center previously filed return. For information on

Form 990-EZ, reporting purposes, however, Ogden, UT 84201-0027 getting blank tax forms, see General Instruction

the method of accounting used must clearly D. Private delivery services. You can use reflect income. certain private delivery services designated by If the return is a final return, see the Generally, the organization must file Form the IRS to meet the timely mailing as timely Specific Instructions for Form 990 for line 79, 3115 to change its accounting method. Notice filing/paying rule for tax returns and payments. Part VI. For Form 990-EZ, see the Specific 96-30, 1996-1 C.B. 378, provides relief from These private delivery services include only the Instructions for line 36, Part V. filing Form 3115 to section 501(c) following.

organizations that change their method of • DHL Express (DHL): DHL “Same Day”

accounting to comply with the provisions of Service, DHL Next Day 10:30 AM, DHL Next K. Penalties SFAS 116, Accounting for Contributions Day 12:00 PM, DHL Next Day 3:00 PM, and

Received and Contributions Made. In SFAS DHL 2nd Day Service. Against the Organization 116, the Financial Accounting Standards Board • Federal Express (FedEx): FedEx Priority

revised certain generally accepted accounting Overnight, FedEx Standard Overnight, FedEx Under section 6652(c)(1)(A), a penalty of $20 a

principles relating to contributions received and day, not to exceed the smaller of $10,000 or 2Day, FedEx International Priority, FedEx

contributions awarded by not-for-profit 5% of the gross receipts of the organization for International First.

organizations. the year, may be charged when a return is filed • United Parcel Service (UPS): UPS Next Day late, unless the organization can show that the Air, UPS Next Day Air Saver, UPS 2nd Day A not-for-profit organization that changes late filing was due to reasonable cause. its method of accounting for federal income tax Air, UPS 2nd Day Air A.M., UPS Worldwide Organizations with annual gross receipts purposes to conform to the method provided in Express Plus, and UPS Worldwide Express. exceeding $1 million are subject to a penalty of SFAS 116 should report any adjustment The private delivery service can tell you $100 for each day the failure continues (with a required by section 481(a) on line 20 of Form how to get written proof of the mailing date. maximum penalty with respect to any one 990, or Form 990-EZ, as a net asset return of $50,000). The penalty begins on the adjustment made during the year the change is Electronic Filing due date for filing the Form 990 or Form made. The adjustment should be identified as You can file Form 990, or Form 990-EZ, and 990-EZ. the effect of changing to the method provided related forms, schedules, and attachments in SFAS 116. The beginning of year statement electronically. However, If an organization files The penalty may also be charged if the of financial position (balance sheet) should not at least 250 returns during the calendar year organization files an incomplete return. To be restated to reflect any prior period and has total assets of $100 million or more at avoid having to supply missing information adjustments. the end of the tax year, it must file Form 990 later, be sure to complete all applicable line

State reporting. electronically. items; answer “Yes,” “No,” or “N/A” (not If the organization prepares

Form 990, or Form 990-EZ, for state reporting applicable) to each question on the return;

purposes, it may file an identical return with the If an organization is required to file a return make an entry (including a zero when electronically but does not, the organization is appropriate) on all total lines; and enter “None” IRS even though the return does not agree considered to have not filed its return. See with the books of account, unless the way one or “N/A” if an entire part does not apply. Temporary Regulations section 301.6033-4T or more items are reported on the state return for more information. Also, this penalty may be imposed if the conflicts with the instructions for preparing organization’s return contains incorrect Form 990, or Form 990-EZ, for filing with the For additional information on the electronic information. For example, an organization that IRS. filing requirement visit www.irs.gov/efile. reports contributions net of related fundraising Example 1. The organization maintains its The IRS may waive the requirements to expenses may be subject to this penalty. books on the cash receipts and disbursements file electronically in cases of undue method of accounting but prepares a state Use of a paid preparer does not relieve the hardship. For information on filing a

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return based on the accrual method. It could organization of its responsibility to file a waiver, see Notice 2005-88, which is on page use that return for reporting to the IRS. complete and accurate return. 1060 of Internal Revenue Bulletin 2005-48.

Example 2. A state reporting requirement Against Responsible Person(s) requires the organization to report certain

revenue, expense, or balance sheet items I. Extension of Time To File If the organization does not file a complete

differently from the way it normally accounts for return or does not furnish correct information, Use Form 8868 to request an automatic the IRS will send the organization a letter that them on its books. A Form 990, or Form 3-month extension of time to file. Use Form

990-EZ, prepared for that state is acceptable includes a fixed time to fulfill these 8868 also to apply for an additional (not for the IRS reporting purposes if the state requirements. After that period expires, the automatic) 3-month extension if the original 3 reporting requirement does not conflict with the months was not enough time. To obtain this person failing to comply will be charged a

Form 990, or Form 990-EZ, instructions. penalty of $10 a day. The maximum penalty on additional extension of time to file, you must all persons for failures with respect to any one An organization should keep a show reasonable cause for the additional time return shall not exceed $5,000 (section reconciliation of any differences between its requested. See the Instructions for Form 8868. 6652(c)(1)(B)(ii)). books of account and the Form 990, or Form

990-EZ, that is filed. Any person who does not comply with the J. Amended Return / Final Return Most states that accept Form 990, or Form public inspection requirements, as discussed in

990-EZ, in place of their own forms require that To change the organization’s return for any General Instruction M, will be assessed a

all amounts be reported based on the accrual year, file a new return including any required penalty of $20 for each day that inspection was

method of accounting. For further information, attachments. Use the revision of Form 990, or not permitted, up to a maximum of $10,000 for

see General Instruction E. Form 990-EZ, applicable to the year being each return. The penalties for failure to comply amended. The amended return must provide with the public inspection requirements for all the information called for by the form and applications is the same as those for annual H. When and Where To File instructions, not just the new or corrected returns, except that the $10,000 limitation does

File Form 990, or Form 990-EZ, by the 15th information. Check the Amended return box in not apply (sections 6652(c)(1)(C) and (D)). Any

day of the 5th month after the organization’s the heading of the return. person who willfully fails to comply with the

accounting period ends. If the regular due date public inspection requirements for annual The organization may file an amended falls on a Saturday, Sunday, or legal holiday, returns or exemption applications will be return at any time to change or add to the file on the next business day. A business day is subject to an additional penalty of $5,000 information reported on a previously filed return any day that is not a Saturday, Sunday, or (section 6685). for the same period. It must make the legal holiday. amended return available for public inspection There are also penalties (fines and If the organization is liquidated, dissolved, for 3 years from the date of filing or 3 years imprisonment) for willfully not filing returns and or terminated, file the return by the 15th day of from the date the original return was due, for filing fraudulent returns and statements with whichever is later. the 5th month after the liquidation, dissolution, the IRS (sections 7203, 7206, and 7207). or termination. The organization must also send a copy of States may impose additional penalties for

If the return is not filed by the due date the information or amended return to any state failure to meet their separate filing

(including any extension granted), attach a with which it filed a copy of Form 990, or Form requirements. See also the discussion of the

statement giving the reasons for not filing on 990-EZ, originally to meet that state’s filing Trust Fund Recovery Penalty, under General

time. requirement. Instruction D.

-6- General Instructions for Form 990 and Form 990-EZ
or services received by the patrons. See Disclosure statement for quid pro quo L. Contributions Disclosure statement for quid pro quo contributions. If the organization receives a

contributions below. quid pro quo contribution of more than $75, an Schedule B (Form 990, 990-EZ, or organization must provide a disclosure Noncash Contributions 990-PF) statement to the donor. The organization’s

Schedule B (Form 990, 990-EZ, or 990-PF), See the Instructions for Schedule B (Form 990, disclosure statement must:

990-EZ, or 990-PF). generally, is a required attachment for the 1. Be written.

Form 990, 990-EZ, or 990-PF, and is used to If the organization received a partially 2. Estimate in good faith the organization’s

report on tax-deductible and non-tax-deductible completed Form 8283 from a donor, complete goods or services given in return for donor’s

contributions. See the Instructions for Schedule it and return it so the donor can get a charitable contribution.

B for the public inspection rules applicable to contribution deduction. Keep a copy for your 3. Describe, but need not value, certain

that form. See also the Specific Instructions for records. See also the reference to Form 8282 goods or services given donor’s employees or

both Form 990 and Form 990-EZ, under in General Instruction D. partners.

Completing the Heading . . . where the Qualified intellectual property. An 4. Inform the donor that a deductible

instructions are keyed to items in the heading organization described in section 170(c) charitable contribution deduction is limited as

of Form 990 or Form 990-EZ. (except a private foundation) that receives or follows:

accrues net income from a qualified intellectual Solicitations of Nondeductible property contribution must file Form 8899. The Contributions Donor’s contribution organization must file the return for any tax Less Any fundraising solicitation by or on behalf of year that includes any part of the 10-year

any section 501(c) or 527 organization that is period beginning on the date of contribution but Organization’s money, and goods or services not eligible to receive contributions deductible not for any tax years in which the legal life of given in return as charitable contributions for federal income the qualified intellectual property has expired or

tax purposes must include an explicit the property failed to produce net income. Equals

statement that contributions or gifts to it are not An organization (donee) reports all income Donor’s deductible charitable contribution. deductible as charitable contributions. The from donated qualified intellectual property as statement must be in an easily recognizable income other than contributions (for example, format whether the solicitation is made in royalty income from a patent). Charities are not Exception: No disclosure statement is written or printed form, by television or radio, or required to report as contributions any of the required if the organization gave the following. by telephone. This provision applies only to additional deductions claimed by donors under 1. Goods or services of insubstantial value. those organizations whose annual gross the new section 170(m)(1). Likewise, these 2. Certain membership benefits. receipts are normally more than $100,000 additional deductions are not required to be 3. An intangible religious benefit. (section 6113 and Notice 88-120, 1988-2 C.B. reported on Schedule B (Form 990, 990-EZ, or 454). 990-PF) and donees are not required to See Regulations sections 1.170A-1,

1.170A-13, and 1.6115-1. Failure to disclose that contributions are not comply with the substantiation requirements of

deductible could result in a penalty of $1,000 section 170(f)(8) with regard to any donor’s Certain goods or services disregarded for

for each day on which a failure occurs. The additional deductions. See Pub. 526. substantiation and disclosure purposes.

maximum penalty for failures by any Motor vehicles, boats, and airplanes. Goods or services with insubstantial organization, during any calendar year, shall Special rules apply to charitable contributions value. Generally, under section 170, the not exceed $10,000. In cases where the failure of motor vehicles, boats, or airplanes with a deductible amount of a contribution is to make the disclosure is due to intentional claimed value of more than $500. See section determined by taking into account the fair disregard of the law, more severe penalties 170(f)(12) and the Instructions for Form market value, not the cost to the charity, of any apply. No penalty will be imposed if the failure 1098-C. benefits received in return. However, the cost is due to reasonable cause (section 6710). to the charity may be used in determining Substantiation and Disclosure

Keeping Fundraising Records for whether the benefits are insubstantial. See Requirements for Charitable below. Tax-Deductible Contributions Contributions Cost basis. If a taxpayer makes a Section 501(c) organizations that are eligible to Acknowledgment to substantiate charitable payment of $41.50 or more to a charity and receive tax-deductible contributions under contributions. An organization (donee) receives only token items in return, the items section 170(c) of the Code must keep sample should be aware that a donor of a charitable have insubstantial value if they: copies of their fundraising materials, such as: contribution of $250 or more cannot take an • Bear the charity’s name or logo, and • Dues statements, income tax deduction unless the donor obtains • Have an aggregate cost to the charity of • Fundraising solicitations, the organization’s acknowledgment to $8.30 or less (low-cost article amount of • Tickets, substantiate the charitable contribution. section 513(h)(2)). • Receipts, or

• Other evidence of payments received in The organization’s acknowledgment must: Fair market value basis. If a taxpayer

connection with fundraising activities. 1. Be written. makes a payment to a charitable organization

2. Be contemporaneous. in a fundraising campaign and receives

3. State the amount of any cash it benefits with a fair market value of not more IF . . . THEN . . .

received. than 2% of the amount of the payment, or $83,

4. State: whichever is less, the benefits received have Organizations advertise They must keep insubstantial value in determining the their fundraising events, samples of the a. Whether the organization gave the taxpayer’s contribution. advertising copy. donor any intangible religious benefits (no

valuation needed). The dollar amounts given above are b. Whether or not the organization gave Organizations use radio They must keep applicable to tax year 2005 under Rev. the donor any goods or services in return for or television to make samples of: Proc. 2004-71, 2004-50 I.R.B. 970 (and

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the donor’s contribution (a quid pro quo their solicitations, other successor documents). They are • Scripts, contribution). adjusted annually for inflation. • Transcripts, or 5. Describe goods or services the When a donee organization provides a • Other evidence of organization: donor only with goods or services having on-air solicitations. a. Received (no valuation needed). insubstantial value under Rev. Proc. 2004-71, b. Gave (good faith estimate needed). 2004-50 I.R.B. 970 (and any successor Organizations use They must keep documents), the contemporaneous written Exception. An organization need not make outside fundraisers, samples of the acknowledgment may indicate that no goods or a good faith estimate of a quid pro quo fundraising materials services were provided in exchange for the contribution if the goods or services given to a used by the outside donor’s payment. donor are: fundraisers. • Insubstantial in value. Certain membership benefits. Other

• Certain membership benefits for $75 or less goods or services that are disregarded for

For each fundraising event, organizations per year. See Certain membership benefits, substantiation and disclosure purposes are

must keep records to show the portion of any later. annual membership benefits offered to a

payment received from patrons that is not • Certain goods or services given to the taxpayer in exchange for a payment of $75 or

deductible; that is, the retail value of the goods donor’s employees or partners. less per year that consist of:

General Instructions for Form 990 and Form 990-EZ -7-
1. Any rights or privileges that the taxpayer sufficient information to substantiate the fundraising events will not be aggregated for

can exercise frequently during the membership amount of the deductible contribution. purposes of the $75 threshold.

period such as: The organization may either provide: Good faith estimate. An organization

a. Free or discounted admission to the • Separate statements for each contribution of may use any reasonable method in making a

 organization’s facilities or events, $250 or more, or good faith estimate of the value of goods or

b. Free or discounted parking. • Furnish periodic statements substantiating services provided by an organization in

2. Admission to events that are: contributions of $250 or more. consideration for a taxpayer’s payment to that

a. Open only to members, and are, per organization. A good faith estimate of the value Separate contributions of less than $250

 person, of goods or services that are not generally are not subject to the requirements of section b. Within the low-cost article limitation. available in a commercial transaction may be 170(f)(8), regardless of whether the sum of the determined by reference to the fair market contributions made by a taxpayer to a donee Examples. value of similar or comparable goods or organization during a tax year equals $250 or services. Goods or services may be similar or 1. E offers a basic membership benefits more. comparable even though they do not have the package for $75. The package gives members Contemporaneous. A written unique qualities of the goods or services that the right to buy tickets in advance, free parking, acknowledgment is contemporaneous if the are being valued. and a gift shop discount of 10%. E’s $150 donor obtains it on or before the earlier of: preferred membership benefits package also Goods or services. Goods or services • The date the donor files the original return includes a $20 poster. Both the basic and mean: for the tax year in which the contribution was preferred membership packages are for a made; or • Cash,

12-month period and include about 50 • Property, • The due date (including extensions) for filing productions. E offers F, a patron of the arts, the • Services, the donor’s original return for that year. preferred membership benefits in return for a • Benefits, and Substantiation of payroll contributions. payment of $150 or more. F accepts the • Privileges. An organization may substantiate a payroll preferred membership benefits package for In consideration for. A donee contribution by: $300. E’s written acknowledgment satisfies the organization provides goods or services in • A pay stub, Form W-2, or other document substantiation requirement if it describes the consideration for a taxpayer’s payment if, at showing a contribution to a donee organization; poster, gives a good faith estimate of its fair the time the taxpayer makes the payment to and market value ($20), and disregards the the donee organization, the taxpayer receives, • A pledge card or other document from the remaining membership benefits. or expects to receive, goods or services in donee organization stating that organization 2. If F received only the basic membership exchange for that payment. provides no goods or services for any payroll package for its $300 payment, E’s contributions. Goods or services a donee organization acknowledgment need state only that no goods provides in consideration for a payment by a or services were provided. The amount withheld from each payment of taxpayer include goods or services provided in 3. G Theater Group performs four plays. wages to a taxpayer is treated as a separate a year other than the year in which the donor Each play is performed twice. Nonmembers contribution. makes the payment to the donee organization. can purchase a ticket for $15. For a $60 Substantiation of payments to a college membership fee, however, members are Intangible religious benefits. Intangible or university for the right to purchase offered free admission to any of the religious benefits must be provided by tickets to athletic events. The right to performances. H makes a payment of $350 organizations organized exclusively for purchase tickets for an athletic event is valued and accepts this membership benefit. Because religious purposes. Examples include: at 20% of the payment. of the limited number of performances, the • Admission to a religious ceremony, and Example. When a taxpayer pays $312.50 membership privilege cannot be exercised • De minimis tangible benefits, such as wine, for the right to purchase tickets for an athletic frequently. Therefore, G’s acknowledgment provided in connection with a religious event, the right is valued at $62.50. The must describe the free admission benefit and ceremony. remaining $250 is a charitable contribution that estimate its value in good faith. Distributing organization as donee. An the taxpayer must substantiate. organization described in section 170(c), or an Certain goods or services provided to Substantiation of matched payments. If organization described as a Principal donor’s employees or partners. Certain a taxpayer’s payment to a donee organization Combined Fund Organization for purposes of goods or services provided to employees or is matched by another payor, and the taxpayer the Combined Federal Campaign, that receives partners of donors may be disregarded for receives goods or services in consideration for a payment made as a contribution is treated as substantiation and disclosure purposes. its payment and some or all of the matching a donee organization even if the organization Describe such goods or services. A good faith payment, those goods or services will be distributes the amount received to one or more

estimate is not needed. treated as provided in consideration for the organizations described in section 170(c). taxpayer’s payment and not in consideration Example. Museum J offers a basic Penalties. A charity that knowingly for the matching payment. membership benefits package for $40. It provides a false substantiation includes free admission and a 10% gift shop Disclosure statement. An organization acknowledgment to a donor may be subject to discount. Corporation K makes a $50,000 must provide a written disclosure statement to the penalties under section 6701 for aiding and payment to J and in return, J offers K’s donors who make a payment, described as a abetting an understatement of tax liability. employees free admission, a tee shirt with J’s quid pro quo contribution, in excess of $75 Charities that fail to provide the required logo that costs J $4.50, and a 25% gift shop (section 6115). This requirement is separate disclosure statement for a quid pro quo discount. Because the free admission is from the written substantiation contribution of more than $75 will incur a offered in both benefit packages and the value acknowledgment a donor needs for penalty of $10 per contribution, not to exceed of the tee shirts is insubstantial, K’s written deductibility purposes. While, in certain $5,000 per fundraising event or mailing. The acknowledgment need not value the free circumstances, an organization may be able to

meet both requirements with the same written charity may avoid the penalty if it can show that admission benefit or the tee shirts. However, the failure was due to reasonable cause because the 25% gift shop discount to K’s document, an organization must be careful to (section 6714). employees differs from the 10% discount satisfy the section 6115 written disclosure

offered in the basic membership benefits statement requirement in a timely manner

package, K’s written acknowledgment must because of the penalties involved. M. Public Inspection of describe the 25% discount, but need not Quid pro quo contribution. A quid pro Returns, etc. estimate its value. quo contribution is a payment that is given both

as a contribution and as a payment for goods Definitions. Through the IRS or services provided by the donee Substantiation. Use Form 4506-A to request: It is the responsibility of organization.

the donor: Example. A donor gives a charity $100 in • A copy of an exempt or political • To value a donation, and organization’s return, report, notice, or consideration for a concert ticket valued at $40 • To obtain an organization’s written exemption application; (a quid pro quo contribution). In this example, acknowledgment substantiating the donation. • An inspection of a return, report, notice, or $60 would be deductible. Because the donor’s exemption application at an IRS office. There is no prescribed format for the payment exceeds $75, the organization must

organization’s written acknowledgment of a furnish a disclosure statement even though the The IRS can provide copies of exempt

donation. Letters, postcards, or taxpayer’s deductible amount does not exceed organization returns on a compact disk

computer-generated forms may be acceptable. $75. Separate payments of $75 or less made (CD-ROM). Requesters can order the complete

The acknowledgment must, however, provide at different times of the year for separate set (all Forms 990 and 990-EZ or all Forms

-8- General Instructions for Form 990 and Form 990-EZ
990-PF filed for a year) or a partial set by state nonexempt private foundation that is subject to • Must allow the individual to photocopy the

or by month. For more information on the cost the reporting requirements of section 6033. document at no charge, if the individual

and how to order CD-ROMs, call the TEGE provides photocopying equipment at the place Application for tax exemption includes: Customer Account Services toll-free number of inspection. • Any prescribed application form (such as (1-877-829-5500) or write to the IRS in Form 1023 or Form 1024), Organizations that do not maintain Cincinnati, OH, at the address in General • All documents and statements the IRS permanent offices. A tax-exempt Instruction A. requires an applicant to file with the form, organization with no permanent office: The IRS may not disclose portions of an • Any statement or other supporting document • Must make its application for tax exemption exemption application relating to any trade submitted in support of the application, and and its annual information returns available for

secrets, etc. Additionally, the IRS may not • Any letter or other document issued by the inspection at a reasonable location of its disclose the names and addresses of IRS concerning the application. choice.

contributors. See the Instructions for Schedule Application for tax exemption does not • Must permit public inspection within a B (Form 990, 990-EZ, or 990-PF) for more include: reasonable amount of time after receiving a information about the disclosure of that request for inspection (normally not more than • Any application for tax exemption filed schedule. 2 weeks) and at a reasonable time of day. before July 15, 1987, unless the organization You can only request Forms 990 or 990-EZ • May mail, within 2 weeks of receiving the filing the application had a copy of the for section 527 organizations for tax years request, a copy of its application for tax application on July 15, 1987; beginning after June 30, 2000. exemption and annual information returns to • In the case of a tax-exempt organization the requester instead of allowing an inspection. You may inspect a return, report, notice, or other than a private foundation, the name and • May charge the requester for copying and exemption application at an IRS office free of address of any contributor to the organization; actual postage costs only if the requester charge. You may also obtain a copy of these or consents to the charge. items through the organization as discussed in • Any material that is not available for public

the following section. inspection under section 6104. An organization that has a permanent

office, but has no office hours, or very limited Through the Organization If there is no prescribed application hours during certain times of the year, must form, see Regulations section Public inspection and distribution of make its documents available during those CAUTION 301.6104(d)-1(b)(4)(i).

!

returns and reports for a political periods when office hours are limited, or not

organization. Section 527 political Annual information return includes: available, as though it were an organization

organizations required to file Form 990, or • An exact copy of the Form 990, or Form without a permanent office.

Form 990-EZ, must, in general, make their 990-EZ filed by a tax-exempt organization as Special rules relating to copies. Form 8871, 8872, 990, or 990-EZ available for required by section 6033.

public inspection in the same manner as • Any amended return the organization files Time and place for providing copies in annual information returns of section 501(c) with the IRS after the date the original return is response to requests made in-person. A

organizations and 4947(a)(1) nonexempt filed. tax-exempt organization must: charitable trusts are made available. See the The copy must include all information • Provide copies of required documents under public inspection rules for Tax-exempt furnished to the IRS on Form 990, or Form section 6104(d) in response to a request made organizations, later. Generally, Form 8871 and 990-EZ, as well as all schedules, attachments in person at its principal, regional and district Form 8872 are available for inspection and and supporting documents, except for the offices during regular business hours. printing from the Internet. The website address name and address of any contributor to the • Provide such copies to a requester on the for both of these forms is http://eforms.irs.gov. organization. See the Instructions for Schedule day the request is made, except for unusual

B (Form 990, 990-EZ, or 990-PF). circumstances (see below). Note that a section 527 political

organization (and an organization filing Annual returns more than 3 years old. Unusual circumstances. In the case of

Form 990-PF) must disclose their An annual information return does not include an in-person request, where unusual

TIP

Schedule B (Form 990, 990-EZ, or 990-PF). any return after the expiration of 3 years from circumstances exist so that fulfilling the request See the Instructions for Schedule B. the date the return is required to be filed on the same business day causes an

The penalties discussed in General (including any extension of time that has been unreasonable burden to the tax-exempt

Instruction K also apply to section 527 political granted for filing such return) or is actually organization, the organization must provide the

organizations (Rev. Rul. 2003-49, 2003-204 filed, whichever is later. copies no later than the next business day

I.R.B. 903). following the day that the unusual If an organization files an amended return,

however, the amended return must be made circumstances cease to exist, or the 5th Public inspection and distribution of available for a period of 3 years beginning on business day after the date of the request, applications for tax exemption and annual whichever occurs first. the date it is filed with the IRS. information returns of tax-exempt

organizations. Under Regulations sections Local or subordinate organizations. For Unusual circumstances include:

301.6104(d)-1 through 301.6104(d)-3, a rules relating to annual information returns of • Requests received that exceed the tax-exempt organization must: local or subordinate organizations, see organization’s daily capacity to make copies; • Make its application for recognition of Regulations section 301.6104(d)-1(f)(2). • Requests received shortly before the end of exemption and its annual information returns Regional or district offices. A regional or regular business hours that require an available for public inspection without charge at district office is any office of a tax-exempt extensive amount of copying; or its principal, regional and district offices during organization, other than its principal office, that • Requests received on a day when the regular business hours. has paid employees, whether part-time or organization’s managerial staff capable of • Make each annual information return fulfilling the request is conducting special full-time, whose aggregate number of paid available for a period of 3 years beginning on hours a week are normally at least 120. duties, such as student registration or the date the return is required to be filed attending an off-site meeting or convention, A site is not considered a regional or district (determined with regard to any extension of rather than its regular administrative duties. office, however, if: time for filing) or is actually filed, whichever is

later. • The only services provided at the site further Agents for providing copies. For rules

• Provide a copy without charge, other than a exempt purposes (such as day care, health relating to use of agents to provide copies, see

reasonable fee for reproduction and actual care or scientific or medical research); and Regulations sections 301.6104(d)-1(d)(1) and

postage costs, of all or any part of any • The site does not serve as an office for (2).

application or return required to be made management staff, other than managers who Request for copies in writing. A available for public inspection to any individual are involved solely in managing the exempt tax-exempt organization must honor a written who makes a request for such copy in person function activities at the site. request for a copy of documents (or the or in writing (except as provided in Regulations requested part) required under section 6104(d) sections 301.6104(d)-2 and -3). Special rules relating to public inspection. if the request:

Definitions. Permissible conditions on public 1. Is addressed to, and delivered by mail,

Tax-exempt organization is any inspection. A tax-exempt organization: electronic mail, facsimile, or a private delivery

organization that is described in section 501(c) • May have an employee present in the room service, as defined in section 7502(f), to a

or (d) and is exempt from taxation under during an inspection. principal, regional, or district office of the

section 501(a). The term tax-exempt • Must allow the individual conducting the organization; and

organization also includes any section inspection to take notes freely during the 2. Sets forth the address to which the copy

4947(a)(1) nonexempt charitable trust or inspection. of the documents should be sent.

General Instructions for Form 990 and Form 990-EZ -9-
Time and manner of fulfilling written forms of payment, such as credit cards and than 2 weeks) after receiving a request made

requests. personal checks. in person for public inspection or copies and at

a reasonable time of day. (B) Request made in writing. If a

IF the organization . . THEN the organization tax-exempt organization charges a fee for In a case where the requester seeks

copying and postage, it must accept payment inspection, the local or subordinate

Receives a written Must mail the copy of by certified check, money order, and either organization may mail a copy of the applicable

request for a copy, the requested personal check or credit card for requests documents to the requester within the same

documents (or the made in writing. The organization may accept time period instead of allowing an inspection.

requested parts) within other forms of payment. In such a case, the organization may charge

30 days from the date it the requester for copying and actual postage Avoidance of unexpected fees. Where a receives the request. costs only if the requester consents to the tax-exempt organization does not require charge. prepayment and a requester does not enclose Mails the copy of the Is deemed to have payment with a request, an organization must If the local or subordinate organization

requested document, provided the copy on the receive consent from a requester before receives a written request for a copy of its

postmark date or private providing copies for which the fee charged for annual information return, it must fulfill the

delivery mark (if sent by copying and postage exceeds $20. request by providing a copy of the group return

certified or registered in the time and manner specified in the Documents to be provided by regional mail, the date of paragraph earlier, Request for copies in and district offices. Except as otherwise registration or the date writing. provided, a regional or district office of a of the postmark on the tax-exempt organization must satisfy the same The requester has the option of requesting sender’s receipt). rules as the principal office with respect to from the central or parent organization, at its

allowing public inspection and providing copies principal office, inspection or copies of group

Requires payment in Is required to provide of its application for tax exemption and annual returns filed by the central or parent

advance, the copies within 30 organization. The central or parent information returns.

days from the date it organization must fulfill such requests in the A regional or district office is not required, receives payment. time and manner specified in the paragraphs, however, to make its annual information return Special rules relating to public inspection and available for inspection or to provide copies Receives a request or Is deemed to have Special rules relating to copies earlier. until 30 days after the date the return is payment by mail, received it 7 days after Failure to comply. If an organization fails required to be filed (including any extension of the date of the to comply with the requirements specified in time that is granted for filing such return) or is postmark, absent this paragraph, the penalty provisions of actually filed, whichever is later. evidence to the contrary. sections 6652(c)(1)(C), 6652(c)(1)(D), and Documents to be provided by local and 6685 apply. subordinate organizations. Receives a request Is deemed to have Making applications and returns widely Applications for tax exemption. Except as transmitted by electronic received it the day the available. A tax-exempt organization is not otherwise provided, a tax-exempt organization mail or facsimile, request is transmitted required to comply with a request for a copy of that did not file its own application for tax successfully. its application for tax exemption or an annual exemption (because it is a local or subordinate information return if the organization has made organization covered by a group exemption Receives a written Must notify the the requested document widely available (see letter) must, upon request, make available for request without payment requester of the below). public inspection, or provide copies of, the or with an insufficient prepayment policy and application submitted to the IRS by the central An organization that makes its application payment, when payment the amount due within 7 or parent organization to obtain the group for tax exemption and/or annual information in advance is required, days from the date of exemption letter and those documents which return widely available must nevertheless the request’s receipt. were submitted by the central or parent make the document available for public

organization to include the local or subordinate inspection as required under Regulations

Receives consent from May provide a copy of organization in the group exemption letter. section 301.6104(d)-1(a).

an individual making a the requested document However, if the central or parent A tax-exempt organization makes its request, exclusively by electronic organization submits to the IRS a list or application for tax exemption and/or an annual mail (the material is directory of local or subordinate organizations information return widely available if the provided on the date the covered by the group exemption letter, the organization complies with the Internet posting organization local or subordinate organization is required to requirements and the notice requirements successfully transmits provide only the application for the group given below. the electronic mail). exemption ruling and the pages of the list or Internet posting. A tax-exempt

directory that specifically refer to it. The local or organization can make its application for tax

Request for a copy of parts of a subordinate organization must permit public exemption and/or an annual information return

document. A tax-exempt organization must inspection, or comply with a request for copies widely available by posting the document on a

fulfill a request for a copy of the organization’s made in person, within a reasonable amount of World Wide Web page that the tax-exempt

entire application for tax exemption or annual time (normally not more than 2 weeks) after organization establishes and maintains or by

information return or any specific part or receiving a request made in person for public having the document posted, as part of a

schedule of its application or return. A request inspection or copies and at a reasonable time database of similar documents of other

for a copy of less than the entire application or of day. See Regulations section tax-exempt organizations, on a World Wide

less than the entire return must specifically 301.6104(d)-1(f) for further information. Web page established and maintained by

identify the requested part or schedule. Annual information returns. another entity. The document will be A local or considered widely available only if: Fees for copies. A tax-exempt subordinate organization that does not file its • The World Wide Web page through which it organization may charge a reasonable fee for own annual information return (because it is is available clearly informs readers that the providing copies. affiliated with a central or parent organization document is available and provides instructions that files a group return) must, upon request, Before the organization provides the make available for public inspection, or provide for downloading it; documents, it may require that the individual • The document is posted in a format that, copies of, the group returns filed by the central requesting copies of the documents pay the when accessed, downloaded, viewed and or parent organization. fee. If the organization has provided an printed in hard copy, exactly reproduces the individual making a request with notice of the However, if the group return includes image of the application for tax exemption or fee, and the individual does not pay the fee separate schedules with respect to each local annual information return as it was originally within 30 days, or if the individual pays the fee or subordinate organization included in the filed with the IRS, except for any information by check and the check does not clear upon group return, the local or subordinate permitted by statute to be withheld from public deposit, the organization may disregard the organization receiving the request may omit disclosure; and request. any schedules relating only to other • Any individual with access to the Internet organizations included in the group return. Form of payment—(A) Request made in can access, download, view and print the

person. If a tax-exempt organization charges a The local or subordinate organization must document without special computer hardware

fee for copying, it must accept payment by permit public inspection, or comply with a or software required for that format (other than

cash and money order for requests made in request for copies made in person, within a software that is readily available to members of

person. The organization may accept other reasonable amount of time (normally not more the public without payment of any fee) and

-10- General Instructions for Form 990 and Form 990-EZ
without payment of a fee to the tax-exempt return under Regulations section

organization or to another entity maintaining 1.6033-2(g)(6). N. Disclosures Regarding Certain

the World Wide Web page. • Certain foreign organizations. Information and Services

Reliability and accuracy. In order for the Furnished An organization is not treated as a section

document to be widely available through an 501(c)(3) or 501(c)(4) organization for any A section 501(c) organization that offers to sell Internet posting, the entity maintaining the period covered by a final determination that the or solicits money for specific information or a World Wide Web page must have procedures organization was not tax-exempt under section routine service for any individual that could be 501(a), so long as the determination was not for ensuring the reliability and accuracy of the obtained by such individual from a federal document that it posts on the page and must based on private inurement or one or more government agency free or for a nominal excess benefit transactions. take reasonable precautions to prevent charge must disclose that fact conspicuously alteration, destruction or accidental loss of the when making such offer or solicitation. Any Disqualified Person document when posted on its page. In the organization that intentionally disregards this The vast majority of section 501(c)(3) or event that a posted document is altered, requirement will be subject to a penalty for 501(c)(4) organization employees and destroyed or lost, the entity must correct or each day on which the offers or solicitations contractors will not be affected by these rules. replace the document. are made. The penalty imposed for a particular Only the few influential persons within these

Notice requirement. day is the greater of $1,000 or 50% of the total If a tax-exempt organizations are covered by these rules when

organization has made its application for tax cost of the offers and solicitations made on that they receive benefits, such as compensation,

exemption and/or an annual information return day that lacked the required disclosure (section fringe benefits, or contract payments. The IRS

widely available, it must notify any individual 6711). calls this class of covered individuals

requesting a copy where the documents are disqualified persons. A disqualified person,

available (including the address on the World regarding any transaction, is any person who

Wide Web, if applicable). If the request is made O. Disclosures Regarding Certain was in a position to exercise substantial

in person, the organization must provide such Transactions and Relationships influence over the affairs of the applicable

notice to the individual immediately. If the In their annual returns on Schedule A (Form tax-exempt organization at any time during a

request is made in writing, the notice must be 990 or 990-EZ), section 501(c)(3) 5-year period ending on the date of the

provided within 7 days of receiving the request. organizations must disclose information transaction. Persons who hold certain powers,

regarding their direct or indirect transfers to, responsibilities, or interests are among those Tax-exempt organization subject to and other direct or indirect relationships with, who are in a position to exercise substantial harassment campaign. If the Director EO

other section 501(c) organizations (except influence over the affairs of the organization. Examination (or designee) determines that the other section 501(c)(3) organizations) or This would include, for example, voting organization is being harassed, a tax-exempt section 527 political organizations (section members of the governing body, and persons organization is not required to comply with any 6033(b)(9)). This provision helps prevent the holding the power of: request for copies that it reasonably believes is diversion or expenditure of a section 501(c)(3) • Presidents, chief executive officers, or chief part of a harassment campaign. organization’s funds for purposes not intended operating officers.

Whether a group of requests constitutes a by section 501(c)(3). All section 501(c)(3) • Treasurers and chief financial officers.

harassment campaign depends on the relevant organizations must maintain records regarding A disqualified person also includes certain facts and circumstances such as: all such transfers, transactions, and family members of a disqualified person, and

A sudden increase in requests; an relationships. See also General Instruction K 35% controlled entities of a disqualified person.

extraordinary number of requests by form regarding penalties. Who is not a disqualified person? The rules

letters or similarly worded correspondence; also clarify which persons are not considered

hostile requests; evidence showing bad faith or to be in a position to exercise substantial

deterrence of the organization’s exempt P. Intermediate Sanction influence over the affairs of an organization.

purpose; prior provision of the requested Regulations—Excess Benefit They include:

documents to the purported harassing group; Transactions • An employee who receives benefits that total

and a demonstration that the organization less than the highly compensated amount The intermediate sanction regulations are routinely provides copies of its documents ($95,000 in 2005) and who does not hold the important to the exempt organization upon request. executive or voting powers just mentioned; is community as a whole, and for ensuring not a family member of a disqualified person; A tax-exempt organization may disregard compliance in this area. The rules provide a and is not a substantial contributor; any request for copies of all or part of any roadmap by which an organization may steer • Tax-exempt organizations described in document beyond the first two received within clear of situations that may give rise to section 501(c)(3); and any 30-day period or the first four received inurement. • Section 501(c)(4) organizations with respect within any 1-year period from the same Under section 4958, any disqualified person to transactions engaged in with other section individual or the same address, regardless of who benefits from an excess benefit 501(c)(4) organizations. whether the Director EO Examination (or

designee) has determined that the organization transaction with an applicable tax-exempt Who else may be considered a disqualified

is subject to a harassment campaign. organization is liable for a 25% tax on the person? Other persons not described above excess benefit. The disqualified person is also can also be considered disqualified persons, A tax-exempt organization may apply for a liable for a 200% tax on the excess benefit if depending on all the relevant facts and determination that it is the subject of a the excess benefit is not corrected by a certain circumstances.

harassment campaign and that compliance date. Also, organization managers who Facts and circumstances tending to with requests that are part of the campaign participate in an excess benefit transaction show substantial influence: would not be in the public interest by knowingly, willfully, and without reasonable • The person founded the organization. submitting a signed application to the Director cause are liable for a 10% tax on the excess • The person is a substantial contributor to the EO Examination (or designee) for the area benefit, not to exceed $10,000 for all organization under the section 507(d)(2)(A) where the organization’s principal office is participating managers on each transaction. definition, only taking into account contributions located. Applicable Tax-Exempt Organization to the organization for the past 5 years.

In addition, the organization may suspend • The person’s compensation is primarily These rules only apply to certain applicable compliance with any request it reasonably based on revenues derived from activities of section 501(c)(3) and 501(c)(4) organizations. believes to be part of the harassment the organization that the person controls. An applicable tax-exempt organization is a campaign until it receives a response to its • The person has or shares authority to control section 501(c)(3) or a section 501(c)(4) application for a harassment campaign or determine a substantial portion of the organization that is tax-exempt under section determination. However, if the Director EO organization’s capital expenditures, operating 501(a), or was such an organization at any Examination (or designee) determines that the budget, or compensation for employees. time during a 5-year period ending on the day organization did not have a reasonable basis • The person manages a discrete segment or of the excess benefit transaction. for requesting a determination that it was activity of the organization that represents a

subject to a harassment campaign or An applicable tax-exempt organization does substantial portion of the activities, assets,

reasonable belief that a request was part of the not include: income, or expenses of the organization, as

campaign, the officer, director, trustee, • A private foundation as defined in section compared to the organization as a whole.

employee, or other responsible individual of the 509(a). • The person owns a controlling interest

organization remains liable for any penalties for • A governmental entity that is exempt from (measured by either vote or value) in a

not providing the copies in a timely fashion. (or not subject to) taxation without regard to corporation, partnership, or trust that is a

See Regulations section 301.6104(d)-3. section 501(a) or relieved from filing an annual disqualified person.

General Instructions for Form 990 and Form 990-EZ -11-
• The person is a nonstock organization property, or the rights to future compensation 1099 or Form 990, or on an amended form

controlled directly or indirectly by one or more or property, is not subject to a substantial risk filed prior to the start of an IRS examination; or

disqualified persons. of forfeiture. Where the disqualified person • The disqualified person reports the benefit

elects to include an amount in gross income in as income on the person’s original Form 1040 Facts and circumstances tending to the tax year of transfer under section 83(b), the or on an amended form filed prior to the start of show no substantial influence: excess benefit transaction occurs on the date an IRS examination. • The person is an independent contractor

whose sole relationship to the organization is the disqualified person receives the economic Exception. To the extent the economic

benefit for federal income tax purposes. providing professional advice (without having benefit is excluded from the disqualified

decision-making authority) with respect to Section 4958 applies only to person’s gross income for income tax

transactions from which the independent post-September 1995 transactions. Section purposes, the applicable tax-exempt

contractor will not economically benefit. 4958 applies to excess benefit transactions organization is not required to indicate its intent

• The person has taken a vow of poverty. occurring on or after September 14, 1995. to provide an economic benefit as

• Any preferential treatment the person Section 4958 does not apply to any transaction compensation for services. (For example:

receives based on the size of the person’s occurring pursuant to a written contract that employer provided health benefits, and

donation is also offered to others making was binding on September 13, 1995, and at all contributions to qualified plans under section

comparable widely solicited donations. times thereafter before the transaction occurs. 401(a).)

• The direct supervisor of the person is not a What is reasonable compensation? What benefits are disregarded? The

disqualified person. Reasonable compensation is the valuation following economic benefits are disregarded for • The person does not participate in any standard that is used to determine if there is an purposes of section 4958: management decisions affecting the excess benefit in the exchange of a disqualified • Nontaxable fringe benefits. An economic organization as a whole or a discrete segment person’s services for compensation. benefit that is excluded from income under

of the organization that represents a section 132. Reasonable compensation is the value that substantial portion of the activities, assets, • Benefits to volunteer. An economic benefit would ordinarily be paid for like services by like income, or expenses of the organization, as provided to a volunteer for the organization if enterprises under like circumstances. This is compared to the organization as a whole. the benefit is provided to the general public in the section 162 standard that will apply in What about persons who staff affiliated exchange for a membership fee or contribution determining the reasonableness of organizations? of $75 or less per year. In the case of multiple compensation. The fact that a bonus or affiliated organizations, the determination of • Benefits to members or donors. An revenue-sharing arrangement is subject to a whether a person has substantial influence is economic benefit provided to a member of an cap is a relevant factor in determining the made separately for each applicable organization due to the payment of a reasonableness of compensation. tax-exempt organization. A person may be a membership fee, or to a donor as a result of a

disqualified person with respect to transactions For determining the reasonableness of deductible contribution, if a significant number

with more than one organization. compensation, all items of compensation of nondisqualified persons make similar provided by an applicable tax-exempt payments or contributions and are offered a Excess Benefit Transaction organization in exchange for the performance similar economic benefit.

An excess benefit transaction is a transaction of services are taken into account in • Benefits to a charitable beneficiary. An determining the value of compensation (except in which an economic benefit is provided by an economic benefit provided to a person solely

applicable tax-exempt organization, directly or as a member of a charitable class that the for certain economic benefits that are

indirectly, to or for the use of any disqualified applicable tax-exempt organization intends to disregarded, as discussed in What benefits are

person, and the value of the economic benefit benefit as part of the accomplishment of its disregarded? later). Items of compensation

provided by the organization exceeds the value exempt purpose. include:

of the consideration (including the performance • All forms of cash and noncash • Benefits to a governmental unit. A transfer of

of services) received for providing such benefit. an economic benefit to or for the use of a compensation, including salary, fees, bonuses,

severance payments, and deferred and governmental unit, as defined in section To determine whether an excess benefit noncash compensation. 170(c)(1), if exclusively for public purposes. transaction has occurred, all consideration and • The payment of liability insurance premiums benefits exchanged between a disqualified Is there an exception for initial contracts? for, or the payment or reimbursement by the person and the applicable tax-exempt Section 4958 does not apply to any fixed organization of taxes or certain expenses organization, and all entities it controls, are payment made to a person pursuant to an under section 4958, unless excludable from taken into account. For purposes of initial contract. This is a very important income as a de minimis fringe benefit under determining the value of economic benefits, the exception, since it would potentially apply, for section 132(a)(4). (A similar rule applies in the value of property, including the right to use example, to all initial contracts with new, private foundation area.) Inclusion in property, is the fair market value. Fair market previously unrelated officers and contractors. compensation for purposes of determining value is the price at which property, or the right reasonableness under section 4958 does not An initial contract is a binding written to use property, would change hands between control inclusion in income for income tax contract between an applicable tax-exempt a willing buyer and a willing seller, neither purposes. organization and a person who was not a being under any compulsion to buy, sell or • All other compensatory benefits, whether or disqualified person immediately prior to transfer property or the right to use property, not included in gross income for income tax entering into the contract. and both having reasonable knowledge of purposes. A fixed payment is an amount of cash or relevant facts. • Taxable and nontaxable fringe benefits, other property specified in the contract, or An excess benefit can occur in an except fringe benefits described in section 132. determined by a fixed formula that is specified exchange of compensation and other • Foregone interest on loans. in the contract, which is to be paid or compensatory benefits in return for the Written intent required to treat benefits transferred in exchange for the provision of services of a disqualified person, or in an as compensation. An economic benefit is not specified services or property. exchange of property between a disqualified treated as consideration for the performance of A fixed formula may, in general, incorporate person and the exempt organization. services unless the organization providing the an amount that depends upon future specified

When does an excess benefit transaction benefit clearly indicates its intent to treat the events or contingencies, as long as no one has usually occur? An excess benefit transaction benefit as compensation when the benefit is discretion when calculating the amount of a occurs on the date the disqualified person paid. payment or deciding whether to make a receives the economic benefit from the An applicable tax-exempt organization (or payment (such as a bonus). organization for federal income tax purposes. entity that it controls) is treated as clearly Treatment as new contract. A binding However, when a single contractual indicating its intent to provide an economic written contract providing that it may be arrangement provides for a series of benefit as compensation for services only if the terminated or cancelled by the applicable compensation payments or other payments to organization provides written substantiation tax-exempt organization without the other a disqualified person during the disqualified that is contemporaneous with the transfer of party’s consent (except as a result of person’s tax year, any excess benefit the economic benefits under consideration. substantial non-performance) and without transaction with respect to these payments Ways to provide contemporaneous written substantial penalty, is treated as a new occurs on the last day of the taxpayer’s tax substantiation of its intent to provide an contract, as of the earliest date that any year. economic benefit as compensation include: termination or cancellation would be effective.

In the case of the transfer of property • The organization produces a signed written Also, a contract in which there is a material

subject to a substantial risk of forfeiture, or in employment contract; change, which includes an extension or

the case of rights to future compensation or • The organization reports the benefit as renewal of the contract (except for an

property, the transaction occurs on the date the compensation on an original Form W-2, Form extension or renewal resulting from the

-12- General Instructions for Form 990 and Form 990-EZ
exercise of an option by the disqualified and use contemporaneous persuasive responsibilities to the organization. For

person), or a more than incidental change to comparability data when they provide the example, a director who votes against giving

the amount payable under the contract, is benefits. an excess benefit would ordinarily not be

treated as a new contract as of the effective subject to this tax. Organizations that do not establish a date of the material change. Treatment as a presumption of reasonableness. An A person participates in a transaction new contract may cause the contract to fall organization may still comply with section 4958 knowingly if the person has actual knowledge outside the initial contract exception, and it even if it did not establish a presumption of of sufficient facts so that, based solely upon thus would be tested under the fair market reasonableness. In some cases, an such facts, the transaction would be an excess value standards of section 4958. organization may find it impossible or benefit transaction. Knowing does not mean

impracticable to fully implement each step of having reason to know. The organization Rebuttable Presumption of the rebuttable presumption process described manager ordinarily will not be considered Reasonableness above. In such cases, the organization should knowing if, after full disclosure of the factual Payments under a compensation arrangement try to implement as many steps as possible, in situation to an appropriate professional, the are presumed to be reasonable and the whole or in part, in order to substantiate the organization manager relied on the transfer of property (or right to use property) is reasonableness of benefits as timely and as professional’s reasoned written opinion on presumed to be at fair market value, if the well as possible. If an organization does not matters within the professional’s expertise or if following three conditions are met. satisfy the requirements of the rebuttable the manager relied on the fact that the

1. The transaction is approved by an presumption of reasonableness, a facts and requirements for the rebuttable presumption of

authorized body of the organization (or an circumstances approach will be followed, using reasonableness have been satisfied.

entity it controls) which is composed of established rules for determining Participation by an organization manager is

individuals who do not have a conflict of reasonableness of compensation and benefit willful if it is voluntary, conscious, and

interest concerning the transaction. deductions in a manner similar to the intentional. An organization manager’s

2. Prior to making its determination, the established procedures for section 162 participation is due to reasonable cause if the

authorized body obtained and relied upon business expenses. manager has exercised responsibility on behalf

appropriate data as to comparability. There is a of the organization with ordinary business care Section 4958 Taxes special safe harbor for small organizations. If and prudence.

the organization has gross receipts of less than Tax on disqualified persons. An excise tax Correcting an Excess Benefit $1 million, appropriate comparability data equal to 25% of the excess benefit is imposed Transaction includes data on compensation paid by three on each excess benefit transaction between an

comparable organizations in the same or A disqualified person corrects an excess applicable tax-exempt organization and a similar communities for similar services. benefit transaction by undoing the excess disqualified person. The disqualified person

3. The authorized body adequately who benefited from the transaction is liable for benefit to the extent possible, and by taking

documents the basis for its determination any additional measures necessary to place the tax. If the 25% tax is imposed and the

concurrently with making that determination. the organization in a financial position not excess benefit transaction is not corrected

The documentation should include: within the taxable period, an additional excise worse than that in which it would be if the

disqualified person were dealing under the a. The terms of the approved transaction tax equal to 200% of the excess benefit is highest fiduciary standards. The organization is and the date approved; imposed. not required to rescind the underlying b. The members of the authorized body If a disqualified person makes a payment of agreement; however, the parties may need to who were present during debate on the less than the full correction amount, the 200% modify an ongoing contract with respect to transaction that was approved and those who tax is imposed only on the unpaid portion of the future payments. voted on it; correction amount. If more than one

c. The comparability data obtained and A disqualified person corrects an excess disqualified person received an excess benefit relied upon by the authorized body and how benefit by making a payment in cash or cash from an excess benefit transaction, all such the data was obtained; equivalents equal to the correction amount to disqualified persons are jointly and severally d. Any actions by a member of the the applicable tax-exempt organization. The liable for the taxes.

authorized body having a conflict of interest; correction amount equals the excess benefit

and To avoid the imposition of the 200% tax, a plus the interest on the excess benefit; the

e. Documentation of the basis for the disqualified person must correct the excess interest rate may be no lower than the

determination before the later of the next benefit transaction during the taxable period. applicable Federal rate. There is an anti-abuse

meeting of the authorized body or 60 days after The taxable period begins on the date the rule to prevent the disqualified person from

the final actions of the authorized body are transaction occurs and ends on the earlier of effectively transferring property other than cash

taken, and approval of records as reasonable, the date the statutory notice of deficiency is or cash equivalents. issued or the section 4958 taxes are assessed. accurate and complete within a reasonable Property. With the agreement of the This 200% tax may be abated if the excess time thereafter. applicable tax-exempt organization, a benefit transaction subsequently is corrected disqualified person may make a payment by Special rebuttable presumption rule for during a 90-day correction period. returning the specific property previously nonfixed payments. As a general rule, in the Tax on organization managers. An excise transferred in the excess benefit transaction.

case of a nonfixed payment, no rebuttable tax equal to 10% of the excess benefit may be The return of the property is considered a presumption arises until the exact amount of imposed on the participation of an organization payment of cash (or cash equivalent) equal to the payment is determined, or a fixed formula manager in an excess benefit transaction the lesser of:

for calculating the payment is specified, and between an applicable tax-exempt organization • The fair market value of the property on the the three requirements creating the and a disqualified person. This tax, which may date the property is returned to the presumption have been satisfied. However, if not exceed $10,000 with respect to any single organization, or the authorized body approves an employment transaction, is only imposed if the 25% tax is • The fair market value of the property on the contract with a disqualified person that includes imposed on the disqualified person, the date the excess benefit transaction occurred.

a nonfixed payment (for example, discretionary organization manager knowingly participated in Insufficient payment. If the payment bonus) with a specified cap on the amount, the the transaction, and the manager’s resulting from the return of the property is less authorized body may establish a rebuttable participation was willful and not due to than the correction amount, the disqualified presumption as to the nonfixed payment when reasonable cause. There is also joint and person must make an additional cash payment the employment contract is entered into by, in several liability for this tax. An organization to the organization equal to the difference. effect, assuming that the maximum amount manager may be liable for both the tax on Excess payment. If the payment resulting payable under the contract will be paid, and disqualified persons and on organization from the return of the property exceeds the satisfying the requirements giving rise to the managers in appropriate circumstances. correction amount described above, the rebuttable presumption for that maximum An organization manager is any officer, organization may make a cash payment to the amount. director, or trustee of an applicable tax-exempt disqualified person equal to the difference. An IRS challenge to the presumption of organization, or any individual having powers

reasonableness. The Internal Revenue or responsibilities similar to officers, directors, Churches and Section 4958

Service may refute the presumption of or trustees of the organization, regardless of The regulations make it clear that the IRS will

reasonableness only if it develops sufficient title. An organization manager is not apply the procedures of section 7611 when

contrary evidence to rebut the probative value considered to have participated in an excess initiating and conducting any inquiry or

of the comparability data relied upon by the benefit transaction where the manager has examination into whether an excess benefit

authorized body. This provision gives opposed the transaction in a manner transaction has occurred between a church

taxpayers added protection if they faithfully find consistent with the fulfillment of the manager’s and a disqualified person.

General Instructions for Form 990 and Form 990-EZ -13-
Revenue Sharing Transactions 2. Subject to the central organization’s contributions or making expenditures, or both,

Proposed intermediate sanction regulations general supervision or control, for an exempt function.

were issued in 1998. The proposed regulations 3. Exempt from tax under a group The exempt function of a political exemption letter that is still in effect, and had special provisions covering ‘‘any organization is influencing or attempting to 4. Have the same accounting period as the transaction in which the amount of any influence the selection, nomination, election or central organization. economic benefit provided to or for the use of a appointment of an individual to a federal, state,

disqualified person is determined in whole or in or local public office or office in a political If the parent organization is required to file part by the revenues of one or more activities organization. A political organization must be a return for itself, it must file a separate return of the organization. . .’’ — so-called organized for the primary purpose of carrying and may not be included in the group return. revenue-sharing transactions. Rather than on exempt function activities. See General Instruction B for a list of setting forth additional rules on organizations not required to file. A political organization does not need to be revenue-sharing transactions, the final formally chartered or established as a Every year, each local organization must regulations reserve this section. Consequently, corporation, trust, or association. A separate until the Service issues new regulations for this authorize the central organization in writing to bank account in which political campaign funds include it in the group return and must declare, reserved section on revenue-sharing are deposited and disbursed only for political transactions, these transactions will be under penalty of perjury, that the authorization campaign expenses can qualify as a political evaluated under the general rules (for and the information it submits to be included in organization. example, the fair market value standards) that the group return are true and complete.

apply to all contractual arrangements between If the central organization prepares a group

applicable tax-exempt organizations and their return for its affiliated organizations, check the V. Information Regarding Transfers

disqualified persons. “Yes” box in item H(a), in the heading of Form Associated With Personal Benefit

990, and indicate the number of organizations Revocation of Exemption and Section Contracts for which the group return is filed in item H(b). 4958 Filers of Form 990 that engaged in activities For item H(c), check “Yes,” to indicate that involving personal benefit contracts must Section 4958 does not affect the substantive the group return includes all affiliated declare in Part X, Information Regarding standards for tax exemption under section organizations covered by the group ruling. If Transfers Associated With Personal Benefit 501(c)(3) or section 501(c)(4), including the you answer “No” to H(c), attach a list showing Contracts, whether or not they: requirements that the organization be the name, address, and employer identification organized and operated exclusively for exempt 1. Received any funds, directly or number (EIN) of each affiliated organization purposes, and that no part of its net earnings indirectly, to pay premiums on a personal included in the group return. If either box in benefit contract. inure to the benefit of any private shareholder H(a) or H(d) is checked “Yes,” enter the

or individual. The legislative history indicates 2. Paid any premiums, directly or indirectly, four-digit group exemption number (GEN). Do on a personal benefit contract. that in most instances, the imposition of this not confuse the four-digit GEN number to be intermediate sanction will be in lieu of reported for item I with the nine-digit EIN revocation. The IRS has indicated that the Filers of Form 990-EZ must make this number reported in item D of the form’s following four factors will be considered in declaration in a statement attached to heading. determining whether to revoke an applicable CAUTION their form.

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The central organization should send the tax-exempt organization’s exemption status annual information required to maintain a If premiums were paid on a personal benefit where an excess benefit transaction has group exemption letter to the: contract, the organization must report these occurred: Internal Revenue Service Center payments on Form 8870 and pay an excise • Whether the organization has been involved Ogden, UT 84201-0027 tax, equal to premiums paid, with Form 4720. in repeated excess benefit transactions; An affiliated organization covered by a Section 170(f)(10)(F)(iii) requires a • The size and scope of the excess benefit group ruling may file a separate return instead charitable organization to report annually its transaction; of being included in the group return. In such premium payments on a personal benefit • Whether, after concluding that it has been case, check the “Yes” box in item H(d), in the contract with respect to a transferor and to party to an excess benefit transaction, the heading of Form 990, and enter the GEN identify the beneficiaries of those contracts. A organization has implemented safeguards to number in item I. transferor of funds to a charitable organization prevent future recurrences; and receives no charitable contribution deduction if • Whether there was compliance with other Parts IV-A and IV-B of Form 990 do not the organization, directly or indirectly pays, or applicable laws. have to be completed on group returns. has previously paid, any premium on a

personal benefit contract with respect to the

Q. Erroneous Backup Withholding S. Organizations in Foreign transferor, or there is an understanding or

Countries and U.S. Possessions expectation that any person will directly or Recipients of dividend or interest payments indirectly pay any premium on a personal generally must certify their correct taxpayer Refer to General Instruction B for the filing benefit contract with respect to the transferor identification number to the bank or other payer exemption for foreign organizations with (section 170(f)(10)(A)). on Form W-9. If the payer does not get this $25,000 or less in gross receipts from U.S. A personal benefit contract, generally, is information, it must withhold part of the sources. any life insurance, annuity, or endowment payments as backup withholding. If the Report amounts in U.S. dollars and state contract that benefits, directly or indirectly, the organization was subject to erroneous backup what conversion rate you use. Combine transferor, a member of the transferor’s family, withholding because the payer did not realize it amounts from within and outside the United or any other person designated by the was an exempt organization and not subject to States and report the total for each item. All transferor (other than an organization this withholding, it can claim credit on Form information must be written in English. described in section 170(c)). A charitable 990-T for the amount withheld. See the organization is an organization described in Instructions for Form 990-T. Claims for refund

must be filed within 3 years after the date the T. Public Interest Law Firms section 170(c).

original return was due; 3 years after the date Section 170(f)(10)(F)(i) imposes on a A public interest law firm exempt under section the organization filed it; or 2 years after the charitable organization an excise tax equal to 501(c)(3) or 501(c)(4) must attach a statement date the tax was paid, whichever is later. the premiums paid by the organization on any that lists the cases in litigation, or that have personal benefit contract, if the payment of been litigated during the year. For each case, premiums is in connection with a transfer for describe the matter in dispute and explain how R. Group Return which a deduction is not allowed under section the litigation will benefit the public generally. 170(f)(10)(A). For purposes of this excise tax, If a parent organization wants to file a group Also attach a report of all fees sought and

recovered in each case. See Rev. Proc. 92-59, section 170(f)(10)(F)(ii) provides that premium return for two or more of its subsidiaries, it payments made by any other person, pursuant must use Form 990. The parent organization 1992-2 C.B. 411. to an understanding or expectation described cannot use a Form 990-EZ for the group in section 170(f)(10)(A), are treated as made return. U. Political Organizations by the charitable organization.

A central, parent, or like organization can A political organization subject to section 527 is For more information on the reporting file a group return on Form 990 for two or more a party, committee, association, fund, or other requirements of section 170(f)(10), see Notice local organizations that are: organization (whether or not incorporated) 2000-24, 2000-17 I.R.B. 952 (2000-1 C.B. 952)

1. Affiliated with the central organization at organized and operated primarily for the and Announcement 2000-82, 2000-42 I.R.B.

the time its annual accounting period ends, purpose of directly or indirectly accepting 385 (2000-2 C.B. 385).

-14- General Instructions for Form 990 and Form 990-EZ
• Complete the required preparer information. not leave any applicable lines blank or attach W. Requirements for a Properly • Give a copy of the return to the organization. any other forms or schedules instead of

Completed Form 990 or Form Leave the paid preparer’s space blank if the entering the required information on the

appropriate line on Form 990 or Form 990-EZ. 990-EZ return was prepared by a regular employee of

the filing organization. Assembling Form 990 or Form 990-EZ. Public inspection. In general, all information Recordkeeping. The organization’s records Before filing the Form 990, or Form 990-EZ, the organization reports on or with its Form should be kept for as long as they may be assemble the package of forms and 990, or Form 990-EZ, including attachments, needed for the administration of any provision attachments in the following order: will be available for public inspection. Note, of the Internal Revenue Code. Usually, records • Form 990 or Form 990-EZ.

however, the public inspection rules for the that support an item of income, deduction, or • Schedule A (Form 990 or 990-EZ). The Schedule B (Form 990, 990-EZ, or 990-PF), a requirement to attach Schedule A (Form 990 or credit must be kept for 3 years from the date required attachment for organizations that file 990-EZ) applies to all section 501(c)(3) the return is due or filed, whichever is later. Form 990 or Form 990-EZ. Make sure the Keep records that verify the organization’s organizations and all section 4947(a)(1) forms and attachments are clear enough to basis in property for as long as they are nonexempt charitable trusts that file Form 990 photocopy legibly. needed to figure the basis of the original or or Form 990-EZ.

Signature. To make the return complete, an • Schedule B (Form 990, 990-EZ, or 990-PF). replacement property. officer of the organization authorized to sign it • Attachments to Form 990 or Form 990-EZ. The organization should also keep copies must sign in the space provided. For a • Attachments to Schedule A (Form 990 or of any returns it has filed. They help in corporation, or association, this officer may be 990-EZ). preparing future returns and in making the president, vice president, treasurer, • Attachments to Schedule B (Form 990, computations when filing an amended return. assistant treasurer, chief accounting officer, or 990-EZ, or 990-PF). Rounding off to whole dollars. You may other corporate, or association officer, such as Attachments. Use the schedules on the round off cents to whole dollars on the return a tax officer. A receiver, trustee, or assignee official form unless you need more space. If must sign any return he or she files for a and schedules. If you do round to whole you use attachments, they must: dollars, you must round all amounts. To round, corporation or association. For a trust, the drop amounts under 50 cents and increase 1. Show the form number and tax year; authorized trustee(s) must sign. amounts from 50 to 99 cents to the next dollar. 2. Show the organization’s name and EIN;

Generally, anyone who is paid to For example, $1.39 becomes $1 and $2.50 3. Identify clearly the Part or line(s) to

prepare the return must sign it in the becomes $3. which the attachments relate;

Paid Preparer’s Use Only area. 4. Include the information required by the

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If you have to add two or more amounts to form and use the same format as the form; The paid preparer must: figure the amount to enter on a line, include 5. Follow the same Part and line sequence • Sign the return in the space provided for the cents when adding the amounts and round off as the form; and preparer’s signature. only the total. 6. Be on the same size paper as the form. • Enter the preparer’s social security number Completing all lines. Unless the organization (SSN), preparer tax identification number is permitted to use certain DOL forms or Form

(PTIN), or employer identification number 5500 as partial substitutes for Form 990, or

(EIN), only if the Form 990, or Form 990-EZ, is Form 990-EZ (see General Instruction F), do

for a section 4947(a)(1) nonexempt charitable

trust that is not filing Form 1041.

General Instructions for Form 990 and Form 990-EZ -15-
 Checklist For A Properly Completed Return.

Complete Schedule A (Form 990 or 990-EZ) if your organization is a section 501(c)(3), 501(e), (f), (k), (n)

organization or a section 4947(a)(1) nonexempt charitable trust.

Complete Schedule A (Form 990 or 990-EZ), Part IV-A, Support Schedule, if you are required to check a box

on line 10, 11a, 11b, or 12 of Part IV of Schedule A.

File Form 990 instead of Form 990-EZ if your organization’s gross receipts are $100,000 or more or total

assets at the end of the year are $250,000 or more.

Indicate the correct tax year in the heading of your form.

Have an officer of the organization sign the return.

Complete all Balance Sheet columns (Part IV (and IV-A and IV-B) of Form 990; Part II of Form 990-EZ).

Indicate “N/A” if a line, column, or Part does not apply. Indicate too, on the applicable line, if a schedule is

attached. Do not substitute another balance sheet instead of completing the Part II Balance Sheet of Form

990-EZ.

Attach all required pages and schedules to the return. Include a list of subordinates if filing a group return.

Double-check the accuracy of your EIN, tax period, and group exemption number (GEN), if applicable.

Indicate the correct 501(c) subsection under which you are tax-exempt. If there has been a change, attach a

copy of the latest determination letter. If the letter is unavailable, attach a description of your organization’s

primary exempt purpose.

Be aware that the Form 990, Form 990-EZ, the Schedule A (Form 990 or 990-EZ), and the attachments to be

filed with these forms, are publicly disclosable. Note, however, the specific public inspection rules in the

Instructions for Schedule B (Form 990, 990-EZ, or 990-PF).

Section 501(c)(3) organizations required to complete lines 26, 27, or 28 of Schedule A (Form 990 or 990-EZ)

must prepare lists for their own records to substantiate amounts on those lines. These lists are not to be filed

with the return.

Do not check the Final return box in the heading of the Form 990 or 990-EZ unless your organization has

ceased operations.

-16- General Instructions for Form 990 and Form 990-EZ
• A disregarded entity, as described in A trust Amendments to the trust Regulations sections 301.7701-1 through Specific Instructions for agreement signed by the 301.7701-3, however, may use the EIN of the trustee. Form 990 organization in Part IX if the disregarded entity

does not have its own EIN. See General See also the General Instructions that apply to An association Amendments to the articles of Instruction A and the instructions for Part IX. both Form 990 and Form 990-EZ. association, constitution,

bylaws, or other organizing Item E. Telephone Number Contents Page document, with the signatures Enter a telephone number of the organization Completing the Heading of Form 990 of at least two officers/ . . . . . 17 that members of the public and government members.

Part I—Revenue, Expenses, and Changes in regulators may use during normal business

Net Assets . . . . . . . . . . . . . . . . . . . . . . 18 hours to obtain information about the

Final return and Amended return. organization’s finances and activities. If the Part II—Statement of Functional Expenses 22 Organizations should file final returns when organization does not have a telephone

Part III—Statement of Program Service they cease to be section 501(a) organizations number, enter the telephone number of an

Accomplishments . . . . . . . . . . . . . . . . . . 25 or section 527 organizations; for example, organization official who can provide such

when they cease operations and dissolve. See information.

Part IV—Balance Sheets . . . . . . . . . . . . . 25 the instructions for line 79 that discuss

Parts IV-A and IV-B—Reconciliation liquidations, dissolutions, terminations, or Item F. Accounting Method

Statements . . . . . . . . . . . . . . . . . . . . . . 27 substantial contractions. An organization must indicate the method of

If the return is an amended return, check accounting used in preparing this return. See Part V-A—Current Officers, Directors, the box. There are amended return General Instruction G. Trustees, and Key Employees . . . . . . . . . . 27 requirements when filing with a state. See

Part V-B—Former Officers, Directors, General Instructions E and J. Item G. Website

Trustees, and Key Employees That Received Application pending. If the organization’s Show the organization’s website address if a

Compensation or Other Benefits . . . . . . . . 28 application for exemption is pending, check this website is available. Otherwise, write ‘‘N/A’’

box and complete the return. (not applicable). Consider adding your email Part VI—Other Information . . . . . . . . . . . . 29 address to your website.

Part VII—Analysis of Income-Producing Item C. Name and Address

Activities . . . . . . . . . . . . . . . . . . . . . . . . 34 If we mailed the organization a Form 990 Item H. Group Return, etc.

Package with a pre-addressed mailing label, Part VIII—Relationship of Activities to the See General Instruction R. Attach the required please attach the label in the name and Accomplishment of Exempt Purposes list, if applicable, or you will be contacted later . . . . . 35 address space on the return. Using the label for the missing information. Part IX—Information Regarding Taxable helps us avoid errors in processing the return.

Subsidiaries and Disregarded Entities . . . . . 35 If any information on the label is wrong, draw a Item I. Group Exemption Number line through that part and correct it. Part X—Information Regarding Transfers The group exemption number (GEN) is a

Associated With Personal Benefit Contracts 35 If the organization operates under a name number assigned by the IRS to the central/ different from its legal name, give the legal parent organization of a group that has a group Exclusion Codes . . . . . . . . . . . . . . . . . . . 36 name of the organization but identify its ruling. alternate name, after the legal name, by writing

‘‘aka’’ (also known as) and the alternate name Enter the four-digit group exemption

Completing the Heading of of the organization. However, if the number if you checked a “Yes” box in item H(a)

Form 990 organization has changed its name, follow the and H(d). Contact the central/parent

instructions for Name change in Item B — organization if you are unsure of the GEN The instructions that follow are keyed to items Checkboxes. assigned. in the heading for Form 990. If the organization receives its mail in care Item A. Accounting Period Item J. Organization Type of a third party (such as an accountant or an

File the 2005 return for calendar year 2005 and attorney), enter on the street address line If the organization is exempt under section

fiscal years that begin in 2005 and end in 2006. “C/O” followed by the third party’s name and 501(c), check the applicable box and insert,

For a fiscal year return, fill in the tax year street address or P.O. box. within the parentheses, the number that

space at the top of page 1. See General identifies the type of section 501(c) Include the suite, room, or other unit Instruction G for additional information on organization the filer is. See the chart in number after the street address. If the Post accounting periods and methods. General Instruction C. The term section Office does not deliver mail to the street 501(c)(3) includes organizations exempt under address and the organization has a P.O. box, Item B. Checkboxes sections 501(e), (f), (k), and (n). Check the show the box number instead of the street Address change, name change, and initial applicable box if the organization is a section address.

return. Check the appropriate box if the 527 political organization. See General

For foreign addresses, enter information in organization changed its address since it filed Instruction U.

the following order: city, province or state, and its previous return, or if this is the first time the the name of the country. Follow the foreign If the organization is a section 4947(a)(1) organization is filing either a Form 990 or a country’s practice in placing the postal code in nonexempt charitable trust, check the Form 990-EZ. the address. Please do not abbreviate the applicable box. Note also the discussion If the tax-exempt organization has changed country name. regarding Schedule A (Form 990 or 990-EZ) its name, attach the following documents: and Form 1041 in General Instruction D and If a change in address occurs after the the instructions to line 92 of Form 990. return is filed, use Form 8822 to notify the IRS IF the of the new address. organization is . THEN attach . . . Item K. Gross Receipts of $25,000 or Item D. Employer Identification Less

A corporation Amendments to the articles of Number Check this box if the organization’s gross incorporation with proof of The organization should have only one federal receipts are normally not more than $25,000, filing with the state of employer identification number (EIN). If it has but the organization chooses to file a return. If incorporation. more than one and has not been advised the organization chooses to file a return, be

which to use, notify the: sure to file a complete return. For a discussion

 Internal Revenue Service Center on gross receipts see General Instruction A, Ogden, UT 84201-0027 and General Instruction W for a discussion on

State what numbers the organization has, the a complete return.

name and address to which each number was

assigned, and the address of its principal Item L. Calculating Gross Receipts

office. The IRS will advise the organization The organization’s gross receipts are the total which number to use. amount it received from all sources during its

• A section 501(c)(9) voluntary employees’ annual accounting period, without subtracting

beneficiary association must use its own EIN any costs or expenses. See the gross receipts

and not the EIN of its sponsor. discussion in General Instruction B.

Specific Instructions for Form 990 -17-
Item M. Schedule B (Form 990, 990-EZ, If a contributor gives more than $40, that

or 990-PF) Part I. Revenue, Expenses, and person would be making a larger contribution,

Whether or not the organization enters any Changes in Net Assets or Fund the difference between the book’s retail value

of $16 and the amount actually given. Rev. amount on line 1d of Form 990, the Balances Rul. 67-246, 1967-2 C.B. 104, explains this organization must either check the box in item All organizations filing Form 990 with the IRS principle in detail. See also the Lines 9a M or attach Schedule B (Form 990, 990-EZ, or or any state must complete Part I. Some states through 9c instructions and Pub. 526. 990-PF). Your return will be incomplete if you that accept Form 990 in place of their own do not either check the box in item M or file forms require additional information. Report the expenses that relate directly to Schedule B (Form 990, 990-EZ, or 990-PF). the sale of the book on line 9b. Report the See the Instructions for Schedule B (Form 990, Line 1. In General expenses of raising contributions (shown within 990-EZ, or 990-PF), for more information. the parentheses on line 9a and again on line

Contributions, gifts, grants, and 1a) in Fundraising, column (D), Part II, and on

line 15 of Part I. Contributor includes individuals, similar amounts received

fiduciaries, partnerships, corporations, • On lines 1a through 1c, report amounts At the time of any solicitation or associations, trusts, and exempt received as voluntary contributions; that is,

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payment, organizations that are eligible organizations. payments, or the part of any payment, for CAUTION to receive tax-deductible contributions

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which the payer (donor) does not receive full should advise patrons of the amount deductible retail value (fair market value) from the for federal tax purposes. See General recipient (donee) organization. Instruction L. Guidelines for Meeting the • Report gross amounts of contributions

Requirements for Schedule B (Form collected in the charity’s name by fundraisers. Contributions Can Arise From Special

990, 990-EZ, or 990-PF) • Report all expenses of raising contributions Events When Items of Only Nominal in Fundraising, column (D), Part II, and on line Value are Given or Offered 15 of Part I. You must show on line 30 Section 501(c)(3) org., meeting the 1/3 professional fundraising fees relating to the If an organization offers goods or services of support test of 170(b)(1)(A) gross amounts of contributions collected in the only nominal value through a special event or

charity’s name by fundraisers. distributes free, unordered, low-cost items to

If . . . . . . . A section 501(c)(3) organization • Report the value of noncash contributions at patrons, report the entire amount received for

that met the 1/3 support test of the the time of the donation. For example, report such benefits as a contribution on line 1a

regulations under 509(a)(1)/ the gross value of a donated car at the time the (direct public support). Report all related

170(b)(1)(A) did not receive a expenses in Fundraising, column (D), Part II. car was received as a donation.

contribution of the greater of • For grants, see Grants that are Equivalent to See General Instruction L for a definition of

$5,000 or 2% of the amount on benefits that have a nominal or insubstantial contributions, on the following page. value. line 1d of Form 990, from any one Reporting for line 1, in accordance with contributor,* SFAS 116, is acceptable for Form 990 Section 501(c)(3) Organizations

Then .... The organization should check the purposes, but not required by IRS. However, Correctly dividing gross receipts from special box in item M to certify that it is see General Instruction E. events into revenue and contributions is

not required to attach Schedule B especially important for a section 501(c)(3) An organization that receives a grant to be (Form 990, 990-EZ, or 990-PF). organization that claims public support as paid in future years should, according to SFAS described in section 509(a)(1)/170(b)(1)(A)(vi) Otherwise Complete and attach Schedule B 116, report the grant’s present value on line 1. or section 509(a)(2). In the public support (Form 990, 990-EZ, or 990-PF). Accruals of present value increments to the computations of these Code sections, the unpaid grant should also be reported on line 1 revenue portion of gross receipts may be (a) Section 501(c)(7), (8), or (10) Organization in future years. excluded entirely, (b) treated as public support,

Contributions Can Arise From Special or (c) if the revenue represents unrelated trade If . . . . . . . A section 501(c)(7), (8), or (10) Events When an Excess Payment is or business income, treated as nonpublic organization did not receive any support. contribution or bequest for use Received for Items Offered

exclusively for religious, Fundraising activities relate to soliciting and Section 501(c)(3) organizations must

charitable, scientific, literary, or separate gross receipts from special events receiving contributions. However, special

educational purposes, or the fundraising activities such as dinners, into revenue and contributions when preparing

prevention of cruelty to children or door-to-door sales of merchandise, carnivals, the Support Schedule in Part IV-A of Schedule

animals (and did not receive any and bingo games can produce both A (Form 990 or 990-EZ).

noncharitable contributions of contributions and revenue.

Section 501(c)(9), (17), and (18) $5,000 or more as described If a buyer at such a special event, pays Organizations below under general rule), more for goods or services than their retail These organizations provide participants with value, report, as a contribution, both on line 1a Then .... The organization should check the life, sickness, accident, welfare, and and on line 9a (within the parentheses), any box in item M to certify that it is unemployment insurance, pensions, or similar amount paid in excess of the retail value. This not required to attach Schedule B benefits, or a combination of these benefits. situation usually occurs when organizations (Form 990, 990-EZ, or 990-PF). When such an organization receives payments seek public support through solicitation from participants or their employers to provide Otherwise Complete and attach Schedule B programs that are in part special events or these benefits, report the payments on line 2 (Form 990, 990-EZ, or 990-PF). activities and are in part solicitations for as program service revenue, rather than on contributions. The primary purpose of such

All Other Form 990 or Form 990-EZ line 1 as contributions. solicitations is to receive contributions and not

Organizations (General rule) to sell the merchandise at its retail value even Donations of Services are Not though this might produce a profit. Contributions If ....... The organization did not show as Example. An organization announces that part of line 1d of the Form 990, a In Part I, do not include as contributions on line anyone who contributes at least $40 to the 1 the value of services donated to the contribution of $5,000 or more organization can choose to receive a book organization, or items such as the free use of from any one contributor,* worth $16 retail value. A person who gives materials, equipment, or facilities. See the $40, and who chooses the book, is really Then .... The organization should check the instructions for Part III and for Part VI, line 82, purchasing the book for $16 and also making a box in item M to certify that it is for the optional reporting of such amounts in contribution of $24. The contribution of $24, not required to attach Schedule B Parts III and VI. which is the difference between the buyer’s (Form 990, 990-EZ, or 990-PF). payment and the $16 retail value of the book, Any unreimbursed expenses of officers,

Otherwise Complete and attach Schedule B would be reported on line 1a and again on line employees, or volunteers do not belong on the

(Form 990, 990-EZ, or 990-PF). 9a (within the parentheses). The revenue Form 990 or Form 990-EZ. See the

* Total a contributor’s gifts of $1,000 or more to received ($16 retail value of the book) would discussions for charitable contributions and

determine if a contributor gave $5,000 or more. Do be reported in the right-hand column on line employee business expenses in Pub. 526 and

not include smaller gifts. 9a. Pub. 463, respectively.

-18- Specific Instructions for Form 990
Grants that are Equivalent to Membership dues. Report on line 1a The general public gets the primary and direct

Contributions membership dues and assessments that benefit from these payments and any benefit to

represent contributions from the public rather the governmental unit itself would be indirect Grants that encourage an organization than payments for benefits received or and insubstantial as compared to the public receiving the grant to carry on programs or payments from affiliated organizations. See the benefit. activities that further its exempt purposes are instructions for line 3. grants that are equivalent to contributions.

Report them on line 1. The grantor may require Government contributions (grants). Report Line 1d. Total Contributions, etc.

that the programs of the grant recipient Enter the total of amounts reported on lines 1a government grants on line 1c if they represent

(grantee) conform to the grantor’s own policies through 1c. In the entry spaces in the contributions, or on line 2 (and on line 93(g) of

and may specify the use of the grant, such as description column for line 1d, enter the Part VII), if they represent fees for services.

use for the restoration of a historic building or a separate totals for cash and noncash See the instructions under the heading, Grants

voter registration drive. that are equivalent to contributions, above and contributions, gifts, grants, and similar amounts

the instructions for line 1c below. received. The total of the two amounts must A grant is still equivalent to a contribution if Commercial co-venture. Report amounts equal the total on line 1d. the grant recipient provides a service or makes

a product that benefits the grantor incidentally. contributed by a commercial co-venture on line Report as cash contributions, etc., only

See Examples 1a as a contribution received directly from the contributions, etc., received in the form of cash, in the line 1c instructions.

However, a grant is a payment for services, public. These are amounts received by an checks, money orders, credit card charges,

and not a contribution, if the grant requires the organization (donee) for allowing an outside wire transfers, and other transfers and deposits

grant recipient to provide that grantor with a organization (donor) to use the donee’s name to a cash account of the organization. If your

specific service, facility, or product rather than in a sales promotion campaign. In such a organization records pledges as contributions,

to give a direct benefit primarily to the general campaign, the donor advertises that it will etc., at the time the pledges are made (rather

public or to that part of the public served by the contribute a certain dollar amount to the donee than when the pledges are collected), include

organization. In general, do not report as organization for each unit of a particular as cash contributions, etc., only those pledges

contributions any payments for a service, product or service sold or for each occurrence actually collected in cash during the year and of a specific type. pledges uncollected at the end of the year that facility, or product that primarily give some

economic or physical benefit to the payer Contributions received through special are reasonably expected to be paid in cash in a

(grantor). events. Report contributions received through later year. Report all other contributions, etc.,

special events on line 1a. See the preceding as noncash contributions, etc., in the space Example. A public interest organization line 1 instructions and the instructions for Lines provided. Be sure to include as a noncash described in section 501(c)(4) makes a grant to 9a through 9c. contribution donated items like cars and another organization to conduct a nationwide clothing valued as of the time of their receipt survey to determine voter attitudes on issues of Line 1b. Indirect Public Support even if these items were made available for interest to the grantor. The grantor plans to use Enter the total contributions received indirectly sale immediately after they were received. See the results of the survey to plan its own from the public through solicitation campaigns General Instruction L and Schedule B (Form program for the next 3 years. Under these conducted by federated fundraising agencies 990, 990-EZ, or 990-PF), and lines 1 and 1a circumstances, since the survey serves the and similar fundraising organizations (such as for a discussion of noncash contributions. grantor’s direct needs and benefits the grantor a United Way organization and certain Noncash contributions do not include donated more than incidentally, the grant to the sectarian federations). These organizations services, which may be reported on line 82 and organization making the survey is not a normally conduct fundraising campaigns within in the narrative section of Part III. contribution. The grant recipient should not a single metropolitan area or some part of a Schedule of Contributors. Attach Schedule report the grant as a contribution but should particular state and allocate part of the net B (Form 990, 990-EZ, or 990-PF). See General report it on line 2 as program service revenue. proceeds to each participating organization on Instruction L and the Specific Instructions for the basis of the donors’ individual designations Treat research to develop products for the Completing the Heading of Form 990, Item M. and other factors. payer’s use or benefit as directly serving the

payer. However, generally, basic research or Include on line 1b amounts contributed by Lines 2 through 11

studies in the physical or social sciences other organizations closely associated with the

should not be treated as serving the payer’s reporting organization. This includes Do not enter any contributions on lines

needs. contributions received from a parent 2 through 11. Enter all contributions on

organization, subordinate, or another CAUTION line 1. If you enter contributions on lines

!

See Regulations section 1.509(a)-3(g) to organization with the same parent. National 2 through 11, you will be unable to complete determine if a grant is a contribution reportable organizations that share in fundraising Part VII correctly. Line 105 (the sum of on line 1, or a revenue item reportable campaigns conducted by their local affiliates amounts entered in columns (B), (D), and (E) elsewhere on Form 990. should report the amount they receive on line for lines 93 through 103 of Part VII, Analysis of

1b. Income-Producing Activities) should match the Line 1a. Direct Public Support total of amounts entered for correlating lines 2

Contributions, gifts, grants, and similar Line 1c. Government Contributions through 11 of Part I. See the instructions for

amounts received. Enter the gross amounts (Grants) Part VII.

of contributions, gifts, grants, and bequests The general line 1 instructions, under the Line 2. Program Service Revenue that the organization received directly from the heading, Grants that are Equivalent to

public. Include: Including Medicare, Medicaid contributions, earlier, apply to this item in • All donated items. For example, a car is particular. A grant or other payment from a Payments and Government Fees and

donated to an organization. Immediately after governmental unit is treated as a contribution if Contracts

the organization receives the donated car, the its primary purpose is to enable the donee to Enter the total of program service revenue organization sells the car. The organization provide a service to, or maintain a facility for, (exempt function income) as reported in Part includes the value of the car as of the time of the direct benefit of the public rather than to VII, lines 93(a) through (g), columns (B), (D), its receipt as a contribution on line 1a and serve the direct and immediate needs of the and (E). Program services are primarily those includes it in the total on line 1d as a noncash grantor even if the public pays part of the that form the basis of an organization’s contribution. expense of providing the service or facility. exemption from tax. For a more detailed • All funds or the entire value of noncash The following are examples of description of program services, refer to the items raised by an outside fundraiser in a governmental grants and other payments that instructions for Part II, column (B), Program charity’s name and not just the amount actually are treated as contributions. services. received by the charity. For example, a Examples. Examples. A hospital would report on this corporation solicits and sells cars in a charity’s line all of its charges for medical services name. When a car is received, its entire value 1. Payments by a governmental unit for the (whether to be paid directly by the patients or is reported as a contribution. construction or maintenance of library or through Medicare, Medicaid, or other • Amounts received from individuals, trusts, hospital facilities open to the public. third-party reimbursement), hospital parking lot corporations, estates, and foundations, or 2. Payments under government programs fees, room charges, laboratory fees for hospital raised by an outside professional fundraiser. to nursing homes or homes for the aged in patients, and related charges for services. • Include contributions and grants from public order to provide health care or other services

charities and other exempt organizations that to their residents. Insurance premiums. A section

are neither fundraising organizations nor 3. Payments to child placement or child 501(c)(15) organization would report on this

affiliates of the filing organization. guidance organizations under government line all of its insurance premiums received. The

• See the instructions for line 1b. programs serving children in the community. amount reported here for insurance premiums

Specific Instructions for Form 990 -19-
should correlate with the amounts reported on received, report such dues and assessments Line 6b. Rental Expenses

line 93, columns (B), (D) and (E). on line 3. Enter the expenses paid or incurred for the

Program service revenue. Program service Organizations described in section income reported on line 6a. Include interest

revenue includes income earned by the 501(c)(5), (6), or (7) generally provide benefits related to rental property and depreciation if it

organization for providing a government that have a reasonable relationship to dues, is recorded in the organization’s books and

agency with a service, facility, or product that although benefits to members may be indirect. records. Report in column (B) of Part II

benefited that government agency directly Program services any rental expenses Dues or assessments received that exceed rather than benefiting the public as a whole. allocable to rental income reportable as the value of available membership benefits. See the line 1c instructions for reporting program service revenue on line 2. Whether or not membership benefits are used, guidelines when payments are received from a dues received by an organization, to the extent Line 6c. Net Rental Income or (Loss) government agency for providing a service, they are more than the monetary value of the facility, or product for the primary benefit of the Subtract line 6b from line 6a. Show any loss in membership benefits available to the dues general public. parentheses. payer, are a contribution that should be Program service revenue also includes: reported on line 1a. See Rev. Rul. 54-565, Line 7. Other Investment Income

tuition received by a school; revenue from 1954-2 C.B. 95 and Rev. Rul. 68-432, 1968-2 Enter the amount of investment income not admissions to a concert or other performing C.B. 104. reportable on lines 4 through 6 and describe arts event or to a museum; royalties received Dues received primarily for the the type of income in the space provided or in as author of an educational publication organization’s support. If a member pays an attachment. The income should be the distributed by a commercial publisher; interest dues mainly to support the organization’s gross amount derived from investments income on loans a credit union makes to its activities and not to obtain benefits of more reportable on line 56. Include, for example, members; payments received by a section than nominal monetary value, those dues are a royalty income from mineral interests owned by 501(c)(9) organization from participants, or contribution to the organization includible on the organization. However, do not include employers of participants, for health and line 1a. income from program-related investments. See welfare benefits coverage; insurance premiums the instructions for line 2. Also, do not include received by a fraternal beneficiary society; and Examples of membership benefits. These unrealized gains and losses on investments registration fees received in connection with a include subscriptions to publications, carried at market value. See the instructions for meeting or convention. newsletters (other than one about the line 20.

Program-related investments. Program organization’s activities only), free or

service revenue also includes income from reduced-rate admissions to events the Lines 8a through 8d. Gains (or Losses)

program-related investments. These organization sponsors, the use of its facilities, From Sale of Assets Other Than

and discounts on articles or services that both investments are made primarily to accomplish Inventory members and nonmembers can buy. In figuring an exempt purpose of the investing Report, on lines 8a through 8c, all sales of the value of membership benefits, do not organization rather than to produce income. securities in column (A). Use column (B) to Examples are scholarship loans and low include intangible benefits, such as the right to report sales of all other types of investments attend meetings, vote or hold office in the interest loans to charitable organizations, (such as real estate, royalty interests, or organization, and the distinction of being a indigents, or victims of a disaster. partnership interests) and all other member of the organization. Rental income from an exempt function is noninventory assets (such as program-related

another example of program-related Line 4. Interest on Savings and investments and fixed assets used by the

investment income. When an organization Temporary Cash Investments organization in its related and unrelated

rents to an unaffiliated exempt organization at activities). Enter the amount of interest income from less than fair rental value for the purpose of savings and temporary cash investments On line 8a, for each column, enter the total aiding that tenant’s exempt function, the reportable on line 46. So-called dividends or gross sales price of all such assets. Total the reporting organization should report such rental earnings received from mutual savings banks, cost or other basis (less depreciation) and income as program service revenue on line 2. money market funds, etc., are actually interest selling expenses and enter the result on line See also the instructions for line 6a. For and should be entered on line 4. 8b. On line 8c, enter the net gain or loss. purposes of this return, report all rental income On lines 8a and 8c, also report capital gains from an affiliated organization on line 2. Line 5. Dividends and Interest from dividends, the organization’s share of capital Unrelated trade or business activities. Securities gains and losses from a partnership, and Unrelated trade or business activities (not Enter the amount of dividend and interest capital gains distributions from trusts. Indicate including any special events or activities) that income from equity and debt securities (stocks the source on the schedule described below. generate fees for services may also be and bonds) of the type reportable on line 54. program service activities. A social club, for Combine the gain and/or loss figures Include amounts received from payments on example, should report as program service reported on line 8c, columns (A) and (B) and securities loans, as defined in section

revenue the fees it charges both members and report that total on line 8d. Do not include any 512(a)(5). Do not include any capital gains nonmembers for the use of its tennis courts unrealized gains or losses on securities carried dividends that are reportable on line 8. See the and golf course. at market value in the books of account. See instructions for line 2 for reporting income from the instructions for line 20. Sales of inventory items by hospitals, program-related investments.

colleges, and universities. Books and For reporting sales of securities on Form Line 6a. Gross Rents records maintained in accordance with 990, you may use the more convenient

generally accepted accounting principles for Enter on line 6a the rental income received for average cost basis method to figure the

hospitals, colleges, and universities are more the year from investment property reportable organization’s gain or loss. When a security is

specialized than books and records maintained on line 55. Do not include on line 6a rental sold, compare its sales price with the average

according to those accounting principles for income related to the reporting organization’s cost basis of the particular security to

other types of organizations that file Form 990. exempt function (program service). Report determine gain or loss. However, generally, for

Accordingly, hospitals, colleges, and such income on line 2. For example, an reporting sales of securities on Form 990-T, do

universities may report, as program service exempt organization whose exempt purpose is not use the average cost basis to determine

revenue on line 2, sales of inventory items to provide low-rental housing to persons with gain or loss.

otherwise reportable on line 10a. In that event, low income would report that rental income as Nonpublicly traded securities and show the applicable cost of goods sold as program service revenue on line 2. Rental noninventory items. Attach a schedule

program service expense on line 13 of Part I income received from an unaffiliated exempt showing the sale or exchange of nonpublicly and in column (B) of Part II. All other organization is generally considered as traded securities and the sale or exchange of organizations, however, should not report sales unrelated to the reporting organization’s other assets that are not inventory items. The of inventory items on line 2. exempt purpose and reportable on line 6a. schedule should show security transactions However, note an exception given in the separately from the sale of other assets. Show Line 3. Membership Dues and instructions for line 2 when the reporting for each of these assets: Assessments organization aids an unaffiliated organization • Date acquired and how acquired, Enter members’ and affiliates’ dues and with its exempt function. • Date sold and to whom sold, assessments that are not contributions. Only for purposes of completing this return, • Gross sales price,

Dues and assessments received that the reporting organization must report any • Cost, other basis, or if donated, value at time

compare reasonably with available benefits. rental income received from an affiliated acquired (state which),

When dues and assessments are received that exempt organization as program service • Expense of sale and cost of improvements

compare reasonably with membership benefits revenue on line 2. made after acquisition, and

-20- Specific Instructions for Form 990
• If depreciable property, depreciation since line 9b, do not report it again on line 10b or in were not among the three largest. Indicate the

acquisition. Part II. Expenses reported on line 10b relate to type and number of the events not listed

Publicly traded securities. On the attached sales of inventory. Expenses reported in Part individually (for example, three dances and two

II, column (D), relate to contributions raised raffles). schedule, for sales of publicly traded securities through fundraising. through a broker, total the gross sales price, An example of this schedule of special the cost or other basis, and the expenses of Example. At a special event, an events might appear in columnar form as sale on all such securities sold, and report organization received $100 in gross receipts follows:

lump-sum figures in place of the detailed for goods valued at $40. The organization Special Events (and the reporting required by the above paragraph. entered gross revenue of $40 on line 9a (in the number of occasions that (A) (B) (C) All Publicly traded securities include common and right-hand column) and entered a contribution the event occurred): # # # Other Total

preferred stocks, bonds (including of $60 on both line 1a and line 9a (within the

governmental obligations), and mutual fund parentheses). The contribution of $60 was the Gross Receipts $xx $xx $xx $xx $xx shares that are listed and regularly traded in an difference between the gross revenue of $40

over-the-counter market or on an established and the gross receipts of $100. Less: Contributions xx xx xx xx xx

exchange and for which market quotations are The expenses directly relating to the sale of Gross Revenue xx xx xx xx xx

published or otherwise readily available. the goods would be reported on line 9b. Less: Direct Expenses xx xx xx xx xx

Lines 9a through 9c. Special Events However, all expenses of raising contributions Net Income or (loss) $xx $xx $xx $xx $xx would be reported in column (D), Fundraising, and Activities Part II and not on line 9b. On the appropriate line, enter the gross If you use the above schedule, report the

revenue, expenses, and net income (or loss) For more details about contributions total for Contributions on line 1a of Form 990

received through fundraising, and contributions and on line 9a (within the parentheses). Report from all special events and activities, such as and revenue received through special events, dinners, dances, carnivals, raffles, bingo the totals for Gross Revenue, in the right-hand

games, other gaming activities, and see the line 1 instructions. See also General column, on line 9a; Direct Expenses on line 9b;

door-to-door sales of merchandise. Instruction L and its references. and Net Income or (loss) on line 9c.

Sales or gifts of goods or services of only These activities only incidentally nominal value. If the goods or services given Lines 10a through 10c. Gross Profit or accomplish an exempt purpose. Their sole or or offered at special events have only nominal (Loss) from Sales of Inventory primary purpose is to raise funds that are other

than contributions to finance the organization’s value, include all of the receipts as Enter the gross sales (less returns and contributions on line 1a and all of the related exempt activities. This is done by offering allowances), cost of goods sold, and gross expenses as fundraising expenses on line 15 goods or services that have more than a profit or (loss) from the sale of inventory items. and in column (D) of Part II. See General nominal value (compared to the price charged) These sales do not include items sold at

Instruction L for a description of nominal or special events that are reportable on line 9. for a payment that is more than the direct cost

of those goods or services. insubstantial benefits. Sales of inventory items reportable on line 10

An activity may generate only are sales of those items the organization The gross revenue from gaming activities contributions. An activity that generates only makes to sell to others or buys for resale. and other special events must be reported in contributions, such as a solicitation campaign Sales of investments on which the organization the right-hand column on line 9a without by mail, is not a special event and should not expected to profit by appreciation and sale are reduction for cash or noncash prizes, cost of be reported on line 9. not reported here. Report sales of investments goods sold, compensation, fees, or other Contributions from such an activity are on line 8. expenses. Check the box for gaming if the

organization conducted directly, or through a reportable on line 1, and the related fundraising On line 10a, report gross sales revenue expenses are reportable in column (D), Part II. promoter, any amount of gaming during the from sales of inventory items, whether the

year. The proceeds of solicitation campaigns in sales activity is an exempt function of the

Gaming includes (but is not limited to): which the names of contributors and other organization or an unrelated trade or business.

respondents are entered in a drawing for the bingo, pull tabs, instant bingo, raffles, On line 10b, report the cost of goods sold awarding of prizes (so-called sweepstakes or scratch-offs, charitable gaming tickets, related to the sales of such inventory. The lotteries) are contributions, reportable on line 1, break-opens, hard cards, banded tickets, jar usual items included in cost of goods sold are and the related expenses are fundraising tickets, pickle cards, Lucky Seven cards, direct and indirect labor, materials and supplies expenses, reportable in column (D) of Part II. Nevada Club tickets, casino nights, Las Vegas consumed, freight-in, and a proportion of However, raffles and lotteries in which a nights, and coin-operated gambling devices. overhead expenses. Marketing and distribution

Coin-operated gambling devices include slot payment of at least a specified minimum costs are not included in cost of goods sold but

machines, electronic video slot or line games, amount is required for each entry are special are reported in Part II, column (B), Program events, reportable on line 9, unless the prizes video poker, video blackjack, video keno, video services. awarded have only nominal value. Reporting bingo, video pull tab games, etc. payments in their entirety as contributions Attached schedule. In an attached schedule, Characterizing any required payment as a when gifts or services given are nominal in give a breakdown of items sold; (for example, donation or contribution on tickets or on value is discussed above. sales of food, souvenirs, electronic equipment, advertising or solicitation materials does not uniforms, or educational publications). Attached schedule. Attach a schedule listing affect how such payments should be reported the three largest fundraising events, as on Form 990 or Form 990-EZ. As discussed in Line 11. Other Revenue measured by gross receipts. If gaming is the instructions for line 1, the amount of the Enter the total amount from Part VII, lines conducted, treat different types of gaming contribution is the excess of the amount paid 103(a) through (e) (Other revenue), columns separately to determine the three largest over the retail value of the goods or services (B), (D), and (E). This figure represents the events. For example, treat bingo and pull tabs received by the payer. See also Pub. 526. total income from all sources not covered by as separate fundraising events. Describe each Special events may generate both revenue lines 1 through 10 of Part I. Examples of of these events by listing the type of event and and contributions. Special events sometimes income includible on line 11 are interest on the number of occasions that the event

generate both contributions and revenue. notes receivable not held as investments or as occurred and show (for each event): When a buyer pays more than the retail value program-related investments (defined in the 1. Gross receipts, of the goods or services furnished, enter: line 2 instructions); interest on loans to officers, 2. Contributions included in gross receipts • As gross revenue, on line 9a (in the directors, trustees, key employees, and other (see Special events may generate both right-hand column), the retail value of the employees; and royalties that are not revenue and contributions, earlier), goods or services, investment income or program service 3. Gross revenue (gross receipts less • As a contribution, on both line 1a and line 9a revenue. contributions), (within the parentheses), the amount received

that exceeds the retail value of the goods or 4. Direct expenses, and Lines 13 through 15—Program

5. Net income or (loss) (gross revenue less Services, Management and General, services given. direct expenses). and Fundraising Expenses Report on line 9b only the expenses directly For gaming, direct expenses include: cash and attributable to the goods or services the buyer Section 4947(a)(1) nonexempt charitable noncash prizes, compensation to bingo callers receives from a special event. Fundraising trusts and section 501(c)(3) and (4) and workers, rental of gaming equipment, cost expenses attributable to contributions, reported organizations. Complete Part II and then of bingo supplies such as pull tab deals, etc. on both line 1a and line 9a (within the enter on lines 13 through 15 the appropriate

parentheses), are reportable in Part II, column Include the same information, in total amounts from the totals for columns (B), (C),

(D), Fundraising. If you include an expense on figures, for all other special events held that and (D) reported on line 44, Part II.

Specific Instructions for Form 990 -21-
All other organizations. All other Properly distinguishing between services (column (B)); Management and

organizations are not required to complete payments to affiliates and grants and general (column (C)); and Fundraising (column

lines 13 through 15 of the Form 990. allocations is especially important if you (D)). These functions are explained below in

TIP

use Form 990 for state reporting purposes. the instructions for the columns. Do not include

Line 16. Payments to Affiliates See General Instruction E. If you use Form 990 in Part II any expense items you must report on

This expense classification is used to report only for reporting to the IRS, payments to lines 6b, 8b, 9b, 10b, or 16 in Part I.

certain types of payments to organizations affiliated state or national organizations that do For reporting to the IRS only, use the affiliated with (closely related to) a reporting not represent membership dues reportable as organization’s normal accounting method to

agency. Other expenses on line 43 (see instructions, report total expenses in column (A) and to earlier) may be reported either on line 16 or segregate them into functions under columns Payments to affiliated state or national line 22 and explained in the required (B), (C), and (D). However, for state reporting organizations. Dues paid by the local charity attachment. requirements, see General Instructions E and to its affiliated state or national (parent) Line 17. Total Expenses G. If the accounting system does not provide organization are usually reported on line 16. Organizations using only column (A) of Part II for this type of segregation, a reasonable Report on this line predetermined quota should enter the total of line 16 and line 44 of method of allocation may be used. The support and dues (excluding membership dues column (A), Part II, on line 17. Other amounts reported should be accurate and the of the type described below) by local agencies organizations should enter the total of lines 13 method of allocation documented in the to their state or national organizations for organization’s records. unspecified purposes; that is, general use of through 16. Organizations using Form 5500 or

funds for the national organization’s own an approved DOL form as a partial substitute Report, in the appropriate column,

program and support services. for Form 990 should enter the total expense expenses that are directly attributable to a figure from Form 5500, or from the required particular functional category. In general, Purchases from affiliates. Purchases of reconciliation schedule if Form LM-2 or LM-3 is allocate expenses that relate to more than one goods or services from affiliates are not used. See General Instruction F. functional category. For example, allocate reported on line 16 but are reported as Line 18. Excess or (Deficit) for the Year employees’ salaries on the basis of each expenses in the usual manner. employee’s time. For some shared expenses Enter the difference between lines 12 and 17. If such as occupancy, supplies, and depreciation Expenses for providing goods or services line 17 is more than line 12, enter the of office equipment, use an appropriate basis to affiliates. In addition to payments made difference in parentheses. for each kind of cost. However, you should directly to affiliated organizations, expenses Line 19. Net Assets or Fund Balances, report some other shared expenses in column incurred in providing goods or services to Beginning of Year (C) only. The column instructions below affiliates may be reported on line 16 if: discuss allocating expenses. 1. The goods or services provided are not Enter the balance at the beginning of the year

related to the program services conducted by as reported in column (A) of line 73 (or from Column (A)—Total Form 5500 or an approved DOL form if the organization furnishing them (for example, For column (A), total each line item of columns when a local organization incurs expenses in General Instruction F applies). The balance at (B), (C), and (D) in Part II. Except for expenses the production of a solicitation film for the state the beginning of the year for line 19 was the you report on lines 6b, 8b, 9b, 10b, or 16 of or national organization); and end of the year balance for line 21 and 73 as Part I, you should use column (A) to report all reported on the organization’s prior year return. 2. The costs involved are not connected expenses the organization paid or incurred. with the management and general or Line 20. Other Changes in Net Assets fundraising functions of the reporting or Fund Balances Column (B)—Program Services

organization. For example, when a local Attach a schedule explaining any changes in Program services are mainly those activities organization gives a copy of its mailing list to that the reporting organization was created to net assets or fund balances between the the state or national organization, the expense conduct and which, along with any activities beginning and end of the year that are not of preparing the copy provided may be commenced subsequently, form the basis of accounted for by the amount on line 18. reported on line 16, but not expenses of Amounts to report here include adjustments of the organization’s current exemption from tax. preparing and maintaining the local They may be self-funded or funded out of earlier years’ activity; unrealized gains and organization’s master list. contributions, accumulated income, investment losses on investments carried at market value; income, or any other source. Fundraising and any difference between fair market value Federated fundraising agencies. These expenses should not be reported as and book value of property given as an award agencies (see the instructions for line 1b) program-related expenses even though one of or grant. See General Instruction G regarding should include in their own support the full the functions of the organization is to solicit the reporting of a section 481(a) adjustment to amount of contributions received in connection contributions for other organizations. conform to SFAS 116. with a solicitation campaign they conduct, even Line 21. Net Assets or Fund Balances, Program services can also include the though donors designate specific agencies to organization’s unrelated trade or business receive part or all of their individual End of Year activities. For example, publishing a magazine contributions. These fundraising organizations Enter the total of lines 18, 19, and 20. This total is a program service even though the should report the allocations to participating figure must equal the amount reported for the magazine contains both editorials and articles agencies as grants and allocations (line 22) end of the year in column (B) of line 73. that further the organization’s exempt purpose and quota support payments to their state or and advertising, the income from which is national organization as payments to affiliates Part II—Statement of Functional taxable as unrelated business income. (line 16).

Expenses If an organization receives a grant to do Voluntary awards or grants to affiliates. Do research, produce an item, or perform a not report on line 16 voluntary awards or grants In General— service, either to meet the grantor’s specific made by the reporting agency to its state or needs or to benefit the public directly, the costs national organization for specified purposes. Column (A) incurred represent program service expenses. Report these awards or grants on line 22, All organizations must complete column (A) Do not treat these costs as fundraising Grants and allocations. unless they are using an approved DOL form expenses, even if you report the grant on line 1

Membership dues paid to other or Form 5500 as a partial substitute for Form as a contribution.

organizations. Report membership dues paid 990. See General Instruction F. Column (C)— Management and to obtain general membership benefits, such Columns (B), (C), and (D) General as regular services, publications, and

materials, from other organizations as Other These columns are optional for all Use column (C) to report the organization’s

expenses on line 43. This is the case, for organizations except section 4947(a)(1) expenses for overall function and

example, if a charitable organization pays dues nonexempt charitable trusts and section management, rather than for its direct conduct 501(c)(3) and (4) organizations. Section of fundraising activities or program services. to a trade association comprised of otherwise

unrelated members. 4947(a)(1) nonexempt charitable trusts and Overall management usually includes the section 501(c)(3) and (4) organizations must salaries and expenses of the chief officer of the

Attached schedule. Attach a schedule listing completecolumns (B), (C), and (D). organization and that officer’s staff. If part of

the name and address of each affiliate that In Part II, the organization’s expenses are their time is spent directly supervising program

received payments reported on line 16. Specify designated by object classification (for services and fundraising activities, their

the amount and purpose of the payments to example, salaries, legal fees, supplies, etc.) salaries and expenses should be allocated

each affiliate. and allocated into three functions: Program among those functions.

-22- Specific Instructions for Form 990
Other expenses to report in column (C) allocations were made. Assume that $10,000 Report only the amount of actual grants and

include those for meetings of the board of (of the $100,000 total expenses of the cost awards on line 22. Report expenses incurred in

directors or similar group; committee and staff center) was allocable to fundraising; $70,000 to selecting recipients, or monitoring compliance

meetings (unless held in connection with various program services; $15,000 to with the terms of a grant or award, on lines 25

specific program services or fundraising management and general functions; and through 43.

activities); general legal services; accounting $5,000 to special events and activities. To In the spaces provided, give separate totals (including patient accounting and billing); report this in Part II under this optional method: for cash and noncash grants and allocations general liability insurance; office management; 1. Indicate the cost center, the expenses of made. Cash grants include only grants and auditing, personnel, and other centralized which are being allocated, on line 43, as allocations paid by cash, checks, money services; preparation, publication, and Allocation of (specify) expenses; orders, wire transfers, and other charges distribution of an annual report; and investment 2. Enter a decrease of $5,000 on the same against funds on deposit at a financial expenses (however, report rental income line in the column (A), Total, representing the institution.

expenses on line 6b and program-related special event expenses that were already Reporting for line 22, in accordance with income expenses in column (B)). reported on line 9b in Part I; SFAS 116, is acceptable for Form 990 You should report only general expenses in 3. Enter $70,000 on the same line in purposes, but not required by IRS. However, column (C). Do not use this column to report column (B), Program services; see General Instruction E.

costs of special meetings or other activities that 4. Enter $10,000 on the same line in An organization that makes a grant to be relate to fundraising or specific program column (D), Fundraising; and paid in future years should, according to SFAS services. 5. Enter a decrease of $85,000 on the 116, report the grant’s present value on line 22. same line in column (C), Management and Column (D)— Fundraising Accruals of present value increments to the general, to represent the allocations to unpaid grant should also be reported on line 22 Fundraising expenses are the total expenses functional areas other than management and in future years. incurred in soliciting contributions, gifts, grants, general.

etc. Report as fundraising expenses all Attached schedule. Attach a schedule of

expenses, including allocable overhead costs, amounts reported on line 22. Any grants or Line (A) (B) (C) (D)

incurred in: (a) publicizing and conducting allocations reported on line 22 that were 25 – 43a ...... $ 150,000 $ — $150,000 $ — fundraising campaigns; (b) soliciting bequests approved during the year, but not paid by the 43b Allocation of

and grants from foundations or other the $100,000 due date for filing Form 990 (including

organizations, or government grants reportable indirect cost extensions), must be identified and listed

on line 1c; (c) participating in federated center expenses separately in the schedule for line 22. Show on reported in (C) . . (5,000) 70,000 (85,000) 10,000 fundraising campaigns; (d) preparing and the schedule: (a) each class of activity; (b)

distributing fundraising manuals, instructions, 44 ......... $ 145,000 $ 70,000 $ 65,000 $ 10,000 grantee’s name, address, and the amount

and other materials; and (e) conducting special given; and (c) (in the case of grants to After making these allocations, the column events that generate contributions reportable individuals) relationship of grantee if related by (C) total (line 44, column (C)) would be on line 1a, in addition to revenue reportable in blood, marriage, adoption, or employment $65,000, consisting of the $50,000 actual the right-hand column on line 9a. However, (including employees’ children) to any person management and general expense amount report any expenses that are directly or corporation with an interest in the and the $15,000 allocation of the aggregate attributable to revenue shown on line 9a (for organization, such as a creator, donor, director, cost center expenses to management and example, the direct expenses incurred in trustee, officer, etc. general. furnishing the goods or services sold) on line On the schedule, classify activities in more 9b. The above is an example of a one-step detail than in such broad terms as charitable, allocation that shows how to report the Allocating Indirect Expenses educational, religious, or scientific. For allocation in Part II. This reporting method example, identify payments for nursing Colleges, universities, hospitals, and other would actually be needed more for multiple services, laboratory construction, or organizations that accumulate indirect step allocations involving two or more cost fellowships. expenses in various cost centers (such as the centers. The total expenses of the first would If property other than cash is given, also expenses of operating and maintaining the be allocated to the other functions, including an show on the schedule: (a) a description of the physical plant) that are reallocated to the allocation of part of these expenses to the property; (b) its book value and how the book program services and other functional areas of second cost center. The expenses of the value was determined; (c) its fair market value the organization in single or multiple steps may second cost center would then be allocated to

and how the fair market value was determined; find it easier to report these expenses in the other functions and any remaining cost centers (d) the date of the gift. If the fair market value following optional manner: to be allocated, and so on. The greater the of the property when the organization gave it is number of these cost centers that are allocated First, report the expenses of these indirect the measure of the award or grant, record any out, the more difficult it is to preserve the object cost centers on lines 25 through 43 of column difference between fair market value and book classification identity of the expenses of each (C), Management and general, along with the value in the organization’s books of account cost center (for example, salaries, interest, expenses properly reportable in that column. and on line 20. supplies, etc.). Using the reporting method Second, allocate the total expenses for described above avoids this problem. Colleges, universities, and primary and each cost center to columns (B), (C), and (D) secondary schools are not required to list the (Program services, Management and general, The intent of the above instructions is names of individuals who were provided and Fundraising) as a separate item entry on only to facilitate reporting indirect scholarships or other financial assistance line 43, Other expenses. Enter the name of the CAUTION expenses by both object classification

!

whether they are the recipients of federal grant cost center on line 43. If any of the cost and function. These instructions do not permit money or not. Instead, these organizations center’s expenses are to be allocated to the the allocation to other functions of expenses must (a) group each type of financial aid expenses listed in Part I (such as the expenses that should be reported as management and provided; (b) indicate the number of individuals attributable to special events and activities), general expenses. who received the aid; and (c) specify the enter these expenses as a negative figure in Line 22. Grants and Allocations aggregate dollar amount. columns (A) and (C). This prevents reporting

the same expense in both Parts I and II. If part Enter the amount of awards and grants to Line 23. Specific Assistance to individuals and organizations selected by the of the total cost center expenses are to be Individuals filing organization. United Way and similar allocated to columns (B), Program services, Enter the amount of payments to, or for the fundraising organizations should include and (D), Fundraising, enter these expenses as benefit of, particular clients or patients, allocations to member agencies. positive amounts in these columns and as including assistance rendered by others at the single negative amounts in column (C), Report voluntary awards and grants to expense of the filing organization. Do not Management and general. Do not make any affiliated organizations for specific (restricted) include grants to other organizations that select entries in column (A), Total, for these offsetting purposes or projects also on line 22, but not the person(s) to receive the assistance entries. required payments to affiliates reportable on available through the use of the grant funds.

Example. An organization reports in For example, report a payment to a hospital to line 16.

column (C) $50,000 of its actual management Report scholarship, fellowship, and cover the medical expenses of a particular

and general expenses and $100,000 of research grants to individuals on line 22. individual on line 23, but do not report a

expenses of an indirect cost center that are Certain other payments to, or for the benefit of, contribution to a hospital to provide some

allocable in part to other functions. The total of individuals may be reportable on line 23 service to the general public or to unspecified

lines 25 through 43 of column (C) would be instead. See the instructions for line 23 for charity patients on this line. Also, do not

$150,000 before the indirect cost center details. include scholarship, fellowship, or research

Specific Instructions for Form 990 -23-
grants to individuals even though selected by Line 27. Pension Plan Contributions Line 36. Occupancy

the grantor organization. Report these grants Enter the employer’s share of contributions to Enter the total amount paid or incurred for the on line 22 instead. qualified and nonqualified pension plans for the use of office space or other facilities, heat,

Attached schedule. Attach a schedule year. Do not include contributions to qualified light, power, and other utilities (other than

showing the total payments for each particular pension plans under section 401(a) for current telephone expenses reported on line 34),

class of activity, such as food, shelter, and or former officers, directors, trustees, or key outside janitorial services, mortgage interest,

clothing for indigents or disaster victims; employees, that were reported in line 25. property insurance, real estate taxes, and

medical, dental, and hospital fees and charges; similar expenses. Complete Form 5500 for the organization’s and direct cash assistance to indigents. For plan and file it as a separate return. If the Occupancy expenses paid or incurred for payments to indigent families, do not identify organization has more than one plan, complete program-related income, reportable on line 2, the individuals. a Form 5500 for each plan. File the form by the are included on line 36. Do not subtract rental

Line 24. Benefits Paid to or for last day of the 7th month after the plan year income received from renting or subletting

ends. See General Instruction D rented space from the amount reported for Members for a

discussion of Form 5500. occupancy expense on line 36. If the activities For an organization that provides benefits to of the organization’s tenant are related to the members or dependents (such as Line 28. Other Employee Benefits reporting organization’s exempt purpose, organizations exempt under section 501(c)(8), Enter the organization’s contributions to report rental income as program-service (9), or (17)), attach a schedule. Show amounts employee benefit programs (such as revenue and allocable occupancy expenses on of: (a) death, sickness, hospitalization, or insurance, health, and welfare programs) that line 36. However, if the tenant’s activities are disability benefits; (b) unemployment are not an incidental part of a pension plan not program related, report such rental income compensation benefits; and (c) other benefits included on line 27. on line 6a and related rental expenses on line (state their nature). Do not report the cost of 6b. employment-related benefits the organization Do not include contributions on behalf of

provides its officers and employees on this line. Do not include, as an occupancy expense, current or former officers, directors, trustees,

Report those expenses on lines 27 and 28. depreciation (reportable on line 42) or any and key employees, that were included in line salaries of the reporting organization’s own 25. Report expenses for employee events such Line 25. Compensation of Officers, employees (reportable on line 26). as a picnic or holiday party on line 28. Directors, etc. Line 37. Equipment Rental and Enter the total compensation paid to current Line 29. Payroll Taxes Maintenance and former officers, directors, trustees, and key Enter the amount of federal, state, and local employees for the year. Enter the cost of renting and maintaining office payroll taxes for the year but only those taxes equipment and other equipment, except for Compensation. Compensation includes all that are imposed on the organization as an automobile and truck expenses reportable on forms of income earned or received for employer. This includes the employer’s share lines 35 and 39. services provided. of social security and Medicare taxes, the

 In Part V-A, give the name and Federal unemployment tax (FUTA), state Line 38. Printing and Publications unemployment compensation taxes, and other compensation (if any) of each current officer, Enter the printing and related costs of state and local payroll taxes. Do not include director, trustee, and key employee, along with producing the reporting organization’s own taxes withheld from employees’ salaries and the other information requested. In Part V-B, newsletters, leaflets, films, and other paid to the various governmental units such as give the name and compensation (if any) of informational materials on this line. Also federal and state income taxes and the each former officer director, trustee, and key include the cost of any purchased publications. employees’ shares of social security and employee, along with the other information However, do not include any expenses, such Medicare taxes. requested. If no compensation was paid, enter as salaries or postage, for which a separate zero. See the Part V-A instructions for a Line 30. Professional Fundraising Fees line is provided in Part II. definition of key employee. Enter the organization’s fees to outside Line 39. Travel Form 941 must be filed to report income tax

withholding and social security and Medicare fundraisers who are paid primarily for Enter the total travel expenses, including solicitation campaigns they conducted or for transportation costs (fares, mileage taxes. The organization must also file Form consultation services connected with a allowances, and automobile expenses), meals 940 to report Federal unemployment taxes solicitation of contributions by the organization and lodging, and per diem payments. unless the organization is not subject to these itself. Do not include salaries of employees taxes. See Pub.15 (Circular E) for details. See who undertake fundraising as part of their Line 40. Conferences, Conventions, also the discussion of the Trust Fund Recovery employment duties. and Meetings Penalty given in General Instruction D. Enter the total expenses incurred by the Attached schedule. Attach a schedule Line 31. Accounting Fees organization in conducting meetings related to showing for each current or former officer, Enter the total accounting and auditing fees its activities. Include such expenses as the director, trustee, and key employee a charged by outside firms and individuals who rental of facilities, speakers’ fees and breakdown of the type and amount of are not employees of the reporting expenses, and printed materials. Include the compensation included in columns (C) through organization. registration fees (but not travel expenses) paid (E) of Parts V-A and V-B. The attached for sending any of the organization’s staff to schedule must be supplied in addition to filling Line 32. Legal Fees conferences, meetings, or conventions out line 25 and Parts V-A and V-B. Enter the total legal fees charged by outside conducted by other organizations. However, do Example. Allocate the total compensation firms and individuals who are not employees of not include on this line the salaries and travel

figure of line 25, column (A), by functional the reporting organization. Do not include any expenses of the reporting organization’s own expenses represented by line 25, columns (B), penalties, fines, or judgments imposed against officers, directors, trustees, and employees (C), and (D). For instance, if key employee A the organization as a result of legal who participate. spent 90% of her time running a program proceedings. Report those expenses on line

which constitutes the basis of the 43, Other expenses. Line 41. Interest

organization’s exempt purpose and 10% in Enter the total interest expense for the year. Line 33. Supplies general management of the organization itself, Do not include any interest attributable to rental

key employee A’s compensation should be Enter the total for office, classroom, medical, property (reportable on line 6b) or any

allocated 90% to column (B), program and other supplies used during the year, as mortgage interest treated as occupancy

services, and 10% to column (C), management determined by the organization’s normal expense on line 36.

and general. Conversely, if Director B is not method of accounting for supplies. Line 42. Depreciation, Depletion, etc. paid as a member of the board, but is

employed by the organization as a part-time Line 34. Telephone If the organization records depreciation,

Enter the total telephone, telegram, and similar depletion, and similar expenses, enter the total fundraiser, all of Director B’s compensation

should be allocated to column (D), fundraising. expenses for the year. for the year. Include any depreciation

(amortization) of leasehold improvements. The Line 26. Other Salaries and Wages Line 35. Postage and Shipping organization is not required to use the Modified

Enter the total amount of employees’ salaries Enter the total amount of postage, parcel Accelerated Cost Recovery System (MACRS)

and wages, fees, bonuses, severance delivery, trucking, and other delivery expenses, to compute the depreciation reported on Form

payments, and payments of compensation including the cost of shipping materials. Include 990 or Form 990-EZ. If the organization

deferred in a prior year to all employees not the costs of outside mailing services on this records depreciation using MACRS, attach

reported on line 25. line. Form 4562, or a schedule showing the same

-24- Specific Instructions for Form 990
information required by Form 4562. If the Organizations and State and Local • Section 501(c)(3) and (4) organizations, organization does not use MACRS, attach a Government Entities that Include Fund Raising. and section 4947(a)(1) nonexempt schedule showing how depreciation was Any method of allocating joint costs to program charitable trusts, however, must show the computed. service expenses must be reasonable under

the facts and circumstances of each case. expenses attributable to their program For an explanation of acceptable methods Most states with reporting requirements for services. for computing depreciation, see Pub. 946. charitable and other organizations that solicit If the organization claims a deduction for contributions either require or allow the 5 The organization may show the amount depletion, attach a schedule explaining the reporting of joint costs according to Statement of any donated services, or use of deduction. of Position 98-2 standards. materials, equipment, or facilities it Line 43. Other Expenses received or utilized in connection with a

Show the type and amount of each functional Part III—Statement of Program specific program service.

expense for which a separate line is not Service Accomplishments • Disclose the applicable amounts of any provided. You may report minor miscellaneous A program service is a major (usually ongoing) donated services, etc., on the lines for the expenses as a single total. The total of minor

miscellaneous expenses grouped together on objective of an organization, such as narrative description of the appropriate

adoptions, recreation for the elderly, program service. line 43, may not exceed 5% of the total of all rehabilitation, or publication of journals or functional expenses (line 44). • Do not include these amounts in the newsletters. Expenses that might be categorized and expense column in Part III.

reported as functional expenses on line 43

Step Action • See the instructions for line 82. include:

• Investment counseling and other

professional fees. (Do not include professional 1 State the organization’s primary exempt fundraising fees, accounting fees, or legal fees purpose. Part IV—Balance Sheets

on line 43; these are reportable on lines 30 All organizations, except those that meet one through 32.) 2 All organizations must describe their of the exceptions in General Instruction F, must • Penalties, fines, and judgments; exempt purpose achievements for each complete all of Part IV and may not submit a • Unrelated business income taxes; substitute balance sheet. Failure to complete of their four largest program services (as • Insurance and real estate taxes not

measured by total expenses incurred). If Part IV may result in penalties for filing an attributable to rental property or reported as incomplete return. See General Instruction K. If

occupancy expenses; there were four or fewer of such activities, there is no amount to report in column (A), • Other expenses the organization tracks, not describe each program service activity. Beginning of year, place a zero in that column. included on other lines of Part II. • Describe program service See General Instruction E for details on Additionally, health care organizations accomplishments through measurements completing a Form 990, or Form 990-EZ, to be must separately categorize and itemize such as clients served, days of care, filed with any state or local governmental payments to health care professionals who are therapy sessions, or publications issued. agency. not employees of the health care organization.

Attach a schedule if more space is needed. • Describe the activity’s objective, for both When a schedule is required to be attached

Attach a schedule if more space is needed. this time period and the longer-term goal, for any line item in Part IV, it is only for the

if the output is intangible, such as in a end-of-year balance sheet figure reported in State reporting—miscellaneous expenses. research activity. column (B). Give the end-of-year figures for Some states that accept Form 990, or Form any receivables or depreciable assets and the 990-EZ, in satisfaction of their filing • Give reasonable estimates for any related allowances for doubtful accounts or requirements may require that certain types of statistical information if exact figures are accumulated depreciation reported within the miscellaneous expenses be itemized not readily available. Indicate that this description column. regardless of amount. See General Instruction information is estimated.

E. Line 45. Cash—Non-Interest-Bearing • Be clear, concise, and complete in your Line 44. Total Functional Expenses Enter the total of non-interest-bearing checking description. Avoid adding an attachment. accounts, deposits in transit, change funds, Add lines 22 through 43g and enter the totals petty cash funds, or any other on line 44 in columns (A), (B), (C), and (D).

Report the total amounts for columns (B), (C), 3 If part of the total expenses of any non-interest-bearing account. Do not include program service consists of grants and advances to employees or officers or and (D) in Part I, lines 13 through 15. allocations reported on line 22, enter the refundable deposits paid to suppliers or others. Reporting of Joint Costs amount of grants and allocations in the Line 46. Savings And Temporary Cash Organizations that included in program service space provided and include the grants

expenses (column (B) of Part II) any joint costs and allocations in the Expenses column. Investments

from a combined educational campaign and If the amount of grants and allocations Enter the total of interest-bearing checking

fundraising solicitation must disclose how the entered includes foreign grants, check the accounts, savings and temporary cash

total joint costs of all such combined activities box to the left of the entry space for investments, such as money market funds,

were reported in Part II. Program services expenses. commercial paper, certificates of deposit, and

Organizations answering “Yes” to the U.S. Treasury bills or other governmental • Section 501(c)(3) and (4) organizations, obligations that mature in less than 1 year. joint-cost question following line 44 must and section 4947(a)(1) nonexempt Report the income from these investments on furnish the relevant financial data in the spaces charitable trusts, must show the amount line 4. provided. of grants and allocations to others must An organization conducts a combined Line 47. Accounts Receivable enter the total expenses for each program educational campaign and fundraising service reported. Enter the total accounts receivable (reduced by solicitation when it solicits contributions (by the allowance for doubtful accounts) from the mail, telephone, broadcast media, or any other • For all other organizations, completing sale of goods and/or the performance of means) and includes, with the solicitation, the Program Services Expenses column services. Report claims against vendors or educational material or other information that (and the Grants and allocations entry) in refundable deposits with suppliers or others furthers a bona fide nonfundraising exempt Part III is optional. here, if not significant in amount. Otherwise, purpose of the organization. report them on line 58, Other assets. Report

Expenses attributable to providing any receivables due from officers, directors, 4 Attach a schedule that lists the information regarding the organization itself, its trustees, or key employees on line 50. Report organization’s other program services. use of past contributions, or its planned use of receivables (including loans and advances)

contributions received are not program service • The detailed information required for the due from other employees on line 51a.

expenses and should not be included in four largest services is not necessary for

column (B). This is true whether or not the Line 48. Pledges Receivable this schedule.

organization accounts for joint costs in Enter the total pledges receivable recorded as

accordance with the AICPA’s Statement of of the beginning and end of the year. Do not

Position 98-2, Accounting for Costs of include the amount of pledges estimated to be

Materials and Activities of Not-for-Profit uncollectible.

Specific Instructions for Form 990 -25-
Line 49. Grants Receivable such on a schedule and indicate the total have to be listed individually, except for stock

Enter the total grants receivable from amount of such loans that are outstanding. holdings that represent 5% or more of the

outstanding shares of stock of the same class. governmental agencies, foundations, and other For a note receivable from another However, show separate totals for each type of organizations as of the beginning and end of organization exempt under the same security (U.S. Government obligations, the year. Organizations that follow SFAS 116 paragraph of section 501(c) as the filing

may report the present value of the grants corporate stocks, etc.). Do not include amounts organization, list only the name of the borrower reported on line 46. Report dividends and receivable as of each balance sheet date. and the balance due. For example, a section interest from these securities on line 5. 501(c)(3) organization would have to provide Line 50. Receivables From Officers, the full details of a loan to a section 501(c)(4) Directors, Trustees, And Key Line 55. Investments (Land, Buildings, organization but would have to provide only the Employees and Equipment) name of the borrower and the balance due on

Report all receivables due from current and a note from a loan to another section 501(c)(3) Enter the book value (cost or other basis less

organization. accumulated depreciation) of all land, former officers, directors, trustees, and key

employees, and all secured and unsecured buildings, and equipment held for investment Loans receivable. Enter the gross amount loans to such persons, on line 50 and in an purposes, such as rental properties. Attach a of loans receivable, less the allowance for attached schedule discussed below. Report schedule listing these fixed assets held as doubtful accounts, from the normal activities of investments at the end of the year. Show for interest from such receivables on line 11. For a the filing organization such as loans by a credit definition of key employee, see the instructions each item or category listed, the cost or other union to its members or scholarship loans by a in Part V-A. basis, accumulated depreciation, and book section 501(c)(3) organization. A schedule of value. Report the income from these assets on When receivables should be reported these loans is not required. line 6a. separately. In the required schedule, report Report loans to current and former officers, each receivable separately even if more than directors, trustees, and key employees on line Line 56. Investments (Other) one loan was made to the same person or the 50. Report loans to non-key employees, Enter the amount of all other investment same terms apply to all loans. Report salary vendors, suppliers, and independent holdings not reported on line 54 or 55. Attach a advances, and other advances for the personal contractors on line 51. Attach a schedule schedule listing and describing each of these use and benefit of the recipient, and similar to that called for in the instructions for investments held at the end of the year. Show receivables subject to special terms, or arising line 50. The schedule should also describe the the book value for each and indicate whether from nontypical transactions, as separate loans family or business relationship, if any, between the investment is listed at cost or end-of-year for each current and former officer, director, the borrower and any officer, director, trustee, market value. Report the income from these trustee, and key employee. key employee, or substantial contributor of the assets on line 7. Do not include

Schedule format. For each outstanding loan, organization as defined in section 507(d)(2)(A). program-related investments. See the or other receivable that must be reported Family relationships includes an instructions for line 58.

separately, the attached schedule should show individual’s spouse, ancestors, children, the following information (preferably in Line 57. Land, Buildings, and grandchildren, great-grandchildren, siblings columnar form): Equipment (whether by whole or half blood), and the

1. Borrower’s name and title, spouses of children, grandchildren, Enter the book value (cost or other basis less 2. Original amount, great-grandchildren, and siblings. accumulated depreciation) of all land,

3. Balance due, Business relationships buildings, and equipment owned by the are employment 4. Date of note, organization and not held for investment. This and contractual relationships, and common 5. Maturity date, includes any property, plant, and equipment ownership of a business where any officers, 6. Repayment terms, owned and used by the organization in directors, or trustees, individually or together, 7. Interest rate, conducting its exempt activities. Attach a possess more than a 35% ownership interest 8. Security provided by the borrower, schedule listing these fixed assets held at the in common. Ownership means voting power in 9. Purpose of the loan, and end of the year and showing, for each item or a corporation, profits interest in a partnership, 10. Description and fair market value of the category listed, the cost or other basis, or beneficial interest in a trust. consideration furnished by the lender (for accumulated depreciation, and book value. example, cash—$1,000; or 100 shares of Report program related investments on

XYZ, Inc., common stock—$9,000). line 58. Line 58. Other Assets

List and show the book value of each category

TIP

Line 51. Other Notes and Loans of assets not reportable on lines 45 through 57.

Receivable Line 52. Inventories For Sale Or Use Attach a separate schedule if more space is

Enter the amount of materials, goods, and needed. Line 51a. Enter on line 51a the combined total supplies purchased, manufactured by the of receivables (both notes and loans) to One type of asset reportable on line 58 is organization, or donated and held for future non-key employees. Do not include the program-related investments. These are sale or use. following on line 51a. investments made primarily to accomplish an

• Receivables reported on line 50. Line 53. Prepaid Expenses And exempt purpose of the filing organization rather

• Program-related investments. (Report Deferred Charges than to produce income.

program-related investments on line 58.) Enter the amount of short-term and long-term • Notes receivable acquired as investments Line 59. Total Assets prepayments of expenses attributable to one or (report receivables acquired as investments on more future accounting periods. Examples Enter the total of lines 45 through 58. The

line 56). amounts on line 59 must equal the amounts on include prepayments of rent, insurance, and line 74 for both the beginning and end of the For notes and loans that represent pension costs, and expenses incurred for a year. program-related investments (defined in the solicitation campaign of a future accounting

line 2 instructions), report the interest income period. Line 60. Accounts Payable and on line 2. For all other notes and loans Line 54. Investments (Securities) Accrued Expenses receivable included on line 51, report the

income on line 11. Enter the book value, which may be market Enter the total of accounts payable to suppliers

value, of securities held as investments. Check and others and accrued expenses, such as Line 51b. Enter on line 51b the total amount the appropriate box to indicate whether the salaries payable, accrued payroll taxes, and of doubtful accounts. securities are reported at cost or fair market interest payable. Notes receivable. Enter the amount of all value. When valuing securities at fair market notes receivable not listed on line 50 and not value, use commonly accepted valuation Line 61. Grants Payable

acquired as investments. Attach a schedule methods. (See Regulations section 20.2031-2.) Enter the unpaid portion of grants and awards similar to that requested in the instructions for Attach a schedule that lists the securities held that the organization has made a commitment line 50. The schedule should also describe the at the end of the year. Indicate whether the to pay other organizations or individuals, family or business relationship of the borrower securities are listed at cost (including the value whether or not the commitments have been to any officer, director, trustee, key employee, recorded at the time of receipt in the case of communicated to the grantees. or substantial contributor of the organization. donated securities) or end-of-year market

Notes receivable from loans by a credit value. Debt securities of the U.S., state, and Line 62. Deferred Revenue

union to its members and scholarship loans by municipal governments, corporate stocks and Include revenue that the organization has

a section 501(c)(3) organization do not have to bonds, and other publicly traded securities received but not yet earned as of the balance

be itemized. However, identify these loans as (defined in the instructions for line 8) do not sheet date under its method of accounting.

-26- Specific Instructions for Form 990
Line 63. Loans From Officers, member benefit or mutual benefit or others gave donations that the organization

Directors, Trustees, and Key organizations. records as paid-in capital, include them here.

Employees While some states may require reporting in Report any current-year donations you

included on line 71 in Part I, line 1. Enter the Enter the unpaid balance of loans received accordance with SFAS 117, the IRS does not fund balance for the land, building, and from current and former officers, directors, (see General Instruction E). However, a Form equipment fund on this line. trustees, and key employees. See the 990, or Form 990-EZ, return prepared in

instructions for Part V-A for the definition of key accordance with SFAS 117 will be acceptable Line 72. Retained Earnings or

employee. For loans outstanding at the end of to the IRS. Accumulated Income, Endowment, or

the year, attach a schedule that shows, for Organizations that follow SFAS 117. If the Other Funds

each loan, the name and title of the lender and organization follows SFAS 117, check the box For corporations, enter the balance in the the information specified in items 2 through 10 above line 67. Classify and report net assets in retained earnings, or similar account, minus of the instructions for line 50. three groups—unrestricted, temporarily the cost of any corporate treasury stock. For restricted, and permanently restricted—based Line 64a. Tax-Exempt Bond Liabilities trusts, enter the balance per books in the on the existence or absence of donor-imposed accumulated income or similar account. For Enter the amount of tax-exempt bonds (or restrictions and the nature of those restrictions. those organizations using fund accounting, other obligations) issued by the organization on Show the sum of the three classes of net enter the total of the fund balances for the behalf of a state or local governmental unit, or assets on line 73. On line 74, add the amounts permanent and term endowment funds as well by a state or local governmental unit on behalf on lines 66 and 73 to show total liabilities and as balances of any other funds not reported on of the organization, and for which the net assets. This figure should be the same as lines 70 and 71. organization has a direct or indirect liability. the figure for Total assets on line 59.

Tax-exempt bonds include state or local bonds Line 73. Total Net Assets or Fund Line 67. Unrestricted and any obligations, including direct borrowing Balances from a lender, or certificates of participation, Enter the balances per books of the For organizations that follow SFAS 117, enter the interest on which is excluded from the unrestricted class of net assets. Unrestricted the total of lines 67 through 69. For all other income of the recipient for federal income tax net assets are neither permanently restricted organizations, enter the total of lines 70 purposes under section 103. nor temporarily restricted by donor-imposed through 72. Enter the beginning-of-the-year stipulations. All funds without donor-imposed For all such bonds and obligations figure on line 73, column (A), in Part I, line 19. restrictions must be classified as unrestricted, outstanding at any time during the year, attach The end-of-the-year figure on line 73, column regardless of the existence of any board a schedule showing for each separate issue: (B) must agree with the figure on line 21 of Part designations or appropriations. (a) the purpose of the issue; (b) the amount of I.

the issue outstanding; and (c) the unexpended Line 68. Temporarily Restricted

bond proceeds, if any. Also indicate whether Line 74. Total Liabilities and Net Enter the balance per books for the temporarily any portion of any bond-financed facility was Assets/Fund Balances restricted class of net assets. Donors’

used by a third party (other than a Enter the total of lines 66 and 73. This amount temporary restrictions may require that governmental unit or section 501(c)(3) resources be used in a later period or after a must equal the amount for total assets reported organization), and, if so, state the percentage specified date (time restrictions), or that on line 59 for both the beginning and end of the of space used by the third party. resources be used for a specified purpose year.

If the tax-exempt bond or obligation is in the (purpose restrictions), or both.

form of a mortgage, include the amount of the

mortgage on line 64a, and not on line 64b. For Line 69. Permanently Restricted Parts IV-A and IV-B—

such mortgage, include in the above listing, the Enter the total of the balances for the Reconciliation Statements

maturity date of the debt, repayment terms, permanently restricted class of net assets. Use these reconciliation statements to Permanently restricted net assets are (a) interest rate, and any security provided by the reconcile the differences between the revenue assets, such as land or works of art, donated organization. and expenses shown on the organization’s with stipulations that they be used for a Line 64a does not, however, refer to audited financial statements prepared in specified purpose, be preserved, and not be situations where the organization only has a accordance with SFAS 117 and the revenue sold or (b) assets donated with stipulations that and expenses shown on the organization’s contingent liability, as it would if it were a they be invested to provide a permanent guarantor of tax-exempt bonds issued by a Form 990. source of income. The latter result from gifts related entity. Contingent liabilities, such as If the organization did not receive an and bequests that create permanent those that arise from guarantees, should be audited financial statement for 2005 (or the endowment funds. included as an entry in the separately attached fiscal year for which it is completing this Form Organizations that do not follow SFAS 117. schedule required for line 64a. 990) and prepared the return in accordance If the organization does not follow SFAS 117, with SFAS 117, it does not need to complete Line 64b. Mortgages and Other Notes check the box above line 70 and report Parts IV-A or IV-B and should instead enter Payable account balances on lines 70 through 72. “N/A” on line a of each Part. Report net assets or fund balances on line 73. Enter the amount of mortgages and other Complete line 74 to report the sum of the total These two Parts do not have to be notes payable at the beginning and end of the completed on group returns. liabilities and net assets. year. Attach a schedule showing, as of the end

of the year, the total amount of all mortgages Some states that accept Form 990, or Form On line d1 of Parts IV-A and IV-B, include

payable and, for each nonmortgage note 990-EZ, as their basic reporting form may only those investment expenses netted against

payable, the name of the lender and the other require a separate statement of changes in net investment income in the revenue portion of

assets/fund balances. See the organization’s audited financial statements. information specified in items 2 through 10 of General Instruction

E. Do not include program-related investment the instructions for line 50. The schedule

expenses or other expenses reported as should also identify the relationship of the Line 70. Capital Stock, Trust Principal, lender to any officer, director, trustee, or key program service expenses in the audited

employee of the organization. or Current Funds statement of activities.

For corporations, enter the balance per books Line 65. Other Liabilities for capital stock accounts. Show par or stated Part V-A — Current Officers, List and show the amount of each liability not value (or for stock with no par or stated value,

reportable on lines 60 through 65. Attach a total amount received upon issuance) of all Directors, Trustees, and Key

separate schedule if more space is needed. classes of stock issued and, as yet, Employees uncancelled. For trusts, enter the amount in the Lines 67 through 69. Net Assets List each person who was a current officer, trust principal or corpus account. For director, trustee, or key employee (defined The Financial Accounting Standards Board organizations continuing to use the fund below) of the organization or disregarded entity issued Financial Statements of Not-for-Profit method of accounting, enter the fund balances Organizations described in Regulations sections 301.7701-1 (SFAS 117). SFAS 117 provides for the organization’s current restricted and through 301.7701-3 at any time during the year standards for external financial statements unrestricted funds. even if they did not receive any compensation certified by an independent accountant for Line 71. Paid-In or Capital Surplus, or from the organization. certain types of nonprofit organizations. SFAS

117 does not apply to credit unions, voluntary Enter a zero in columns (B), (C), (D), or (E) Land, Bldg., and Equipment Fund

employees’ beneficiary associations, Enter the balance per books for all paid-in if no hours were entered in column (B) and no

supplemental unemployment benefit trusts, capital in excess of par or stated value for all compensation, contributions, expenses and

section 501(c)(12) cooperatives, and other stock issued and uncancelled. If stockholders other allowances were paid during the

Specific Instructions for Form 990 -27-
reporting year, or deferred for payment to a described in section 132(e)). Include expense consist of the same individuals. Common

future accounting period. allowances or reimbursements that the control also occurs when the filing organization

Aid in the processing of your return by recipients must report as income on their and one or more commonly controlled

separate income tax returns. Examples include organizations have a majority ownership grouping together, preferably at the end of your amounts for which the recipient did not account interest in a corporation, partnership, or trust. list, those who received no compensation. Be to the organization or allowances that were careful not to repeat names. Ownership means holding (directly or more than the payee spent on serving the Give the preferred address at which indirectly) 50% or more of the voting power in a organization. Include payments made under officers, etc., want the Internal Revenue corporation, profits interest in a partnership, or indemnification arrangements, the value of the Service to contact them. beneficial interest in a trust. personal use of housing, automobiles, or other Use an attachment if there are more assets owned or leased by the organization (or Supporting organizations. A supporting persons to list in Part V-A. provided for the organization’s use without organization is a tax-exempt entity whose

Show all forms of cash and noncash charge), as well as any other taxable and purpose is to benefit or further the purposes of

compensation received by each listed officer, nontaxable fringe benefits. See Pub. 525 for one or more charities. All section 509(a)(3)

etc., whether paid currently or deferred. more information. supporting organizations, whether Type 1

(operated, supervised, or controlled by); Type If you pay any other person, such as a Line 75c. Compensation From Related 2 (supervised or controlled in connection with); management services company, for the Organizations or Type 3 (operated in connection with); are services provided by any of your officers, Answer “Yes” to this question if any officer, considered related organizations with respect directors, trustees, or key employees, report director, trustee, key employee, or highest to the organization(s) they support. Therefore, the compensation and other items in Part V-A compensated employees, or highest the compensation reporting requirement of line as if you had paid the officers, etc., directly. compensated professional and 75c applies to both supported and supporting Also see, Ann. 2001-33, 2001-17 I.R.B. 1137. non-professional independent contractors organizations. A failure to fully complete Part V-A can received aggregate compensation amounts of subject both the organization and the Examples of related organizations. A $50,000 or more from your organization and all individuals responsible for such failure to relationship between the filing organization and related organizations (as defined below). For penalties for filing an incomplete return. See one or more other organizations could include this purpose, compensation includes any General Instruction K. any of the following situations: In particular, entering amount that would be reportable in column (C), the phrase on Part V-A, “Information available 1. You control the organization or it (D), or (E) of Part V-A if provided by the filing upon request,” or a similar phrase, is not controls you through common officers, organization. acceptable. directors, or trustees, or through authority to Report any compensation paid by a related approve budgets or expenditures. The organization may also provide an organization for only that period where a 2. You and the other organization(s) were attachment to explain the entire 2005 control or other relationship existed between created at approximately the same time and by compensation package for any person listed in

Part V-A. the organizations. Report compensation paid the same persons. by a related organization in the same period 3. You and the other organization(s) Each person listed in Part V-A should report (calendar or fiscal year) as compensation paid operate in a coordinated manner with respect the listed compensation on his or her income by the Form 990 filer. to facilities, programs, employees, or other tax return unless the Code specifically Organizations answering “Yes” must attach activities. excludes any of the payments from income tax. 4. Persons who exercise substantial See Pub. 525 for details. a schedule that lists, for each officer, director, influence over you also exercise substantial trustee, key employee, highest compensated Key employee. A key employee is any influence over the other organization. employees, or highest compensated person having responsibilities, powers, or professional and non-professional independent influence similar to those of officers, directors, Example. Organization A, a 501(c)(3) contractors, a description of the relationship or trustees. The term includes the chief public charity, is not owned or controlled by between the organization and the other management and administrative officials of an Organization B, a 501(c)(4) social welfare organization, receiving such compensation, the organization (such as an executive director or organization. However, the tax-exempt name and EIN of each related organization that chancellor). purposes of both organizations focus on the provided the compensation and the amount same part of the world, where natural disasters Column (B) each provided. Use the same format as have occurred. Fifty percent (50%) of A’s board required by columns (C) through (E) of Part In column (B), a numerical estimate of the are also members of B’s board. CEO of A is V-A. average hours per week devoted to the also a board member of B. position is required for a complete answer. Providing information on compensation Statements such as “as needed,” “as required,” A and B agree to cooperate in a charitable received from related organizations does not or “40+” are unacceptable. project. An employee of B conducts fundraising violate the disclosure provisions of section among B’s members, with the proceeds going Column (C) 7216(a). See also section 6033(a)(1). to A to carry out disaster relief. The CEO’s of A For each person listed, report salary, fees, For purposes of reporting on the Form 990, and B agree that A will pay a portion of the B

bonuses, and severance payments paid. related organizations are tax-exempt or taxable employee salary for a period of time in Include current-year payments of amounts entities with a close connection. A close recognition of the fundraising assistance of B. reported or reportable as deferred connection that binds related organizations A and B are related entities by virtue of the

compensation in any prior year. may include: overlap in board membership, common

persons exercising substantial influence over Column (D) • Common control of one or more of the both organizations (CEO of A), and payment of organizations; Include in this column all forms of deferred salary to an employee of B by A. B should • Direct or indirect control of one organization compensation and future severance payments report the payment from A in line 75c. by another through common governance; (whether or not funded; whether or not vested;

and whether or not the deferred compensation • Direct or indirect ownership of one Example. A hospital auxiliary that raises organization by another; plan is a qualified plan under section 401(a)). funds for Hospital Y or coordinates the efforts

Include also payments to welfare benefit plans • Control of one organization by another of that hospital’s volunteer staff would be a

on behalf of the officers, etc. Such plans through authority to approve budgets or supporting organization of Hospital Y and, expenditures; provide benefits such as medical, dental, life thus, a related organization, even if the hospital • Coordination of operations as to facilities, does not own or control the auxiliary. Hospital insurance, severance pay, disability, etc.

Reasonable estimates may be used if precise programs, employees, or other activities; Y, in turn, would be a supported organization of • Common persons exercising substantial cost figures are not readily available. the auxiliary. The hospital must report (on an influence over all of the organizations. attachment to its return) the compensation paid Unless the amounts were reported in Thus, the close connection that creates related by the auxiliary to the officer, director, trustee, column (C), report, as deferred compensation entities includes, but is broader than direct or or key employee of the hospital. The same in column (D), salaries and other compensation indirect ownership or control. reporting requirement would apply to earned during the period covered by the return, Common control. Common control occurs compensation paid by Hospital Y to an officer, but not yet paid by the date the organization when the filing organization and one or more etc., of the auxiliary. files its return.

other organizations have (1) a majority of their Column (E) governing boards or officers appointed or

Enter both taxable and nontaxable fringe elected by the same organization(s), or (2) a Part V-B. Former Officers,

benefits (other than de minimis fringe benefits majority of their governing boards or officers Directors, Trustees, and Key

-28- Specific Instructions for Form 990
Employees That Received amounts for which the recipient did not account Form 990-T is not a substitute for Form 990.

to the organization or allowances that were Report on Form 990, or Form 990-EZ, items of Compensation or Other Benefits more than the payee spent on serving the income and expense that are also reported on List each former officer, director, trustee, and organization. Include payments made under Form 990-T when the organization is required key employee (as defined in Part V-A) of the indemnification arrangements, the value of the to file both forms. organization or disregarded entity described in personal use of housing, automobiles, or other Regulations sections 301.7701-1 through assets owned or leased by the organization (or All tax-exempt organizations must pay

301.7701-3 that received compensation or provided for the organization’s use without estimated taxes with respect to their

other benefits during the tax year. charge), as well as any other taxable and CAUTION unrelated business income if they

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nontaxable fringe benefits. See Pub. 525 for expect their tax liability to be $500 or more. Give the preferred address at which these more information. Use Form 990-W to compute this tax. former officers, etc., want the Internal Revenue

Service to contact them. Line 79. Liquidation, Dissolution,

Use an attachment if there are more Part VI—Other Information Termination, or Substantial

persons to list in Part V-B. • Section 501(c)(3) organizations and section Contraction

Show all forms of cash and noncash 4947(a)(1) nonexempt charitable trusts must For a complete liquidation of a corporation or

compensation or benefits received by each also complete and attach a Schedule A (Form termination of a trust, check the Final return

listed former officer, etc., whether paid 990 or 990-EZ) to their Form 990 or Form box in the heading on page 1 of the form. If

currently or deferred. 990-EZ. See General Instruction D for there was a liquidation, dissolution,

information on Schedule A (Form 990 or termination, or substantial contraction, attach a If you pay any other person, such as a

management services company, for the 990-EZ). statement explaining what took place.

• Answer “Yes,” “No,” or “N/A” to each services provided by any of your officers, On the attached statement, show whether question. directors, trustees, or key employees, report the assets have been distributed and the date

the compensation and other items in Part V-A Line 76. Change in Activities of distribution. Also attach a certified copy of as if you had paid the officers, etc., directly. any resolution, or plan of liquidation or Attach a statement to explain any significant A failure to fully complete Part V-B can termination, etc., with all amendments or changes in the kind of activities the subject both the organization and the supplements not already filed. In addition, organization conducts to further its exempt individuals responsible for such failure to attach a schedule listing the names and purpose. Include new or modified activities not penalties for filing an incomplete return. See addresses of all persons who received the listed as current or planned in the General Instruction K. assets distributed in liquidation or termination, In particular, entering organization’s application for recognition of the phrase on Part V-B, “Information available the kinds of assets distributed to each one, and exemption, or not yet reported to the IRS by a upon request,” or a similar phrase, is not each asset’s fair market value. letter to its Director EO Examination or by an acceptable. attachment to the organization’s return for any A substantial contraction is a partial

The organization may also provide an earlier year. Also include any major program liquidation or other major disposition of assets

attachment to explain the entire 2005 activities that are being discontinued. except transfers for full consideration or

compensation package for any person listed in distributions from current income.

Part V-B. Line 77. Changes In Organizing or

Governing Documents A major disposition of assets means any Each person listed in Part V-B should report disposition for the tax year that is: Attach a conformed copy of any changes to the the listed compensation on his or her income articles of incorporation, or association, 1. At least 25% of the fair market value of tax return unless the Code specifically constitution, trust instrument, or other the organization’s net assets at the beginning excludes any of the payments from income tax. organizing document, or to the bylaws or other of the tax year; or See Pub. 525 for details. governing document. If you are filing 2. One of a series of related dispositions

Column (B) electronically, conformed copies of changes to begun in earlier years that add up to at least

25% of the net assets the organization had at these documents should be sent to the IRS in In column (B), report all secured and Cincinnati, OH, at the address in General the beginning of the tax year when the first unsecured loans and salary advances to Instruction A. disposition in the series was made. Whether a former officers, directors, trustees and key major disposition of assets took place through employees. A conformed copy is one that agrees with a series of related dispositions depends on the

Column (C) the original document and all amendments to facts in each case.

it. If the copies are not signed, they must be For each person listed, report salary, fees, accompanied by a written declaration signed bonuses, and severance payments paid. See Regulations section 1.6043-3 for by an officer authorized to sign for the special rules and exceptions. Include current-year payments of amounts organization, certifying that they are complete reported or reportable as deferred and accurate copies of the original documents. Line 80. Relation To Other compensation in any prior year.

Photocopies of articles of incorporation Organizations Column (D) showing the certification of an appropriate state Answer “Yes” if most (more than 50%) of the

Include in this column all forms of deferred official do not have to be accompanied by such organization’s governing body, officers,

compensation and future severance payments a declaration. See Rev. Proc. 68-14, 1968-1 directors, trustees, or membership are also

(whether or not funded; whether or not vested; C.B. 768, for details. When a number of officers, directors, trustees, or members of any

and whether or not the deferred compensation changes are made, attach a copy of the entire other organization.

plan is a qualified plan under section 401(a)). revised organizing instrument or governing Disregard any coincidental overlap of Include also payments to welfare benefit plans document. membership with another organization; that is, on behalf of the officers, etc. Such plans However, if your exempt organization when membership in one organization is not a provide benefits such as medical, dental, life changes its legal structure, such as from a trust condition of membership in another insurance, severance pay, disability, etc.

Reasonable estimates may be used if precise to a corporation, you must file a new exemption organization. For example, assume that a

application to establish that the new legal entity majority of the members of a section 501(c)(4) cost figures are not readily available. qualifies for exemption. civic organization also belong to a local Unless the amounts were reported in chamber of commerce described in section

column (C), report, as deferred compensation Line 78. Unrelated Business Income 501(c)(6). The civic organization should in column (D), salaries and other compensation Political organizations described in section 527 answer “No” on line 80 if it does not require its earned during the period covered by the return, are not required to answer this question. members to belong to the chamber of but not yet paid by the date the organization commerce. files its return. Check “Yes” on line 78a if the

organization’s total gross income from all of its Also disregard affiliation with any statewide Column (E) unrelated trades and businesses is $1,000 or or nationwide organization. Thus, the civic

Enter both taxable and nontaxable fringe more for the year. Gross income is the amount organization in the above example would still

benefits (other than de minimis fringe benefits of gross receipts less the cost of goods sold. answer “No” on line 80 even if it belonged to a

described in section 132(e)). Include expense See Pub. 598 for a description of unrelated state or national federation of similar

allowances or reimbursements that the business income and the Form 990-T filing organizations. A local labor union whose

recipients must report as income on their requirements for section 501(c), (e), (f), (k), members are also members of a national labor

separate income tax returns. Examples include and (n) organizations having such income. organization would answer “No” on line 80.

Specific Instructions for Form 990 -29-
Line 81. Expenditures For Political An organization is effectively controlled by a Exception 1. Section 6033(e)(3) exception

Purposes candidate or prospective candidate only if such for organizations whose dues are

individual has a continuing, substantial nondeductible. (Check “Yes” for line 85a.)

Political organizations described in involvement in the day-to-day operations or 1. All organizations exempt from tax under

section 527 are not required to answer management of the organization. section 501(a), other than section 501(c)(4), CAUTION this question. A determination of whether the primary (5), and (6) organizations.

!

purpose of an organization is promoting the 2. Local associations of employees’ and A political expenditure is one intended to candidacy or prospective candidacy of an veterans’ organizations described in section influence the selection, nomination, election, or individual for public office is made on the basis 501(c)(4), but not section 501(c)(4) social appointment of anyone to a federal, state, or of all the facts and circumstances. See section welfare organizations. local public office, or office in a political 4955 and Regulations section 53.4955. 3. Labor unions and other labor organization, or the election of Presidential or

Vice Presidential electors. It does not matter Use Form 4720 to figure and report the organizations described in section 501(c)(5),

whether the attempt succeeds. excise taxes. but not section 501(c)(5) agricultural and

horticultural organizations. An expenditure includes a payment, Line 82. Donated Services Or Facilities 4. Section 501(c)(4), (5), and (6) distribution, loan, advance, deposit, or gift of Because Form 990, or Form 990-EZ, is open to organizations that receive more than 90% of money, or anything of value. It also includes a public inspection, you may want the return to their dues from: contract, promise, or agreement to make an show contributions the organization received in expenditure, whether or not legally a. Section 501(c)(3) organizations, the form of donated services or the use of enforceable. b. State or local governments, materials, equipment, or facilities at less than All section 501(c) organizations. An exempt c. Entities whose income is exempt from fair rental value. If so, and if the organization’s tax under section 115, or organization that is not a political organization records either show the amount and value of

must file Form 1120-POL if it is treated as d. Organizations described in 1 through 3, such items or give a clearly objective basis for having political organization taxable income above. an estimate, the organization may choose to under section 527(f)(1). 5. Section 501(c)(4) and (5) organizations enter this optional information on line 82b. The that receive more than 90% of their annual If a section 501(c) organization establishes IRS does not require any organization to keep dues from: and maintains a section 527(f)(3) separate such records. However, do not include the

segregated fund, it is the fund’s responsibility value of such items in Part I or II, or in the a. Persons,

to file its own Form 1120-POL if the fund meets expense column in Part III. You may indicate b. Families, or

the Form 1120-POL filing requirements. Do not the value of donated services or use of c. Entities,

include the segregated fund’s receipts, materials, equipment, or facilities in Part III in who each paid annual dues of $88 or less

expenditures, and balance sheet items on the the narrative description of program services in 2005 (adjusted annually for inflation). See

Form 990, or Form 990-EZ, of the section rendered. See the instructions for Part III. Rev. Proc. 2004-71, 2004-50 I.R.B. 970.

501(c) organization that establishes and Line 83. Public Inspection 6. Any organization that receives a private maintains the fund. When answering questions letter ruling from the IRS stating that the Requirements 81a and 81b on its Form 990, this section organization satisfies the section 6033(e)(3) 501(c) organization should disregard the Answer “Yes” only if the organization complied exception. political expenses and Form 1120-POL filing with its public inspection obligations described 7. Any organization that keeps records to requirement of the segregated fund. in General Instruction M. substantiate that 90% or more of its members

However, when a section 501(c) Line 83b. Disclosure Requirements For cannot deduct their dues (or similar amounts)

organization transfers its own funds, to a Quid Pro Quo as business expenses whether or not any part Contributions

separate segregated section 527(f)(3) fund for of their dues are used for lobbying purposes. See General Instruction L. use as political expenses, the 501(c) 8. Any organization that is not a

organization must report the transferred funds Line 84a. Solicitations of Contributions membership organization.

as its own political expenses on its Form 990 All organizations that qualify under section or Form 990-EZ. 170(c) to receive contributions that are Special rules treat affiliated social Section 501(c)(3) organizations. A section deductible as charitable contributions for welfare organizations, agricultural and 501(c)(3) organization will lose its tax-exempt federal income tax purposes, enter “N/A.” See CAUTION horticultural organizations, and

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status if it engages in political activity. General Instruction L. business leagues as parts of a single

A section 501(c)(3) organization must pay a organization for purposes of meeting the Line 85. Section 501(c)(4), (5), or (6) section 4955 excise tax for any amount paid or nondeductible dues exception. See Rev. Proc. Organizations incurred on behalf of, or in opposition to, any 98-19.

candidate for public office. The organization Reporting membership dues, lobbying, and Exception 2. Section 6033(e)(1) $2,000 must pay an additional excise tax if it fails to political expenses under section 6033(e).

Only certain organizations that are tax-exempt in-house lobbying exception. (Check “Yes” correct the expenditure timely. for line 85b.) An organization satisfies the under: A manager of a section 501(c)(3) $2,000 in-house lobbying exception if it: • Section 501(c)(4) (social welfare organization who knowingly agrees to a organizations), 1. Did not receive a waiver for proxy tax political expenditure must pay a section 4955 • Section 501(c)(5) (agricultural and owed for the prior year. excise tax, unless the agreement is not willful horticultural organizations), or 2. Did not make any political expenditures and there is reasonable cause. A manager who • Section 501(c)(6) (business leagues) or foreign lobbying expenditures during the does not agree to a correction of the political are subject to (a) the section 6033(e) notice 2005 reporting year, expenditure may have to pay an additional

excise tax. and reporting requirements, and (b) a potential 3. Made lobbying expenses during the

proxy tax. These organizations must report 2005 reporting year consisting only of in-house When a section 501(c)(3) organization their total lobbying expenses, political direct lobbying expenses totaling $2,000 or promotes a candidate for public office (or is expenses, and membership dues, or similar less, but excluding: used or controlled by a candidate or amounts, on line 85 of Form 990. prospective candidate), amounts paid or a. Any allocable overhead expenses, and

Section 6033(e) notice and reporting b. All direct lobbying expenses of any local incurred for the following purposes are political

expenditures: requirements and proxy tax. Section 6033(e) council regarding legislation of direct interest to

• Remuneration to such individual (a requires certain section 501(c)(4), (5), and (6) the organization or its members. organizations to tell their members what candidate or prospective candidate) for portion of their membership dues were speeches or other services; Dues notices. An organization that checked allocable to the political or lobbying activities of • Travel expenses of such individual; “No” for both lines 85a and 85b, and is thus the organization. If an organization does not • Expenses of conducting polls, surveys, or responsible for reporting on line 85c through give its members this information, then the other studies, or preparing papers or other 85h, must send dues notices to its members at

material for use by such individual; the time of assessment or payment of dues, organization is subject to a proxy tax. The tax

is reported on Form 990-T. • Expenses of advertising, publicity, and unless the organization chooses to pay the

fundraising for such individual; and However, if the organization meets proxy tax instead of informing its members of

• Any other expense that has the primary Exception 1 or 2, it is excluded from the notice, the nondeductible portion of its dues. These

effect of promoting public recognition or reporting, and proxy tax requirements of dues notices must reasonably estimate the

otherwise primarily accruing to the benefit of section 6033(e). See also Rev. Proc. 98-19, dues allocable to the nondeductible lobbying

such individual. 1998-1 C.B. 547. and political expenditures reported on line 85d.

-30- Specific Instructions for Form 990
IF . . . THEN . . . • The actions of a covered executive branch supporting a lobbying communication, even if

official through direct communication (for not yet made.

The organization’s The organization must: example, President, Vice President, or A lobbying communication is any

lobbying and political (a) Allocate all cabinet-level officials, and their immediate communication with any member or employee

expenses are more than membership dues to its deputies) (sections 162(e)(1)(A) and (D)). of a legislative body, or any other government

its membership dues for lobbying and political Reasonable methods of allocating costs to official participating in the formulation of the

the year, activities, and direct lobbying activities include, but are not legislation that:

(b) Carry forward any limited to: • Refers to specific legislation and reflects a

excess lobbying and • The ratio method, view on that legislation, or

political expenses to the • The gross-up and alternative gross-up • Provides support for views in a prior lobbying

next tax year. methods, and communication. • A method applying the principles of section Purpose for engaging in an activity is

The organization: The organization need 263A. based on all the facts and circumstances. If an

(a) Had only de minimis not disclose to its See Regulations sections 1.162-28 and organization’s lobbying communication was for in-house expenses membership the 1.162-29 and the special rules and definitions a lobbying and a nonlobbying purpose, the ($2,000 or less) and no allocation of dues, etc., for these allocation methods given below. organization must make a reasonable other nondeductible to its lobbying and An organization that is subject to the allocation of costs to influencing legislation. lobbying or political political activities. lobbying disclosure rules of section 6033(e) Correction of prior year lobbying costs. expenses; or must also determine its total costs of: If in a prior year, an organization treated costs

• De minimis in-house lobbying, incurred for a future lobbying communication (b) Paid a proxy tax, • Grassroots lobbying, and as a lobbying cost to influence legislation, but instead of notifying its • Political activities. after the organization filed a timely return, it members on the There are no special rules related to appears the lobbying communication will not allocation of dues to determining these costs. be made under any foreseeable circumstance, lobbying and political All methods. the organization may apply these costs to For all the allocation expenses*; or methods, include labor hours and costs of reduce its current year’s lobbying costs, but not

below zero. The organization may carry personnel whose activities involve significant (c) Established that forward any amount of the costs not used to judgment with respect to lobbying activities substantially all of its reduce its current year’s lobbying costs to (lobbying personnel). membership dues, etc., subsequent years. are not deductible by Example: Ratio method. X Organization members. Special rules and definitions. incurred: Ratio and gross-up methods. *Such as political campaign or grassroots lobbying 1. 6,000 labor hours for all activities, expenses. 1. May use even if volunteers conduct 2. 3,000 labor hours for lobbying activities activities. (three employees), 2. May disregard labor hours and costs of Members of the organization cannot take a 3. $300,000 for operational costs, and clerical or support personnel (other than 4. No third-party lobbying costs. trade or business expense deduction on their lobbying personnel) under the ratio method. tax returns for the portion of their dues, etc.,

allocable to the organization’s lobbying and Alternative gross-up method. X Organization allocated its lobbying costs as political activities. • Disregard labor hours, and follows: • Costs of clerical or support personnel (other Proxy tax. than lobbying personnel). Lobbying

labor hrs. Third-party costs are those paid to: IF . . . THEN . . . 3,000 • Outside parties for conducting lobbying × $300,000 + 0 = $150,000 6,000

activities, The organization’s The organization is Total labor Total Allocable Costs • Dues paid to another membership actual lobbying and liable for a proxy tax on hrs. costs of third-party allocable to

organization that were declared to be operations costs lobbying political expenses are the excess and reports it nondeductible lobbying expenses, and activities more than it estimated on Form 990-T. • Travel and entertainment costs for lobbying in its dues notices, Examples: Gross-up method and activities. Alternative gross-up method. Direct contact lobbying is a: The organization: All the members’ dues A and B are employees of Y Organization. • Meeting, (a) Elects to pay the remain eligible for a 1. A’s activities involve significant • Telephone conversation, proxy tax, and section 162 trade or judgment with respect to lobbying activities. • Letter, or (b) Chooses not to give business expense 2. A’s basic lobbying labor costs (excluding • Similar means of communication that is its members a notice deduction. employee benefits) are $50,000. with a: allocating dues to 3. B performs clerical and support activities lobbying and political 1. Legislator (other than a local legislator), for A.

activities, or 4. B’s labor costs (excluding employee 2. Covered executive branch official benefits) in support of A’s activities are

The organization: The IRS may permit a and that otherwise qualifies as a lobbying $15,000. activity. (a) Makes a reasonable waiver of the proxy tax. 5. Allocable third-party costs are $100,000.

estimate of dues Treat all hours spent by a person in

allocable to connection with direct contact lobbying as labor If Y Organization uses the gross-up method

nondeductible lobbying hours allocable to lobbying activities. to allocate its lobbying costs, Y multiplies 175%

and political activities, times its basic labor costs (excluding employee Do not treat the hours spent by a person and benefits) for all of the lobbying of its personnel who engages in research and other (b) Agrees to adjust its and adds its allocable third-party lobbying background activities related to direct contact estimate in the following costs as follows: lobbying, but who makes no direct contact with year*. a legislator, or covered executive branch 175% × $65,000 + $100,000 = $213,750 *A facts and circumstances test determines whether or official, as direct contact lobbying. Basic lobbying labor Allocable Costs allocable not a reasonable estimate was made in good faith. De minimis rule. If less than 5% of a costs of A + B third-party costs to lobbying

person’s time is spent on lobbying activities, activities

Allocation of costs to lobbying activities and there is no direct contact lobbying, an If Y Organization uses the alternative organization may treat that person’s time spent and influencing legislation. An organization gross-up method to allocate its lobbying costs, on lobbying activities as zero. that is subject to the lobbying disclosure rules Y multiplies 225% times its basic labor costs of section 6033(e) must use a reasonable Influencing legislation means: (excluding employee benefits) for all of the allocation method to determine its total costs of • Any attempt to influence legislation through lobbying hours of its lobbying personnel and its direct lobbying activities; that is, costs to a lobbying communication; and adds its third-party lobbying costs as follows: influence: • All activities, such as research and

• Legislation, and coordination for the purpose of making or 225% × $50,000 + $100,000 = $212,500

Specific Instructions for Form 990 -31-
Basic lobbying labor Allocable Costs allocable 2. Assessments to cover basic operating Equals costs of A third-party costs to lobbying costs, and activities 3. Special assessments to conduct Line 85f (taxable lobbying & political expenses) lobbying and political activities. Section 263A cost allocation method. The

examples that demonstrate this method are If the amount on line 85c (dues, etc.) is less Line 85d. Lobbying and Political found in Regulations section 1.162-28(f). than the amount on line 85d (lobbying & Expenditures political expenses), then: Line 85a. Section 6033(e)(3) Exception Include on line 85d the total amount of For Nondeductible Dues expenses paid or incurred during the 2005 Line 85c (dues, etc.)

If your organization meets any of the criteria of reporting year in connection with: Less

Exception 1 in the line 85 instructions, answer 1. Influencing legislation; Line 85e (dues shown in notices) “Yes” to question 85a. By doing so, you are 2. Participating or intervening in any declaring that substantially all of the political campaign on behalf of (or in opposition Equals organization’s membership dues were to) any candidate for any public office; nondeductible. Skip lines 85b through 85h. Line 85f (taxable lobbying & political 3. Attempting to influence any segment of expenses), and Line 85b. In-House Lobbying the general public with respect to elections,

Expenditures legislative matters, or referendums; or

4. Communicating directly with a covered An organization is exempt from the notice, Line 85d (lobbying & political expenses) executive branch official in an attempt to reporting, and proxy tax liability rules of section Less influence the official actions or positions of 6033(e) if it meets Exception 2, the $2,000 such official. Line 85c (dues, etc.) in-house lobbying exception. Both exceptions

are discussed in the instructions for line 85. Also include on line 85d: Equals

An organization should answer “Yes” to 1. Excess lobbying and political The excess amount to be carried over to the question 85b if it met all of the requirements of expenditures carried over from the preceding Exception 2. Skip lines 85c through 85h. following tax year and reported on line 85d tax year. (lobbying & political expenses), or its If the organization’s in-house direct 2. An amount equal to the taxable lobbying equivalent, on the year 2006 Form 990. lobbying expenditures during the 2005 and political expenditures reported on line 85f reporting year were $2,000 or less, but the for the preceding tax year, if the organization organization also paid or incurred other See Examples given below. received a waiver of the proxy tax imposed on lobbying or political expenditures during the that amount. Lines 85g and 85h. Proxy Tax And 2005 reporting year, or received a waiver for

proxy tax owed for the prior year, it should Do not include: Waivers

answer “No” to question 85b and complete An organization must pay the section 6033(e) 1. Any direct lobbying of any local council lines 85c through 85h. However, the $2,000 or proxy tax on the amount reported on line 85f or similar governing body with respect to less of in-house direct lobbying expenditures unless it has the option to check “Yes” on line legislation of direct interest to the organization should not be included in the total on line 85d. 85h. or its members.

Definitions. 2. In-house direct lobbying expenditures, if If the amount on line 85f is zero, or less than Grassroots lobbying refers to attempts to the total of such expenditures is $2,000 or less zero, enter on: (excluding allocable overhead). influence any segment of the general public 3. Political expenditures for which the Line 85g N/A regarding legislative matters or referendums. section 527 tax has been paid (on Form Line 85h N/A Direct lobbying includes attempting to 1120-POL). influence:

• Legislation through communication with • Reduce the current year’s lobbying If the organization sent dues notices to its legislators and other government officials, and expenditures, but not below zero, by costs members at the time of assessment or • The official actions or positions of covered previously allocated in a prior year to lobbying payment of dues that reasonably estimated the executive branch officials through direct activities that were cancelled after a return dues allocable to the nondeductible lobbying communication. reporting those costs was filed. and political expenditures reported on line 85d, Direct lobbying does not include • Carry forward any amounts not used as a enter on: attempting to influence: reduction to subsequent years. Line 85g No • Any local council on legislation of direct Line 85e. Dues Declared Line 85h Yes interest to the organization or its members, and Nondeductible In Notices To Members • The general public regarding legislative Include the amount from the 2005 Form 990, matters (grassroots lobbying). Enter the total amount of dues, etc., allocable line 85f, on the year 2006 Form 990, line 85d, Other lobbying includes: to the 2005 reporting year that members were or its equivalent. notified were nondeductible under section • Grassroots lobbying, 162(e). • Foreign lobbying,

• Third-party lobbying, and Example: If the organization did not send these dues • Dues paid to another organization that were • Membership dues: $100,000 for the 2005 notices, enter on:

used to lobby. reporting year, Line 85g Yes

In-house expenditures include: • Organization’s timely notices to members— Line 85h No • Salaries, and 25% of membership dues nondeductible, and

• Other expenses of the organization’s officials • Line 85e entry—$25,000. Report the proxy tax on Form 990-T.

and staff (including amounts paid or incurred Line 85f. Taxable Lobbying And for the planning of legislative activities). Political Expenditures Underreporting of lobbying expenses. An In-house expenditures do not include: The taxable amount reportable on line 85f is organization is subject to the proxy tax for the • Any payments to other taxpayers engaged in the amount of dues, etc.: 2005 reporting year for underreported lobbying lobbying or political activities as a trade or and political expenses only to the extent that business. 1. Allocable to the 2005 reporting year, these expenses (if actually reported) would • Any dues paid to another organization that and have resulted in a proxy tax liability for that are allocable to lobbying or political activities. 2. Attributable to lobbying and political year. A waiver of proxy tax for the tax year only expenditures that the organization did not Line 85c. Dues, Assessments, And applies to reported expenditures. timely notify its members were nondeductible. Similar Amounts Received An organization that underreports its Enter the total dues, assessments, and similar If the amount on line 85c (dues, etc.) is lobbying and political expenses is also subject amounts allocable to the 2005 reporting year. greater than the amount on line 85d (lobbying to the section 6652(c) daily penalty for filing an & political expenses), then: The term dues means the amount the incomplete or inaccurate return.

organization requires a member to pay in order

to be recognized as a member. Line 85d (lobbying & political expenses) Examples

Less Payments that are similar to dues include: Organizations A and B:

1. Members’ voluntary payments, 1. Reported on the calendar year basis. Line 85e (dues shown in notices)

-32- Specific Instructions for Form 990
2. Incurred only grassroots lobbying • Investment income (such as dividends, not owned by the mutual or electric cooperative

expenses (did not qualify for the under $2,000 rents, and similar receipts), and normal company:

in-house lobbying exception (de minimis rule)). recurring capital gains on investments. a. To end-users who are served by 3. Allocated dues to the tax year in which Gross receipts do not include: distribution facilities not owned by the received. company or any of its members (other than • Capital contributions (see Regulations income received or accrued directly or For Organization A— Dues, section 1.118-1), indirectly from a member), or assessments, and similar amounts received in • Initiation fees, or b. Generated by a generation facility not 2005 were greater than its lobbying expenses • Unusual amounts of income (such as the owned or leased by the company or any of sale of the clubhouse). for 2005. its members and which is directly connected College fraternities or sororities or other to distribution facilities owned by such Workpapers (for 2005 Form 990) —

Organization A organizations that charge membership company or any of its members (other than initiation fees, but not annual dues, do income received or accrued directly or CAUTION

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1. Total dues, assessments, etc., include initiation fees in their gross receipts. indirectly from a member), received . . ................ $800

 If the 35% and 15% limits do not affect the 4. From any nuclear decommissioning 2. Lobbying expenses paid or incurred $600 club’s exempt status, include the income transaction, or

3. Less: Total nondeductible amount of shown on line 86b on the club’s Form 990-T. 5. From any asset exchange or conversion

dues notices . . . . . . . . . . . . . . . 100 100 transaction. Investment income earned by a section

4. (Subtract line 3 from both lines 1 and 501(c)(7) organization is not tax-exempt For a mutual or cooperative telephone 2) . . . . . . . . . . . . . . . . . . . . . $700 $500 income unless it is set aside for: company, gross income also does not include

5. Taxable amount of lobbying expenses • Religious, amounts received or accrued either from (smaller of the two amounts on line 4) $500 • Charitable, another telephone company for completing • Scientific, long distance calls to or from or between the The amounts on lines 1, 2, 3, and 5 of • Literary, telephone company’s members, or from the the workpapers were entered on lines • Educational purposes, or sale of display listings in a directory furnished 85c through 85f of the 2005 Form 990. • Prevention of cruelty to children or animals.

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to the telephone company’s members. Also, Because dues, etc., received were greater If the combined amount of an gross income does not include amounts than lobbying expenses, there is no carryover organization’s gross investment income (that is received or accrued as qualified pole rentals. of excess lobbying expenses to line 85d of the not set aside for charitable purposes) and other Line 88 year 2006 Form 990. unrelated business income exceeds $1,000, it

must report the investment income and other Answer “Yes” to this question if at any time See the instructions for lines 85g and 85h

for the treatment of the $500. unrelated business income on Form 990-T. during the year, the organization owned a 50%

or greater interest in a taxable corporation or For Organization B— Dues, Nondiscrimination policy. A section partnership or an entity disregarded as assessments, and similar amounts received in 501(c)(7) organization is not exempt from separate from the organization under 2005 were less than its lobbying expenses for income tax if any written policy statement, Regulations sections 301.7701-2 and 2005. including the governing instrument and bylaws, 301.7701-3. If an organization answers “Yes” allows discrimination on the basis of race, on line 88, complete Part IX, Information Workpapers (for 2005 Form 990) — color, or religion. Organization B Regarding Taxable Subsidiaries and However, section 501(i) allows social clubs Disregarded Entities. 1. Total dues, assessments, etc., to retain their exemption under section received . . ................ $400 Line 89a. Section 501(c)(3) 501(c)(7) even though their membership is

2. Lobbying expenses paid or incurred $600 limited (in writing) to members of a particular Organizations: Disclosure of Excise

religion, if the social club: Taxes Imposed Under Section 4911, 3. Less: Total nondeductible amount of

dues notices . . . . . . . . . . . . . . . 100 100 1. Is an auxiliary of a fraternal beneficiary 4912, or 4955

4. (Subtract line 3 from both lines 1 and society exempt under section 501(c)(8), and Section 501(c)(3) organizations must disclose

2) . . . . . . . . . . . . . . . . . . . . . $300 $500 2. Limits its membership to the members any excise tax imposed during the year under

of a particular religion; or the membership section 4911 (excess lobbying expenditures), 5. Taxable amount of lobbying expenses limitation is: 4912 (disqualifying lobbying expenditures), or, (smaller of the two amounts on line 4) $300

a. A good-faith attempt to further the unless abated, 4955 (political expenditures).

The amounts on lines 1, 2, 3, and 5 of See sections 4962 and 6033(b). teachings or principles of that religion, and

the workpapers were entered on lines b. Not intended to exclude individuals of a Line 89b. Section 501(c)(3) and 85c through 85f of the 2005 Form 990. particular race or color.

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501(c)(4) Organizations: Disclosure of Because dues, etc., received were less Section 4958 Excess Benefit than lobbying expenses, excess lobbying Line 87. Section 501(c)(12) Transactions and Excise Taxes expenses of $200 must be carried forward to Organizations Sections 6033(b) and 6033(f) require section line 85d of the year 2006 Form 990 (excess of One of the requirements that an organization 501(c)(3) and (4) organizations to report the $600 of lobbying expenses over $400 dues, must meet to qualify under section 501(c)(12) amount of taxes imposed under section 4958 etc., received). The $200 will be included along is that at least 85% of its gross income consists with the other lobbying and political expenses (excess benefit transactions) involving the of amounts collected from members for the organization, unless abated, as well as any paid or incurred in the 2006 reporting year and sole purpose of meeting losses and expenses. other information the Secretary may require reportable on line 85d (or the equivalent line) of For purposes of section 501(c)(12), the term concerning those transactions. See General the year 2006 Form 990. gross income means gross receipts without Instruction P for a discussion of excess benefit See the instructions for lines 85g and 85h reduction for any cost of goods sold. transactions. for the treatment of the $300. Gross income for mutual or cooperative Attach a statement describing any excess electric companies is figured by excluding any Line 86. Section 501(c)(7) benefit transaction, the disqualified person or income received or accrued from: Organizations persons involved, and whether or not the 1. Qualified pole rentals, excess benefit transaction was corrected. Gross receipts test. A section 501(c)(7) 2. Any provision or sale of electric energy organization may receive up to 35% of its Line 89c. Taxes Imposed on transmission services or ancillary service if the gross receipts, including investment income, services are provided on a nondiscriminatory Organization Managers or Disqualified

from sources outside its membership and open access basis under an open access Persons

remain tax-exempt. Part of the 35% (up to 15% transmission tariff; approved or accepted by For line 89c, enter the amount of taxes of gross receipts) may be from public use of a the Federal Energy Regulatory Commission imposed on organization managers or social club’s facilities. (FERC) or under an independent transmission disqualified persons under sections 4912, Gross receipts are the club’s income from provider agreement approved or accepted by 4955, and 4958, unless abated.

its usual activities and include: FERC (other than income received or accrued Line 89d. Taxes reimbursed by the • Charges, directly or indirectly from a member),

• Admissions, 3. The provision or sale of electric energy organization

• Membership fees, distribution services or ancillary services if the For line 89d, enter the amount of tax on line

• Dues, services are provided on a nondiscriminatory, 89c that was reimbursed by the organization.

• Assessments, and open-access basis to distribute electric energy Any reimbursement of the excise tax liability of

Specific Instructions for Form 990 -33-
a disqualified person or organization manager In Part VII, show whether revenue, also activities that form the basis of the

will be treated as an excess benefit unless (1) reportable on lines 2 through 11 of Part I, was organization’s exemption from taxation). Also

the organization treats the reimbursement as received from activities related to the report here any revenue that is excludable from

compensation during the year the organization’s purpose or activities unrelated to gross income other than by Code section 512,

reimbursement is made, and (2) the total its exempt purpose. Enter gross amounts 513, or 514, such as interest on state and local

compensation to that person, including the unless indicated otherwise. Show also any bonds that is excluded from tax by section 103.

reimbursement, is reasonable. revenue excludable from the definition of Explain in Part VIII how any amount reported in

unrelated business taxable income. column (E) relates to the accomplishment of Line 90a. List of States the organization’s exempt purposes. The sum of amounts entered in columns List each state with which the organization is

filing a copy of this return in full or partial (B), (D), and (E) for lines 93 through 103 of Lines 93(a) through (g). Program

satisfaction of state filing requirements. Part VII should match amounts entered for Service Revenue correlating lines 2 through 11 of Part I. Use the List the organization’s revenue-producing Line 90b. Number of Employees following table to verify the relationship of Part program service activities on these lines. VII with Part I. Enter the number of employees on your payroll Program service activities are primarily those

during the pay period including March 12, Contributions that are reportable on that form the basis of an organization’s

2005, as shown on your Form 941 or Form 943 lines 1a through 1d of Part I are not exemption from tax. Enter in the appropriate

(January-March calendar quarter return only). reportable in Part VII. columns, gross revenue from each program

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Do not include household employees, persons service activity and the business and exclusion

who received no pay during the pay period, Amounts in Part VII Correspond to codes that identify this revenue. See the

pensioners, or members of the Armed Forces. on Line: Amounts in Part explanation of program service revenue in the

I on Line: instructions for Part I, line 2. For 501(c)(15) Line 91b. Foreign Accounts reporting of insurance premiums received, 93(a) through (g) .................. 2 Check the “Yes” box if either 1 or 2 below refer to instructions for Part I, line 2. 94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 applies: 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Line 93(f). Medicare and Medicaid 1. At any time during the calendar year, 96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Payments the organization had an interest in or signature 97 and 98 . . . . . . . . . . . . . . . . . . . . . . . 6c

or other authority over a financial account in a 99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Enter the revenue received from Medicare and

100 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8d Medicaid payments. See the Examples of foreign country (such as a bank account,

securities account, or other financial account); 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9c program service revenue in the instructions for

and 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10c Part I, line 2.

103(a) through (e) . . . . . . . . . . . . . . . . . . 11 a. The combined value of the accounts 105 (plus line 1d, Part I) . . . . . . . . . . . . . . 12 Line 93(g). Fees and Contracts From was more than $10,000 at any time during the Government Agencies calendar year; and Completing Part VII In the appropriate columns, enter gross b. The accounts were not with a U.S. revenue earned from fees and contract military banking facility operated by a U.S. Column (A) payments by government agencies for a financial institution. service, facility, or product that benefited the 2. The organization owns more than 50% In column (A), identify any unrelated business government agency primarily, either of the stock in any corporation that would income reportable in column (B) by selecting a economically or physically. Do not include answer “Yes” to item 1 above. business code from the Codes for Unrelated government grants that enabled your Business Activity in the 2005 Instructions for organization to benefit the public directly and If the “Yes” box is checked, enter the name Form 990-T. primarily. See Part I, line 1c instructions for the of the foreign country or countries. Attach a The Codes for Unrelated Business distinction between government grants that separate sheet if more space is needed. File Activity have been revised. Use the represent contributions and payments from Form TD F 90-22.1 by June 30, 2006, with the CAUTION codes shown in the 2005 Instructions government agencies for a service, product, or !

Department of the Treasury at the address for Form 990-T. facility that primarily benefited the government shown on the form. agencies. Column (B) You can get Form TD F 90-22.1 by calling Report on line 2 of Part I (program service 1-800-TAX-FORM (1-800-829-3676) or by In column (B), enter any revenue received from revenue) the sum of the entries in columns (B), downloading it from the IRS website at activities unrelated to the exempt purpose of (D), and (E) for lines 93(a) through (g). www.irs.gov. Do not file Form TD F 90-22.1 the organization. See the Instructions for Form

with the IRS or attach it to Form 990. 990-T and Pub. 598 for a discussion of what is Lines 94 through 96. Dues,

unrelated business income. If you enter an Assessments, Interest, and Dividends Line 92. Section 4947(a)(1) Nonexempt amount in column (B), then you must enter a In the appropriate columns, report the revenue Charitable Trusts business code in column (A). received for these line items. General

Section 4947(a)(1) nonexempt charitable trusts Column (C) instructions for lines 94 through 96 are given in that file Form 990 instead of Form 1041 must the instructions for Part I, lines 3 through 5. complete this line. The trust should include In column (C), enter an exclusion code from

exempt-interest dividends received from a the Exclusion Codes list on the last page of the Lines 97 and 98. Rental Income (Loss)

mutual fund or other regulated investment Specific Instructions for Form 990 to identify Report net rental income from investment any revenue excludable from unrelated company as well as tax-exempt interest property on these lines. Also report here rental business income. If more than one exclusion received directly. income from unaffiliated exempt organizations. code applies to a particular revenue item, use Report rental income, however, from an the lowest numbered exclusion code that exempt function (program service) on line 93. Part VII—Analysis of applies. If nontaxable revenues from several Refer to the instructions for Part I, line 6. A

Income-Producing Activities sources are reportable on the same line in more detailed discussion of rental income is column (D), use the exclusion code that given in the Instructions for Form 990-T and Political organizations described in section 527 applies to the largest revenue source. If the list Pub. 598. are not required to complete this Part. of exclusion codes does not include an item of Rents from real property are usually An organization is exempt from income revenue that is excludable from unrelated excluded in computing unrelated business business income, enter that item in column (E) taxes only if its primary purpose is to engage in taxable income, as are incidental amounts and see the instructions for column (E). the type of activity for which it claims (10% or less) of rental income from personal exemption. Column (D) property leased with real property (mixed

An exempt organization is subject to a tax lease). In a mixed lease where the rent For column (D), identify any revenue received on unrelated business taxable income if such attributable to personal property is more than that is excludable from unrelated business

income is from a trade or business that is 50% of the total rent, neither rent from real or income. If you enter an amount in column (D), regularly carried on by the organization and is personal property is excluded from unrelated you must enter an exclusion code in not substantially related to the organization’s business taxable income. The exclusion also column (C). performance of its exempt purpose or function. does not apply when the real or personal

Generally, a tax-exempt organization with property rentals depend wholly or partly on the Column (E)

gross income of $1,000 or more for the year For column (E), report any revenue from income or profits from leased property, other

from an unrelated trade or business must file activities related to the organization’s exempt than an amount based on a fixed percentage

Form 990-T and pay any tax due. purpose; (for example, income received from or percentage of gross receipts or sales.

-34- Specific Instructions for Form 990
The rental exclusion from unrelated income, show the line number of the amount in organization held a 50% or greater interest at

business taxable income does not apply to any time during the year. If a disregarded entity column (E) and give a brief description of how

debt-financed real property. In general, does not have its own EIN, state that it uses the activity reported in column (E) specifically debt-financed property is any property that the the organization’s EIN. contributed to the accomplishment of the organization finances by debt and holds to organization’s exempt purposes (other than by Columns (D) and (E). Enter the corporation’s produce income instead of for exempt providing funds for such purposes). Activities or partnership’s total income and end-of-year purposes. An exempt organization’s income total assets as reported on each entity’s federal that generate exempt-function income are from debt-financed property is treated as tax return for the year ending within the year activities that form the basis of the unrelated business taxable income and is covered by the parent organization’s Form 990. organization’s exemption from tax. subject to tax in the same proportion as the Since the financial information of a disregarded property remains financed by the debt. If entity is reported on its parent organization’s substantially all (85% or more) of any property Also give the line number and an return, enter in column (D) the amount on line is used for an organization’s exempt purposes, explanation for any income entered in column 12, Total revenue, that is attributable to the the property is not treated as debt-financed (E) that is specifically excluded from gross disregarded entity. Enter in column (E) the property. The rules for debt-financed property income other than by Code sections 512, 513, amount on line 59, Total assets, column (B), do not apply to rents from personal property. or 514. If no amount is entered in column (E), that is attributable to the disregarded entity.

Lines 99 through 102 do not complete Part VIII.

In the appropriate columns, report the revenue Part X—Information Regarding received for these line items. General Example. M, an organization described in Transfers Associated With instructions for lines 99 through 102 are given section 501(c)(3), operates a school for the in the instructions for Part I, lines 7 through 10. Personal Benefit Contracts performing arts. Admission is charged at See General Instruction V which also Lines 103(a) through (e). Other student performances. M reported admission discusses the reporting requirements for this Revenue income in column (E) of Part VII and explained Part. in Part VIII that performances before an List any Other revenue activity on these lines. If, in connection with any transfer of funds audience were an essential part of the These activities are discussed in the to a charitable organization, the organization students’ training and related to the exempt instructions for line 11, Part I. In the directly or indirectly pays premiums on any appropriate columns, enter the revenue purpose of the organization. personal benefit contract, or there is an received from these activities. Select understanding or expectation that any person applicable business and exclusion codes. Because M also reported interest from state will directly or indirectly pay such premiums, Report as Other revenue, on line 11 of Part I, bonds in column (E) of Part VII, M explained in the organization must report the premiums it the total revenue entered in columns (B), (D), Part VIII that such interest was excluded from paid and the premiums paid by others, but and (E) for lines 103(a) through (e). gross income by Code section 103. treated as paid by the organization, on Form

Line 105. Total 8870. The organization must report and pay an

Enter the total revenue reported on line 104 for excise tax, equal to premiums paid, on Form If you need additional space, see 4720. columns (B), (D), and (E). The amount Attachments in General Instruction W.

reported on line 105, plus the amount on line

1d of Part I, should equal the amount entered

for Total revenue on line 12 of Part I.

Part IX—Information Regarding

Part VIII—Relationship of Taxable Subsidiaries and

Activities to the Accomplishment Disregarded Entities

of Exempt Purposes Column (A). Enter the name, address, and

To explain how an amount entered in Part VII, EIN of each taxable corporation or partnership

column (E), was related or exempt function and each disregarded entity in which the

Specific Instructions for Form 990 -35-
Exclusion Codes

Real property rental income that does not

depend on the income or profits derived by

the person leasing the property and is

excluded by section 512 (b)(3)

16—

General Exceptions

Debt-financed Income

Income exempt from debt-financed

(section 514) provisions because at least

Income from an activity that is not regularly

carried on (section 512(a)(1))

01—

30—

Income from an activity in which labor is a

material income-producing factor and

substantially all (at least 85%) of the work

is performed with unpaid labor (section

513(a)(1))

02—

17— Rent from personal property leased with

real property and incidental (10% or less) in

relation to the combined income from the

real and personal property (section

512(b)(3))

Gross income from mortgaged property

used in research activities described in

section 512(b)(7), (8), or (9) (section

514(b)(1)(C))

31—

Section 501(c)(3) organization—Income

from an activity carried on primarily for the

convenience of the organization’s

members, students, patients, visitors,

officers, or employees (hospital parking lot

or museum cafeteria, for example) (section

513(a)(2))

03—

18— Gain (or loss, to the extent allowed) from

the sale of investments and other

non-inventory property and from certain

property acquired from financial institutions

that are in conservatorship or receivership

(sections 512(b)(5) and 512(b)(16)(A))

19— Income or loss from the lapse or

termination of options to buy or sell

securities, or real property, and from the

forfeiture of good-faith deposits for the

purchase, sale, or lease of investment real

property (section 512(b)(5))

Gross income from mortgaged property

used in any activity described in section

513(a)(1), (2), or (3) (section 514(b)(1)(D))

32—

20— Income from research for the United

States; its agencies or instrumentalities; or

any state or political subdivision (section

512(b)(7))

Section 501(c)(4) local association of

employees organized before 5/27/69—

Income from the sale of work-related

clothes or equipment and items normally

sold through vending machines; food

dispensing facilities; or snack bars for the

convenience of association members at

their usual places of employment (section

513(a)(2))

04—

Income from mortgaged property

(neighborhood land) acquired for exempt

purpose use within 10 years (section

514(b)(3))

33—

21— Income from research conducted by a

college, university, or hospital (section

512(b)(8))

Income from mortgaged property

acquired by bequest or devise (applies to

income received within 10 years from the

date of acquisition) (section 514(c)(2)(B))

34—

22— Income from research conducted by an

organization whose primary activity is

conducting fundamental research, the

results of which are freely available to the

general public (section 512(b)(9))

Income from the sale of merchandise,

substantially all of which (at least 85%) was

donated to the organization (section

513(a)(3))

05—

Income from mortgaged property

acquired by gift where the mortgage was

placed on the property more than 5 years

previously and the property was held by

the donor for more than 5 years (applies

to income received within 10 years from

the date of gift) (section 514(c)(2)(B))

35—

23— Income from services provided under

license issued by a Federal regulatory

agency and conducted by a religious order

or school operated by a religious order, but

only if the trade or business has been

carried on by the organization since before

May 27, 1959 (section 512 (b)(15))

Specific Exceptions

Section 501(c)(3), (4), or (5) organization

conducting an agricultural or educational

fair or exposition—Qualified public

entertainment activity income (section

513(d)(2))

06—

Income from property received in return

for the obligation to pay an annuity

described in section 514(c)(5)

36—

Income from mortgaged property that

provides housing to low and moderate

income persons to the extent the

mortgage is insured by the Federal

Housing Administration (section 514(c)(6))

(Note: In many cases, this would be

exempt function income reportable in

column (E). It would not be so in the case

of a section 501(c)(5) or (6) organization,

for example, that acquired the housing as

an investment or as a charitable activity.)

37—

Foreign Organizations

Section 501(c)(3), (4), (5), or (6)

organization—Qualified convention and

trade show activity income (section

513(d)(3))

07—

Foreign organizations only—Income from a

trade or business NOT conducted in the

United States and NOT derived from United

States sources (patrons) (section 512(a)(2))

24—

Income from hospital services described in

section 513(e)

08—

Income from noncommercial bingo games

that do not violate state or local law

(section 513(f))

09—

Social Clubs and VEBAs

Section 501(c)(7), (9), or (17) organization—

Non-exempt function income set aside for

a charitable, etc., purpose specified in

section 170(c)(4) (section 512(a)(3)(B)(i))

25—

Income from games of chance conducted

by an organization in North Dakota (section

311 of the Deficit Reduction Act of 1984,

as amended)

10—

Income from mortgaged real property

owned by: a school described in section

170(b)(1)(A)(ii); a section 509(a)(3) affiliated

support organization of such a school; a

section 501(c)(25) organization, or by a

partnership in which any of the above

organizations owns an interest if the

requirements of section 514(c)(9)(B)(vi) are

met (section 514(c)(9))

38—

Section 501(c)(7), (9), or (17) organization—

Proceeds from the sale of exempt function

property that was or will be timely

reinvested in similar property (section

512(a)(3)(D))

26—

Section 501(c)(12) organization—Qualified

pole rental income (section 513(g)) and/or

member income (described in section

501(c)(12)(H))

11—

Income from the distribution of low-cost

articles in connection with the solicitation of

charitable contributions (section 513(h))

12— Section 501(c)(9), or (17) organization—

Non-exempt function income set aside for

the payment of life, sick, accident, or other

benefits (section 512(a)(3)(B)(ii))

27—

Special Rules

Income from the exchange or rental of

membership or donor list with an

organization eligible to receive charitable

contributions by a section 501(c)(3)

organization; by a war veterans’

organization; or an auxiliary unit or society

of, or trust or foundation for, a war

veterans’ post or organization (section

513(h))

13—

Section 501(c)(5) organization—Farm

income used to finance the operation and

maintenance of a retirement home,

hospital, or similar facility operated by the

organization for its members on property

adjacent to the farm land (section

1951(b)(8)(B) of Public Law 94-455)

39—

Veterans’ Organizations

Section 501(c)(19) organization—Payments

for life, sick, accident, or health insurance

for members or their dependents that are

set aside for the payment of such

insurance benefits or for a charitable, etc.,

purpose specified in section 170(c)(4)

(section 512(a)(4))

28—

Trade or Business

41— Gross income from an unrelated activity

that is regularly carried on but, in light of

continuous losses sustained over a

number of tax periods, cannot be

regarded as being conducted with the

motive to make a profit (not a trade or

business)

Modifications and Exclusions

14—

Section 501(c)(19) organization—Income

from an insurance set-aside (see code 28

above) that is set aside for payment of

insurance benefits or for a charitable,

etc., purpose specified in section

170(c)(4) (Regulations section

1.512(a)–4(b)(2))

29—

Royalty income excluded by section

512(b)(2)

15—

Dividends, interest, payments with respect

to securities loans, annuities, income from

notional principal contracts, loan

commitment fees, and other substantially

similar income from ordinary and routine

investments excluded by section 512(b)(1)

40— Annual dues not exceeding $127 (subject

to inflation) paid to a section 501(c)(5)

agricultural or horticultural organization

(section 512(d))

85% of the use of the property is for the

organization’s exempt purposes (Note:

This code is only for income from the

15% or less non-exempt purpose use.)

(section 514(b)(1)(A))

Other

42— Receipt of qualified sponsorship

payments described in section 513(i)

43— Exclusion of any gain or loss from the

qualified sale, exchange, or other

disposition of any qualifying brownfield

property (section 512(b)(18)[(19)])

-36- Specific Instructions for Form 990
attach the label in the name and address organization must either check the box in item

space on the organization’s return. Using the H or attach Schedule B (Form 990, 990-EZ, or Specific Instructions for label helps us avoid errors in processing the 990-PF). Failure to either check the box in item

return. If any information on the label is wrong, H or file Schedule B (Form 990, 990-EZ, or Form 990-EZ draw a line through that part and correct it. 990-PF) will result in a determination that the See also the General Instructions that apply to return is incomplete. See the Instructions for If the organization operates under a name both Form 990 and Form 990-EZ. different from its legal name, give the legal Schedule B (Form 990, 990-EZ, or 990-PF), for

name of the organization but identify its more information. Contents Page alternate name, after the legal name, by writing Completing the Heading of Form 990-EZ . . . 37 ‘‘aka’’ (also known as) and the alternate name Contributor includes individuals,

Part I—Revenue, Expenses, and Changes in of the organization. However, if the fiduciaries, partnerships, corporations, Net Assets . . . . . . . . . . . . . . . . . . . . . . 38 organization has changed its name, follow the associations, trusts, and exempt

TIP

instructions for Name change in Item B— organizations. Part II—Balance Sheets . . . . . . . . . . . . . 41 Checkboxes.

Part III—Statement of Program Service Include the suite, room, or other unit

Accomplishments . . . . . . . . . . . . . . . . . . 42 number after the street address. If the Post

Office does not deliver mail to the street Guidelines for Meeting the Part IV—List of Officers, Directors, Trustees, address and the organization has a P.O. box, Requirements of Schedule B (Form and Key Employees . . . . . . . . . . . . . . . . 42 show the box number instead of the street 990, 990-EZ, or 990-PF) 

Part V—Other Information . . . . . . . . . . . . 42 address.

Section 501(c)(3) Org. Meeting the 1/3 Support If the organization receives its mail in care Test of 170(b)(1)(A) of a third party (such as an accountant or an

Completing the Heading of Form attorney), enter on the street address line

C/O followed by the third party’s name and If . . . . . . . A section 501(c)(3) organization that 990-EZ met the 1/3 support test of the street address or P.O. box. The instructions that follow are keyed to items regulations under 509(a)(1)/ in the heading for Form 990-EZ. For foreign addresses, enter information in 170(b)(1)(A) did not receive a the following order: City, province or state, and contribution of the greater of $5,000 Item A. Accounting Period the name of the country. Follow the foreign or 2% of the amount on line 1 of File the 2005 return for calendar year 2005 and country’s practice in placing the postal code in Form 990-EZ, from any one fiscal years that begin in 2005 and end in 2006. the address. Please do not abbreviate the contributor,* For a fiscal year return, fill in the tax year country name.

space at the top of page 1. Then .... The organization should check the If a change of address occurs after the box in item H to certify that it is not Item B. Checkboxes return is filed, use Form 8822 to notify the IRS

of the new address. required to attach Schedule B (Form

Address change, name change, and initial 990, 990-EZ, or 990-PF).

return. Check the appropriate box if the Item D—Employer Identification Otherwise Complete and attach Schedule B organization changed its address since it filed Number (Form 990, 990-EZ, or 990-PF). its previous return, or if this is the first time the The organization should have only one federal

organization is filing either a Form 990 or a employer identification number (EIN). If the Section 501(c)(7), (8), or (10) Organizations

Form 990-EZ. organization has more than one EIN and has

not been advised which to use, notify the If . . . . . . . A section 501(c)(7), (8), or (10) If the tax-exempt organization has changed

its name, attach the following documents: Internal Revenue Service Center, Ogden, UT organization did not receive any

84201-0027. State what numbers the contribution or bequest for use

organization has, the name and address to exclusively for religious, charitable, IF the which each number was assigned, and the scientific, literary, or educational organization is . THEN attach . . . address of its principal office. The IRS will purposes, or the prevention of cruelty

advise the organization which number to use. to children or animals (and did not A corporation An amendment to the articles receive any noncharitable of incorporation with proof of A section 501(c)(9) voluntary contributions of $5,000 or more as filing with the state of employees’ beneficiary association described below under general incorporation. CAUTION must use its own EIN and not the EIN

!

rule), of its sponsor.

Then .... The organization should check the A trust An amendment to the trust Item E—Telephone Number box in item H to certify that it is not agreement signed by the Enter a telephone number of the organization trustee. required to attach Schedule B (Form that members of the public and government 990, 990-EZ, or 990-PF). regulators may use during normal business An association An amendment to the articles hours to obtain information about the Otherwise Complete and attach Schedule B

of association, constitution, organization’s finances and activities. If the (Form 990, 990-EZ, or 990-PF).

bylaws, or other organizing organization does not have a telephone All Other Form 990 or Form 990-EZ document, along with number, enter the telephone number of an Organizations (General rule) signatures of at least two organization official who can provide such officers/members. information. If ....... The organization did not show as

Item F—Group Exemption Number part of line 1 of the Form 990-EZ, a Final return and amended return. The group exemption number (GEN) is a contribution of $5,000 or more from Organizations should file final returns when number assigned by the IRS to the central/ any one contributor,* they cease to be section 501(a) organizations parent organization of a group that has a group or section 527 organizations; for example, Then .... The organization should check the ruling. when they cease operations and dissolve. See box in item H to certify that it is not

the instructions for line 36 that discuss If the organization is covered by a group required to attach Schedule B (Form

exemption letter, enter the four-digit group 990, 990-EZ, or 990-PF). liquidations, dissolutions, terminations, or exemption number. Contact the central/parent substantial contractions. Otherwise Complete and attach Schedule B organization if you are unsure of the GEN If the return is an amended return, check (Form 990, 990-EZ, or 990-PF). assigned. the box. There are amended return * Total a contributor’s gifts of $1,000 or more to determine

Item G—Accounting Method if a contributor gave $5,000 or more. Do not include requirements when filing with a state. See smaller gifts. General Instructions E and J. Indicate the method of accounting used in

Application pending. If the organization’s preparing this return. See General

application for exemption is pending, check this Instruction G. Item I—Website box and complete the return. Item H—Schedule B (Form 990, Show the organization’s website address if a Item C. Name and Address 990-EZ, or 990-PF) website is available. Otherwise, write ‘‘N/A’’

If we mailed the organization a Form 990 Whether or not the organization enters any (not applicable). Consider adding your email

Package with a preaddressed mailing label, amount on line 1 of Form 990-EZ, the address to your website.

Specific Instructions for Form 990-EZ -37-
Item J— Organization Type An organization that receives a grant to be exempt purposes are grants that are equivalent

paid in future years should, according to SFAS to contributions. Report them on line 1. The If the organization is exempt under section 116, report the grant’s present value on line 1. grantor may specify which of the recipient’s 501(c), check the applicable box and insert,

within the parentheses, the number that Accruals of present value increments to the activities the grant may be used for, such as an

unpaid grant should also be reported on line 1 adoption program or a disaster relief project. identifies the type of section 501(c) in future years. organization the filer is. See the chart in A grant is still equivalent to a contribution if

General Instruction C. The term section 1. Contributions can arise from special the grant recipient performs a service, or

501(c)(3) includes organizations exempt under events when an excess payment is received produces a work product, that benefits the

sections 501(e), (f), (k), and (n). Check the box for items offered. Fundraising activities relate grantor incidentally (but see line 1, instruction

if the organization is a section 527 political to soliciting and receiving contributions. B1, below).

organization. See General Instruction U. However, special fundraising activities such as 5. Contributions received through other dinners, door-to-door sales of merchandise, If the organization is a section 4947(a)(1) fundraising organizations. Contributions carnivals, and bingo games can produce both nonexempt charitable trust, check the received indirectly from the public through contributions and revenue. Report as a applicable box. Note also the discussion solicitation campaigns conducted by federated contribution, both on line 1 and on line 6a regarding Schedule A (Form 990 or 990-EZ) fundraising agencies (such as United Way) are (within the parentheses), any amount received and Form 1041 in General Instruction D and included on line 1. through such a special event that is greater the instructions for line 43. 6. Contributions received from associated than the fair market value (retail value) of the Item K—Gross Receipts of $25,000 or merchandise or services furnished by the organizations. Include on line 1 amounts

Less contributed by other organizations closely organization to the contributor. associated with the reporting organization. This Check this box if the organization’s gross This situation usually occurs when includes contributions received from a parent receipts are normally not more than $25,000 organizations seek support from the public organization, subordinate, or another but the organization chooses to file a return. If through solicitation programs that are in part organization having the same parent. the organization chooses to file a return, be special events or activities and are in part sure to file a complete return. See General 7. Contributions from a commercial solicitations for contributions. The primary Instruction B for a discussion on gross receipts co-venture. Include amounts contributed by a purpose of such solicitations is to receive and General Instruction W for a discussion on commercial co-venture on line 1. These contributions and not to sell the merchandise at

a complete return. contributions are amounts received by the its retail value even though this might produce organization for allowing an outside a profit. Item L—Calculating Gross Receipts organization (donor) or individual to use the Only those organizations with gross receipts of Example. An organization announces that recipient organization’s name in a sales less than $100,000 and total assets of less anyone who contributes at least $40 to the promotion campaign. than $250,000 at the end of the year can use organization can choose to receive a book

worth $16 retail value. A person who gives 8. Contributions or grants from the Form 990-EZ. If the organization does not governmental units. A grant, or other meet these requirements, it must file Form 990. $40, and who chooses the book, is really payment from a governmental unit, is treated The organization’s gross receipts are the total purchasing the book for $16 and also making a as a grant equivalent to a contribution if its amount it received from all sources during its contribution of $24. The contribution of $24,

which is the difference between the buyer’s primary purpose is to enable the recipient to annual accounting period, without subtracting provide a service to, or maintain a facility for, any costs or expenses. See the gross receipts payment and the $16 retail value of the book,

would be reported on line 1 and again on line the direct benefit of the public rather than to discussion in General Instruction B. serve the direct and immediate needs of the 6a (within the parentheses). The revenue grantor (even if the public pays part of the received ($16 retail value of the book) would Part I—Revenue, Expenses, and expense of providing the service or facility). be reported in the right-hand column on line (See also line 1, instruction B1, below.) Changes in Net Assets or Fund 6a. Any expenses directly relating to the sale of

the book would be reported on line 6b. Any 9. Contributions in the form of membership Balances fundraising expenses relating to the dues. Include on line 1 membership dues and All organizations filing Form 990-EZ with the contribution of $24 would be reported on lines assessments to the extent they are IRS or any state must complete Part I. Some 12 through 16. contributions and not payments for benefits states that accept Form 990-EZ in place of received. (See line 3, instruction C1.) If a contributor gives more than $40, that their own forms may require additional

information. See General Instruction E. person would be making a larger contribution, B. What is not included on line 1

the difference between the book’s retail value

Line 1. Contributions, Gifts, Grants, of $16 and the amount actually given. See also 1. Grants that are payments for services are

not contributions. A grant is a payment for and Similar Amounts Received the instructions for line 6 and Pub. 526.

services, and not a contribution, when the At the time of any solicitation or terms of the grant provide the grantor with a A. What is included on line 1 payment, organizations that are eligible specific service, facility, or product, rather than • Report amounts received as voluntary to receive tax-deductible contributions providing a benefit to the general public or that CAUTION

!

contributions; (for example, payments, or the should advise patrons of the amount deductible part of the public served by the grant recipient. part of any payment, for which the payer for federal tax purposes. See General The recipient organization would report such a (donor) does not receive full retail value (fair Instruction L. grant as income on line 2 (program service market value) from the recipient (donee) 2. Contributions can arise from special revenue). organization). events when items of only nominal value 2. Donations of services. Do not include the • Enter the gross amounts of contributions, are given or offered. If an organization offers value of services donated to the organization, gifts, grants, and bequests that the goods or services of only nominal value or items such as the free use of materials, organization received from individuals, trusts, through a special event, or distributes free, equipment, or facilities, as contributions on line corporations, estates, affiliates, foundations, unordered, low-cost items to patrons, report 1. However, for the optional reporting of such public charities, and other exempt the entire amount received for such benefits as amounts, see the instruction for donated organizations, or raised by an outside a contribution on line 1. Report all related services in Part III. professional fundraiser. expenses on lines 12 through 16. • Report the value of noncash contributions at Any unreimbursed expenses of officers,

the time of the donation. For example, report See General Instruction L for a definition of employees, or volunteers do not belong on the

the gross value of a donated car as of the time benefits that have a nominal or insubstantial Form 990 or Form 990-EZ. See the instructions

value. the car was received as a donation. for charitable contributions and employee

• Report all related expenses on lines 12 3. Section 501(c)(3) organizations. These business expenses in Pub. 526 and 463,

through 16. You must show on line 13 organizations must compute the amounts of respectively.

professional fundraising fees relating to the revenue and contributions received from 3. Section 501(c)(9), (17), and (18) gross amounts of contributions collected in the special events according to the above organizations. These organizations provide charity’s name by fundraisers. instructions when preparing their Support participants with life, sickness, accident, Schedule in Part IV-A of Schedule A (Form 990 Reporting for line 1, in accordance with welfare and unemployment insurance,

SFAS 116, Accounting for Contributions pension(s), or similar benefits, or a or 990-EZ).

Received and Contributions Made, is 4. Grants equivalent to contributions. combination of these benefits. When such an

acceptable for Form 990-EZ, or Form 990, Grants made to encourage an organization organization receives payments from

purposes, but not required by the IRS. receiving the grant to carry on programs or participants, or their employers, to provide

However, see General Instruction E. activities that further the grant recipient’s these benefits, report the payments on line 2

-38- Specific Instructions for Form 990-EZ
as program service revenue, rather than on reasonably with membership benefits, report An organization whose exempt purpose is

line 1 as contributions. such dues and assessments on line 3. to provide low-rental housing to persons with

low income receives exempt function income C. How to value noncash contributions 2. Organizations that generally match dues from such rentals. An organization receives and benefits. Organizations described in See General Instruction L and Schedule B exempt function income if it rents or sublets section 501(c)(5), (6), or (7) generally provide (Form 990, 990-EZ, or 990-PF). rental space to a tenant whose activities are benefits with a reasonable relationship to dues, D. Schedule of contributors related to the reporting organization’s exempt although benefits to members may be indirect. purpose. Exempt function income also arises Attach Schedule B (Form 990, 990-EZ, or B. Examples of membership benefits when an organization rents to an unaffiliated 990-PF). See General Instruction L and the exempt organization at less than fair rental Specific Instructions for Completing the These include subscriptions to publications; value for the purpose of helping that Heading of Form 990-EZ, Item H. newsletters (other than one about the unaffiliated organization carry out its exempt organization’s activities only); free or Line 2—Program Service Revenue purpose. Report rental income received in reduced-rate admissions to events the these instances on line 2 and not on line 4. Including Medicare, Medicaid organization sponsors; use of its facilities; and

Payments, and Government Fees and discounts on articles or services that both Only for purposes of completing this return,

Contracts members and nonmembers can buy. In figuring treat income from renting property to affiliated

Enter the total program service revenue the value of membership benefits, disregard exempt organizations as exempt function

such intangible benefits as the right to attend income and include such income on line 2 as (exempt function income). Program services meetings, vote, or hold office in the program service revenue. are primarily those that form the basis of an organization, and the distinction of being a organization’s exemption from tax. member of the organization. Lines 5a through 5c—Gains (or

1. Examples. A clinic would include on line 2 Losses) From Sale of Assets Other all of its charges for medical services (whether C. What is not included on line 3 Than Inventory to be paid directly by the patients or through 1. Dues or assessments received that Medicare, Medicaid, or other third-party exceed the value of available membership A. What is included on line 5 reimbursement), laboratory fees, and related

charges for services. benefits. Whether or not membership benefits Report on line 5a all sales of securities and are used, dues received by an organization, to sales of all other types of investments (such as Program service revenue also includes the extent they exceed the monetary value of real estate, royalty interests, or partnership tuition received by a school; revenue from the membership benefits available to the dues interests) as well as sales of all other admissions to a concert or other performing payer, are a contribution that should be noninventory assets (such as program-related arts event or to a museum; royalties received reported on line 1. investments and fixed assets used by the as author of an educational publication 2. Dues received primarily for the organization in its related and unrelated distributed by a commercial publisher; organization’s support. If a member pays activities). payments received by a section 501(c)(9) dues primarily to support the organization’s organization from participants or employers of Total the cost or other basis (less activities, and not to obtain benefits of more participants for health and welfare benefits depreciation) and selling expenses and enter than nominal monetary value, those dues are a coverage; and registration fees received in the result on line 5b. On line 5c, enter the net contribution to the organization includible on connection with a meeting or convention. gain or loss. Report capital gains dividends, the line 1. organization’s share of capital gains and losses 2. Program-related investment income. from a partnership, and capital gains Program service revenue also includes income Line 4—Investment Income distributions from trusts on lines 5a and 5c. from program-related investments. These Indicate the source on the schedule described investments are made primarily to accomplish A. What is included on line 4 below. an exempt purpose of the investing

organization rather than to produce income. 1. Interest on savings and temporary cash For this return, you may use the more

Examples are scholarship loans and investments. Include the amount of interest convenient way to figure the organization’s

low-interest loans to charitable organizations, received from interest-bearing checking gain or loss from sales of securities by

indigents, or victims of a disaster. Rental accounts, savings, and temporary cash comparing the sales price with the investments, such as money market funds, income received from an exempt function is average-cost basis of the particular security

another example of program-related commercial paper, certificates of deposit, and sold. However, generally, the average-cost U.S. Treasury bills or other governmental investment income. See also the instructions basis is not used to figure the gain or loss from obligations that mature in less than 1 year. for line 4. sales of securities reportable on Form 990-T. So-called dividends or earnings received from 3. Unrelated trade or business activities. mutual savings banks, money market funds, B. What is not included on line 5 Unrelated trade or business activities (not etc., are actually interest and should be Do not include on line 5 any unrealized gains including any special events or activities) that included on this line. or losses on securities that are carried in the generate fees for services may also be 2. Dividends and interest from securities. books of account at market value. See the program service activities. A social club, for instructions for line 20. example, should report as program service Include the amount of dividend and interest

revenue the fees it charges both members and income from equity and debt securities (stocks C. Attached schedule nonmembers for the use of its tennis courts and bonds) on this line. Include amounts

and golf course. received from payments on securities loans, as 1. Nonpublicly traded securities and

defined in section 512(a)(5). noninventory items. Attach a schedule to 4. Government fees and contracts. Program show the sale or exchange of nonpublicly service revenue includes income earned by the 3. Gross rents. Include gross rental income traded securities and the sale or exchange of organization for providing a government received during the year from investment other assets that are not inventory items. The agency with a service, facility, or product that property. schedule should show security transactions benefited that government agency directly 4. Other investment income. Include, for separately from the sale of other assets. Show rather than benefiting the public as a whole. example, royalty income from mineral interests for these assets: See line 1, instruction A8, for reporting owned by the organization. • Date acquired and how acquired, guidelines when payments are received from a • Date sold and to whom sold, government agency for providing a service, B. What is not included on line 4 • Gross sales price, facility, or product for the primary benefit of the 1. Capital gains dividends and unrealized • Cost, other basis, or if donated, value at time general public. gains and losses. Do not include on this line acquired (state which),

Line 3—Membership Dues and any capital gains dividends. They are reported • Expense of sale and cost of improvements

Assessments on line 5. Also do not include unrealized gains made after acquisition, and

and losses on investments carried at market • Depreciation since acquisition, if depreciable Enter members’ and affiliates’ dues and value. See the instructions for line 20. property. assessments that are not contributions. See

also General Instruction L. 2. Exempt function revenue (program 2. Publicly traded securities. For sales of

service). Do not include on line 4 amounts publicly traded securities through a broker, you A. What is included on line 3 that represent income from an exempt function may total the gross sales price, the cost or

1. Dues and assessments received that (program service). Report these amounts on other basis, and the expenses of sale, and

compare reasonably with the benefits of line 2 as program service revenue. Report report lump-sum figures in place of providing

membership. When the organization receives expenses related to this income on lines 12 the detailed reporting required in the above

dues and assessments that compare through 16. paragraph.

Specific Instructions for Form 990-EZ -39-
Publicly traded securities include common 3. Direct expenses. Report on line 6b only the If you use this format, report the total for

and preferred stocks, bonds (including direct expenses attributable to the goods or Contributions on line 1 of Form 990-EZ and on

governmental obligations), and mutual fund services the buyer receives from a special line 6a (within the parentheses). Report the

shares that are listed and regularly traded in an event. If you include an expense on line 6b, do totals for Gross Revenue, in the right-hand

over-the-counter market or on an established not report it again on line 7b. Report cost of column, on line 6a; Direct Expenses on line 6b;

exchange and for which market quotations are goods related to the sale of inventory on line and Net Income or (loss) on line 6c.

published or otherwise readily available. 7b. Fundraising expenses attributable to Lines 7a through 7c—Gross Sales of contributions reported on line 6a (within the Lines 6a through 6c—Special Events Inventory parentheses), and also on line 1, are and Activities reportable on lines 12 through 16. 1. Sales of inventory. Include on line 7a the

On the appropriate line, enter the gross gross sales (less returns and allowances) of revenue, expenses, and net income (or loss) B. What is not included on line 6 inventory items, whether the sales activity is an from all special events and activities, such as 1. Sales or gifts of goods or services of exempt function or an unrelated trade or dinners, dances, carnivals, raffles, bingo only nominal value. business. Include all inventory sales except If the goods or services games, other gaming activities, and offered at the special event have only nominal sales of goods at special events, which are door-to-door sales of merchandise. reportable on line 6. value, include all of the receipts as

These activities only incidentally contributions on line 1 and all of the related 2. Cost of goods sold. On line 7b, report the

accomplish an exempt purpose. Their sole or expenses on lines 12 through 16. See General cost of goods sold related to sales of such

primary purpose is to raise funds that are other Instruction L for a description of nominal or inventory. The usual items included in cost of

than contributions to finance the organization’s insubstantial benefits. goods sold are direct and indirect labor,

exempt activities. materials and supplies consumed, freight-in, 2. Sweepstakes, raffles, and lotteries. and a proportion of overhead expenses. This is done by offering goods or services Report as a contribution, on line 1, the Marketing and distribution expenses are not that have more than a nominal value proceeds of solicitation campaigns in which the includible in cost of goods sold. Include those (compared to the price charged) for a payment names of contributors and other respondents expenses on lines 12 through 16. that is more than the direct cost of those goods are entered in a drawing for prizes. or services. See line 1 instructions A1 and A2 3. Investments. Do not include on line 7 sales

for a discussion on contributions reportable on When a minimum payment is required for of investments on which the organization

line 1 and revenue reportable on line 6. See each raffle or lottery entry and prizes of only expected to profit by appreciation and sale.

also General Instruction L. nominal value are awarded, report any amount Report sales of these investments on line 5.

received as a contribution. Report the related Calling any required payment a donation or Line 8—Other Revenue expenses on lines 12 through 16. contribution on tickets, advertising, or Enter the total income from all sources not

solicitation materials does not change how 3. Activities that generate only covered by lines 1 through 7. Examples of these payments should be reported on Form contributions are not special events. An types of income includible on line 8 are interest 990-EZ. activity that generates only contributions, such on notes receivable not held as investments or

The gross revenue from gaming activities as a solicitation campaign by mail, is not a as program-related investments (defined in the

and other special events must be reported in special event. Any amount received should be line 2 instructions); interest on loans to officers,

the right-hand column on line 6a without included on line 1 as a contribution. Related directors, trustees, key employees, and other

reduction for cash or noncash prizes, cost of expenses are reportable on lines 12 through employees; and royalties that are not

goods sold, compensation, fees, or other 16. investment income or program service

expenses. Be sure to check the box for gaming revenue.

if the organization conducted directly, or C. Attached schedule Line 10—Grants and Similar Amounts through the promoter, any amount of gaming Attach a schedule listing the three largest Paid during the year. fundraising events, as measured by gross

receipts. If gaming is conducted, treat different Reporting for line 10 in accordance with SFAS Gaming includes (but is not limited to): types of gaming separately to determine the 116, is acceptable for Form 990-EZ purposes, bingo, pull tabs, instant bingo raffles, three largest events. For example, treat bingo but not required by IRS. However, see General scratch-offs, charitable gaming tickets, and pull tabs as separate fundraising events. Instruction E. break-opens, hard cards, banded tickets, jar

tickets, pickle cards, Lucky Seven cards, Describe each of these events by listing the An organization that makes a grant to be

Nevada Club tickets, casino nights, Las Vegas type of event and the number of occasions that paid in future years should, according to SFAS

nights and coin-operated gambling devices. the event occurred and show (for each event): 116, report the grant’s present value on line 10.

Coin-operated gambling devices include slot 1. Gross receipts, Accruals of present value increments to the

machines, electronic video slot or line games, 2. Contributions included in gross receipts unpaid grant should also be reported on line 10

(see line 6, instruction A1, above), in future years. video poker, video blackjack, video keno, video

bingo, video pull tab games, etc. 3. Gross revenue (gross receipts less A. What is included on line 10 contributions), A. What is included on line 6 Enter the amount of actual grants and similar 4. Direct expenses, and amounts paid to individuals and organizations 1. Gross revenue/contributions. When an 5. Net income or (loss) (gross revenue less selected by the filing organization. Include organization receives payments for goods or direct expenses). scholarship, fellowship, and research grants to services offered through a special event, enter: For gaming, direct expenses include: cash and individuals.

1. As gross revenue, on line 6a (in the noncash prizes, compensation to bingo callers 1. Specific assistance to individuals. right-hand column), the retail value of the and workers, rental of gaming equipment, cost Include on this line the amount of payments to, goods or services, of bingo supplies such as pull tab deals, etc. or for the benefit of, particular clients or 2. As a contribution, on both line 1 and line patients, including assistance by others at the Furnish the same information, in total 6a (within the parentheses), any amount expense of the filing organization. figures, for all other special events held that received that exceeds the retail value of the are not among the largest three. Indicate the 2. Payments, voluntary awards, or grants to goods or services given. type and number of the events not listed affiliates. Include on line 10 certain types of

Example. At a special event, an individually (for example, three dances and two payments to organizations affiliated with

organization received $100 in gross receipts raffles). (closely related to) the reporting organization.

for goods valued at $40. The organization These payments include predetermined quota An example of this schedule of special entered gross revenue of $40 on line 6a and support and dues payments by local events might appear in columnar form as entered a contribution of $60 on both line 1 and organizations to their state or national follows: within the parentheses on line 6a. The organizations.

contribution was the difference between the Special Events (and the (A) (B) (C) All Total If the organization uses Form 990-EZ gross revenue of $40 and the gross receipts of number of occasions that # # # Other for state reporting purposes, be sure to the event occurred): $100. CAUTION distinguish between payments to

!

Gross Receipts $xx $xx $xx $xx $xx 2. Raffles or lotteries. Report as revenue, on affiliates and awards and grants. See General

line 6a, any amount received from raffles or Less: Contributions xx xx xx xx xx Instruction E.

lotteries that require payment of a specified Gross Revenue xx xx xx xx xx B. What is not included on line 10 minimum amount for each entry, unless the Less: Direct Expenses xx xx xx xx xx prizes awarded have only nominal value. See 1. Administrative expenses. Do not include

line 6, instruction B1 and B2, below. on this line expenses made in selecting Net Income or (loss) $xx $xx $xx $xx $xx

-40- Specific Instructions for Form 990-EZ
recipients or monitoring compliance with the benefits the organization gives its officers and Line 16—Other Expenses

terms of a grant or award. Enter those employees. Report them on line 12. Include here such expenses as penalties, expenses on lines 12 through 16. fines, and judgments; unrelated business Line 12—Salaries, Other 2. Purchases of goods or services from income taxes; insurance and real estate taxes

affiliates. Do not report the cost of goods or Compensation, and Employee Benefits not attributable to rental property or reported as

services purchased from affiliates on line 10. Enter the total salaries and wages paid to all occupancy expenses; depreciation on

Report these as expenses on lines 12 through employees and the fees paid to officers, investment property; travel and transportation

16. directors, and trustees. Include the total of the costs; interest expense; and expenses for

employer’s share of the contributions the conferences, conventions, and meetings. 3. Membership dues paid to another organization paid to qualified and nonqualified organization. Report membership dues that Some states that accept Form 990-EZ in pension plans and the employer’s share of the organization pays to another organization satisfaction of their filing requirements may contributions to employee benefit programs for general membership benefits, such as require that certain types of miscellaneous (such as insurance, health, and welfare regular services, publications, and materials on expenses be itemized. See General Instruction programs) that are not an incidental part of a line 16, as Other expenses. E. pension plan. Complete the Form 5500 return if C. Attached schedule you are required to file it. Line 18—Excess or (Deficit) for the

Attach a schedule to explain the amounts Year Also include in the total the amount of reported on line 10. Show on this schedule: Enter the difference between lines 9 and 17. If federal, state, and local payroll taxes for the • Each class of activity, year that are imposed on the organization as line 17 is more than line 9, enter the difference • The grantee’s name and address, an employer. This includes the employer’s in parentheses. • The amount given, and share of social security and Medicare taxes, • The relationship of the grantee (in the case Line 19—Net Assets or Fund Balances Federal unemployment tax (FUTA), state of grants to individuals) if the relationship is by at Beginning of Year unemployment compensation tax, and other blood, marriage, adoption, or employment state and local payroll taxes. Taxes withheld Enter the amount from the prior year’s balance (including employees’ children) to any person from employees’ salaries and paid over to the sheet or from Form 5500 or an approved DOL or corporation with an interest in the various governmental units (such as Federal form if General Instruction F applies. organization, such as a creator, donor, director, and state income taxes and the employees’ trustee, officer, etc. Line 20—Other Changes in Net Assets share of social security and Medicare taxes) Any grants reported on line 10 that were or Fund Balances are part of the employees’ salaries included on approved during the year, but not paid by the line 12. Report expenses paid or incurred for Attach a statement explaining any changes in due date for filing Form 990-EZ (including employee events such as a picnic or holiday net assets or fund balances between the

extensions), must be identified and listed party on this line. beginning and end of the year that are not separately in the line 10 schedule. accounted for by the amount on line 18.

Give the name and address of each affiliate Line 13—Professional Fees and Other Amounts to report here include adjustments of

that received any payment reported on line 10. Payments to Independent Contractors earlier years’ activity; unrealized gains and

Specify both the amount and purpose of these losses on investments carried at market value; Enter the total amount of legal, accounting, payments. and any difference between fair market value auditing, other professional fees (such as fees and book value of property given as an award Classify activities on this schedule in more for fundraising or investment services) and or grant. See General Instruction G regarding detail than by using such broad terms as related expenses charged by outside firms and the reporting of a section 481(a) adjustment to charitable, educational, religious, or scientific. individuals who are not employees of the conform to SFAS 116. For example, identify payments to affiliates; organization. Do not include any penalties,

payments for nursing services; fellowships; or fines, or judgments imposed against the

payments for food, shelter, or medical services organization as a result of legal proceedings. Part II—Balance Sheets Report and identify those expenses on line 16. for indigents or disaster victims. For payments Report fees paid to directors and trustees on All organizations, except those that meet one to indigent families, do not identify the of the exceptions in General Instruction F, must line 12. individuals. complete columns (A) and (B) of Part II of the If an organization gives property other than Line 14—Occupancy, Rent, Utilities, return and may not submit a substitute balance cash and measures an award or grant by the and Maintenance sheet. Failure to complete Part II may result in property’s fair market value, also show on this penalties for filing an incomplete return. If there Enter the total amount paid or incurred for the schedule: is no amount to report in column (A), Beginning use of office space or other facilities, heat, • A description of the property, of year, put a zero in that column. See General light, power, and other utilities, outside • The book value of the property, Instruction K. janitorial services, mortgage interest, real • How you determined the book value, estate taxes and property insurance Some states require more information. See • How you determined the fair market value, attributable to rental property, and similar General Instruction E for more information and expenses. Do not subtract from rental about completing a Form 990-EZ to be filed • The date of the gift. expenses reported on line 14 any rental with any state or local government agency. Any difference between a property’s fair income received from renting or subletting market value and book value should be rented space. See the instructions for lines 2 Line 22—Cash, Savings, and

recorded in the organization’s books of account and 4 to determine whether such income is Investments

and on line 20. reportable as exempt function income or Include all interest and non-interest bearing

Colleges, universities, and primary and accounts such as petty cash funds, checking investment income. However, report on line 14

secondary schools are not required to list the accounts, savings accounts, money market any rental expenses for rental income reported

names of individuals who were provided funds, commercial paper, certificates of on lines 2 and 4. If the organization records

scholarships or other financial assistance deposit, U.S. Treasury bills, and other depreciation on property it occupies, enter the

whether they are the recipients of Federal government obligations. Also include the book total for the year.

grant money or not. Instead, these value of securities held as investments, and all For an explanation of acceptable methods organizations must (a) group each type of other investment holdings including land and for computing depreciation, see Pub. 946. financial aid provided; (b) indicate the number buildings held for investment. Report the

of individuals who received the aid; and (c) income from these investments on line 4. Line 15—Printing, Publications, specify the aggregate dollar amount. Postage, and Shipping Line 23—Land and Buildings Line 11—Benefits Paid To or For Enter the printing and related costs of Enter the book value (cost or other basis less Members producing the reporting organization’s own accumulated depreciation) of all land and

For an organization that gives benefits to buildings owned by the organization and not newsletters, leaflets, films, and other

members or dependents (such as held for investment. informational materials on this line. Include the

organizations exempt under section 501(c)(8), costs of outside mailing services on this line.

(9), or (17)), enter the amounts paid for: (a) Also include the cost of any purchased Line 24—Other Assets

death, sickness, hospitalization, or disability Enter the total of other assets along with a publications as well as postage and shipping

benefits; (b) unemployment compensation description of those assets. Amounts to include costs not reportable on lines 5b, 6b, or 7b. Do

benefits; and (c) other benefits. Do not include, here are (among others) receivable accounts, not include any expenses, such as salaries, for

on this line, the cost of employment-related inventories, and prepaid expenses. which a separate line is provided.

Specific Instructions for Form 990-EZ -41-
Line 25—Total Assets position is required for a complete answer. • The detailed information required for the Enter the amount of total assets. If the Statements such as “as needed” or “as four largest services is not necessary for required,” or “40+” are unacceptable. end-of-year total assets entered in column (B) this schedule. are $250,000 or more, Form 990 must be filed Column (C) instead of Form 990-EZ. • However, section 501(c)(3) and (4)

organizations, and section 4947(a)(1) For each person listed, report salary, fees,

bonuses, and severance payments paid. Line 27—Net Assets or Fund Balances nonexempt charitable trusts must show Include current-year payments of amounts Subtract line 26 (total liabilities) from line 25 the expenses attributable to their program reported or reportable as deferred services. (total assets) to determine net assets. Enter compensation in any prior year. this net asset amount on line 27. The amount

entered in column (B) should agree with the 5 The organization may show the amount Column (D) net asset or fund balance amount on line 21. of any donated services, or use of Include in this column all forms of deferred

materials, equipment, or facilities it compensation and future severance payments States that accept Form 990-EZ as their received or utilized in connection with a (whether or not funded; whether or not vested; basic report form may require a separate specific program service. and whether or not the deferred compensation statement of changes in net assets. See plan is a qualified plan under section 401(a)). General Instruction E. • Disclose the applicable amounts of any Include also payments to welfare benefit plans donated services, etc., on the lines for the on behalf of the officers, etc. Such plans narrative description of the appropriate provide benefits such as medical, dental, life

Part III—Statement of Program program service. insurance, severance pay, disability, etc.

Service Accomplishments • Do not include these amounts in the Reasonable estimates may be used if precise

cost figures are not readily available. A program service is a major (usually ongoing) expense column in Part III.

objective of an organization, such as • See the instructions for line 1, B2. Unless the amounts were reported in

adoptions, recreation for the elderly, column (C), report, as deferred compensation

rehabilitation, or publication of journals or in column (D), salaries and other compensation

newsletters. earned during the period covered by the return, Part IV—List of Officers, Directors, but not yet paid by the date the organization Trustees, and Key Employees files its return. Step Action List each person who was an officer, director,

trustee, or key employee (defined below) of the Column (E) 1 State the organization’s primary exempt organization at any time during the year even if Enter both taxable and nontaxable fringe purpose. they did not receive any compensation from benefits (other than de minimis fringe benefits

the organization. described in section 132(e)). Include amounts

2 All organizations must describe their Enter a zero in columns (B), (C), (D), or (E) that the recipients must report as income on

exempt purpose achievements for each if no hours were entered in column (B) and no their separate income tax returns. Examples

of their four largest program services (as compensation, contributions, expenses, and include amounts for which the recipient did not

measured by total expenses incurred). If other allowances were paid during the account to the organization or allowances that

there were four or fewer of such activities, reporting year, or deferred for payment to a were more than the payee spent on serving the

describe each program service activity. future accounting period. organization. Include payments made under

indemnification arrangements, the value of the Aid in the processing of your return by • Describe program service personal use of housing, automobiles, or other grouping together, preferably at the end of your accomplishments through measurements assets owned or leased by the organization (or list, those who received no compensation. Be such as clients served, days of care, provided for the organization’s use without careful not to repeat names. therapy sessions, or publications issued. charge), as well as any other taxable and Give the preferred address at which nontaxable fringe benefits. See Pub. 525 for • Describe the activity’s objective, for both officers, etc., want the Internal Revenue more information. this time period and the longer-term goal, Service to contact them.

if the output is intangible, such as in a Form 941 must be filed to report income tax Use an attachment if there are more than

research activity. withholding and social security and Medicare four persons to list in Part IV. taxes. The organization must also file Form • Give reasonable estimates for any Show all forms of cash and noncash 940 to report Federal unemployment tax, statistical information if exact figures are compensation received by each listed officer, unless the organization is not subject to these not readily available. Indicate that this etc., whether paid currently or deferred. taxes. See Pub. 15 (Circular E) for more

information is estimated. If you pay any other person, such as a information. See also the Trust Fund Recovery

management services company, for the Penalty discussion in General Instruction D. • Be clear, concise, and complete in your services provided by any of your officers, description. Avoid adding an attachment. directors, trustees, or key employees, report

the compensation and other items in Part IV as Part V—Other Information

3 If part of the total expenses of any if you had paid the officers, etc., directly. Also, • Section 501(c)(3) organizations and section program service consists of grants see Ann. 2001-33, 2001-17 I.R.B. 1137. 4947(a)(1) nonexempt charitable trusts must reported on line 10, enter the amount of A failure to fully complete Part IV can also complete and attach a Schedule A (Form grants in the space provided and include subject both the organization and the 990 or 990-EZ) to their Form 990-EZ. See the grants in the Expenses column. If the individuals responsible for such failure to General Instruction D for information on

amount of grants entered includes foreign penalties for filing an incomplete return. See Schedule A (Form 990 or 990-EZ).

grants check the box to the left of the General Instruction K. In particular, entering • Answer “Yes,” “No,” or “N/A” to each

entry space for Program Services the phrase on Part IV, “Information available question.

Expenses. upon request,” or a similar phrase, is not • The organization must attach a statement

acceptable. regarding personal benefit contracts. See • Section 501(c)(3) and (4) organizations, The organization may also provide an General Instruction V. and section 4947(a)(1) nonexempt attachment to explain the entire 2005 charitable trusts, must show the amount compensation package for any person listed in Line 33—Change in Activities

of grants and allocations to others and Part IV. Attach a statement to explain any significant must enter the total expenses for each Key employee. A key employee is any changes in the kind of activities the program service reported. person having responsibilities or powers similar organization conducts to further its exempt

purpose. Include new or modified activities not • For all other organizations, completing to those of officers, directors, or trustees. The

term includes the chief management and listed as current or planned in the the Program Services Expenses column

administrative officials of an organization (such organization’s application for recognition of (and the Grants entry) in Part III is as an executive director or chancellor). exemption or not already made known to the optional. IRS by a letter to its Director EO Examination Column (B) or by an attachment to the organization’s return

4 Attach a schedule that lists the In column (B), a numerical estimate of the for any earlier year. Also include any major

organization’s other program services. average hours per week devoted to the program activities that are being discontinued.

-42- Specific Instructions for Form 990-EZ
Line 34—Changes in Organizing or 2. Attach page 5 to Form 990-EZ. 3. Incurred lobbying expenses during the

Governing Documents 2005 reporting year consisting only of in-house

Only certain organizations that are tax direct lobbying expenses totaling $2,000 or Attach a conformed copy of any changes to the exempt under sections: less, but excluding: articles of incorporation, or association, • 501(c)(4) (social welfare organizations), constitution, trust instrument, or other a. Any allocable overhead expenses, and • 501(c)(5) (agricultural and horticultural organizing document, or to the bylaws or other b. All direct lobbying expenses of any local organizations), or governing document. If you are filing council regarding legislation of direct interest to • 501(c)(6) (business leagues) electronically, conformed copies of these the organization or its members. are subject to (a) the section 6033(e) notice documents should be sent to the IRS in

Cincinnati, OH, at the address in General and reporting requirements, and (b) a potential Definitions.

proxy tax. Instruction A. Grassroots lobbying refers to attempts to

A conformed copy is one that agrees with If your organization is not tax-exempt influence any segment of the general public

under sections 501(c)(4), (5), or (6), check regarding legislative matters or referendums. the original document and all amendments to “No” on line 35a, unless there was it. If the copies are not signed, they must be Direct lobbying includes attempting to unrelated business income. accompanied by a written declaration signed influence:

by an officer authorized to sign for the If the organization meets Exception 1 or 2 • Legislation through communication with organization, certifying that they are complete below, it is excluded from the notice, reporting, legislators and other government officials, and and accurate copies of the original documents. and proxy tax requirements of section 6033(e), • The official actions or positions of covered

Photocopies of articles of incorporation and you should check “No” to line 35a, unless executive branch officials through direct

showing the certification of an appropriate state the organization had $1,000 or more of communication.

official need not be accompanied by such a unrelated business income. See also Rev. Direct lobbying does not include declaration. See Rev. Proc. 68-14, 1968-1 C.B. Proc. 98-19, 1998-1 C.B. 547. attempting to influence: 768, for details. When a number of changes Exception 1. Section 6033(e)(3) exception • Any local council on legislation of direct are made, attach a copy of the entire revised for nondeductible dues. interest to the organization or its members, and organizing instrument or governing document. • The general public regarding legislative 1. All organizations exempt from tax under However, if your exempt organization matters (grassroots lobbying). section 501(a), other than section 501(c)(4), changes its legal structure, such as from a trust (5), and (6) organizations. Other lobbying includes: to a corporation, you must file a new exemption 2. Local associations of employees’ and • Grassroots lobbying, application to establish that the new legal entity veterans’ organizations described in section • Foreign lobbying, qualifies for exemption. 501(c)(4), but not section 501(c)(4) social • Third-party lobbying, and

Line 35—Unrelated Business Income welfare organizations. • Dues paid to another organization that were

3. Labor unions and other labor used to lobby. and Lobbying Proxy Tax organizations described in section 501(c)(5), In-house expenditures include: but not section 501(c)(5) agricultural and Unrelated business income • Salaries, and horticultural organizations. • Other expenses of the organization’s officials Political organizations described in section 527 4. Section 501(c)(4), (5), and (6) and staff (including amounts paid or incurred are not required to answer this question. organizations that receive more than 90% of for the planning of legislative activities). Check “Yes” on line 35a if the their dues from:

In-house expenditures do not include: organization’s total gross income from all of its a. Section 501(c)(3) organizations, • Any payments to other taxpayers engaged in unrelated trades and businesses is $1,000 or b. State or local governments, lobbying or political activities as a trade or more for the year. Gross income is gross c. Entities whose income is exempt from business. receipts less the cost of goods sold. See Pub. tax under section 115, or • Any dues paid to another organization that 598 for a description of unrelated business d. Organizations described in 1 through 3, are allocable to lobbying or political activities. income and the 2005 Instructions for Form above.

990-T for the Form 990-T filing requirements. 5. Section 501(c)(4) and (5) organizations Line 36—Liquidation, Dissolution, Form 990-T is not a substitute for Form that receive more than 90% of their annual Termination, or Substantial 990-EZ. Items of income and expense reported dues from: Contraction on Form 990-T must also be reported on Form a. Persons, 990-EZ when the organization is required to file If there was a liquidation, dissolution, b. Families, or both forms. termination, or substantial contraction, attach a c. Entities statement explaining what took place. All tax-exempt organizations must pay who each paid annual dues of $88 or less in

2005 (adjusted annually for inflation). See Rev. For a complete liquidation of a corporation estimated taxes with respect to their Proc. 2004-71, 2004-50 I.R.B. 970. or termination of a trust, check the Final return CAUTION unrelated business income if they

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6. Any organization that receives a private box in the heading of the return. On the expect their tax liability to be $500 or more. letter ruling from the IRS stating that the attached statement, show whether the assets Use Form 990-W to compute this tax. organization satisfies the section 6033(e)(3) have been distributed and the date. Also attach

Section 6033(e) tax for lobbying exception. a certified copy of any resolution, or plan of

expenditures 7. Any organization that keeps records to liquidation or termination, etc., with all

substantiate that 90% or more of its members amendments or supplements not already filed. If you check “No” toline 35a, you are certifying

cannot deduct their dues (or similar amounts) In addition, attach a schedule listing the names that the organization was not subject to the

as business expenses whether or not any part and addresses of all persons who received the notice and reporting requirements of section

of their dues are used for lobbying purposes. assets distributed in liquidation or termination; 6033(e) and that the organization had no

8. Any organization that is not a the kinds of assets distributed to each one; and lobbying and political expenditures potentially

membership organization. each asset’s fair market value. subject to the proxy tax.

Section 6033(e) notice and reporting A substantial contraction is a partial

requirements and proxy tax. Section 6033(e) Special rules treat affiliated social liquidation or other major disposition of assets

requires certain section 501(c)(4), (5), and (6) welfare organizations, agricultural and except transfers for full consideration or

organizations to tell their members the portion CAUTION horticultural organizations, and distributions from current income.

!

of their membership dues that were allocable business leagues as parts of a single A major disposition of assets means any to the political or lobbying activities of the organization for purposes of meeting the disposition for the tax year that is: organization. If an organization does not give nondeductible dues exception. See Rev. Proc. 1. At least 25% of the fair market value of its members this information, then the 98-19. the organization’s net assets at the beginning organization is subject to a proxy tax. The tax Exception 2. Section 6033(e)(1) $2,000 of the tax year; or is reported on Form 990-T. in-house lobbying exception. An 2. One of a series of related dispositions If you check “Yes” on line 35a to declare organization satisfies the $2,000 in-house begun in earlier years that add up to at least that your organization had reportable section lobbying exception if it: 25% of the net assets the organization had at 6033(e) lobbying and political expenses in the 1. Did not receive a waiver for proxy tax the beginning of the tax year when the first 2005 reporting year (and potential liability for owed for the prior year. disposition in the series was made. Whether a the proxy tax): 2. Did not make any political expenditures major disposition of assets took place through

1. Complete lines 85a-h, page 5, of Form or foreign lobbying expenditures during the a series of related dispositions depends on the

990 (note instructions), and 2005 reporting year, facts in each case.

Specific Instructions for Form 990-EZ -43-
See Regulations section 1.6043-3 for Gross receipts do not include: Line 38—Loans To or From Officers,

special rules and exceptions. Directors, Trustees, and Key • Capital contributions (see Regulations

Employees section 1.118-1), Line 37—Expenditures for Political • Initiation fees, or Purposes Enter the end-of-year unpaid balance of • Unusual amounts of income (such as the secured and unsecured loans made to or Political organizations described in section sale of the clubhouse). received from officers, directors, trustees, and 527 are not required to answer this key employees. For example, if the question. College fraternities or sororities or other organization borrowed $1,000 from one officer organizations that charge membership A political expenditure is one intended to and loaned $500 to another, none of which has CAUTION initiation fees, but not annual dues, do

!

been repaid, report $1,500 on line 38b. influence the selection, nomination, election, or include initiation fees in their gross receipts. appointment of anyone to a federal, state, or For loans outstanding at the end of the local public office, or office in a political If the 35% and 15% limits do not affect the year, attach a schedule as described below. organization, or the election of Presidential or Report any interest expense on line 16 and any club’s exempt status, include the income

Vice Presidential electors. It does not matter shown on line 39b on the club’s Form 990-T. interest income on line 2, 4, or 8, depending on whether the attempt succeeds. the nature of the receivable that created the Investment income earned by a section interest income. An expenditure includes a payment, 501(c)(7) organization is not tax-exempt

distribution, loan, advance, deposit, or gift of When loans should be reported separately. income unless it is set aside for:

money, or anything of value. It also includes a In the required schedule, report each loan • Religious,

contract, promise, or agreement to make an separately, even if more than one loan was • Charitable,

expenditure, whether or not legally made to or received from the same person, or • Scientific,

enforceable. the same terms apply to all loans made. Salary • Literary,

advances and other advances for the personal • Educational purposes, or All section 501(c) organizations. An exempt use and benefit of the recipient, and • Prevention of cruelty to children or animals. organization that is not a political organization receivables subject to special terms or arising must file Form 1120-POL if it is treated as from nontypical transactions, must be reported If the combined amount of an

having political organization taxable income as separate loans for each officer, director, organization’s gross investment income and under section 527(f)(1). trustee, and key employee. other unrelated business income exceeds

$1,000, it must report the investment income If a section 501(c) organization establishes When loans should be reported as a single and maintains a section 527(f)(3) separate and other unrelated business income on Form total. In the required schedule, report 990-T. segregated fund, see the specific instructions receivables that are subject to the same terms for line 81, Form 990. and conditions (including credit limits and rate Nondiscrimination policy. A section

Section 501(c)(3) organizations. A section of interest) as receivables due from the general 501(c)(7) organization is not exempt from

501(c)(3) organization will lose its tax-exempt public (occurring in the normal course of the income tax if any written policy statement,

status if it engages in political activity. organization’s operations) as a single total for including the governing instrument and bylaws, all the officers, directors, trustees, and key allows discrimination on the basis of race, A section 501(c)(3) organization must pay a employees. Report travel advances for official color, or religion. section 4955 excise tax for any amount paid or business of the organization as a single total. incurred on behalf of, or in opposition to, any However, section 501(i) allows social clubs Schedule format. For each outstanding loan candidate for public office. The organization to retain their exemption under section or other receivable that must be reported must pay an additional excise tax if it fails to 501(c)(7) even though their membership is separately, the attached schedule should show correct the expenditure timely. limited (in writing) to members of a particular the following information (preferably in religion, if the social club: A manager of a section 501(c)(3) columnar form):

• Borrower’s name and title, 1. Is an auxiliary of a fraternal beneficiary organization who knowingly agrees to a

• Original amount, society exempt under section 501(c)(8), and political expenditure must pay a section 4955

• Balance due, 2. Limits its membership to the members excise tax, unless the agreement is not willful

• Date of note, of a particular religion; or the membership and there is reasonable cause. A manager who

• Maturity date, limitation is: does not agree to a correction of the political

expenditure may have to pay an additional • Repayment terms, a. A good-faith attempt to further the

excise tax. • Interest rate, teachings or principles of that religion, and

• Security provided by the borrower, b. Not intended to exclude individuals of a When an organization promotes a • Purpose of the loan, and particular race or color. candidate for public office (or is used or • Description and fair market value of the controlled by a candidate or prospective consideration furnished by the lender (for candidate), amounts paid or incurred for the Line 40a—Section 501(c)(3) example, cash—$1,000; or 100 shares of following purposes are political expenditures: organizations: Disclosure of excise XYZ, Inc., common stock—$9,000). • Remuneration to such individual (a taxes imposed under section 4911, The above detail is not required for candidate or prospective candidate) for 4912, or 4955 speeches or other services; receivables or travel advances that may be Section 501(c)(3) organizations must disclose • Travel expenses of such individual; reported as a single total. However, report and any excise tax imposed during the year under • Expenses of conducting polls, surveys, or identify those totals separately in the section 4911 (excess lobbying expenditures), other studies, or preparing papers or other attachment. 4912 (disqualifying lobbying expenditures), or, material for use by such individual; Line 39—Section 501(c)(7) unless abated, 4955 (political expenditures). • Expenses of advertising, publicity, and Organizations See sections 4962 and 6033(b). fundraising for such individual; and

• Any other expense that has the primary Gross receipts test. A section 501(c)(7) Line 40b—Section 501(c)(3) and effect of promoting public recognition or organization may receive up to 35% of its 501(c)(4) organizations: Disclosure of otherwise primarily accruing to the benefit of gross receipts, including investment income, section 4958 excess benefit such individual. from sources outside its membership and

remain tax-exempt. Part of the 35% (up to 15% transactions and excise taxes

An organization is effectively controlled by a of gross receipts) may be from public use of a Sections 6033(b) and 6033(f) require section candidate or prospective candidate only if such social club’s facilities. 501(c)(3) and (4) organizations to report the individual has a continuing, substantial Gross receipts are the club’s income from amount of taxes imposed under section 4958 involvement in the day-to-day operations or (excess benefit transactions) involving the management of the organization. its usual activities and include: organization, unless abated, as well as any • Charges, A determination of whether the primary other information the Secretary may require • Admissions, purpose of an organization is promoting the concerning those transactions. See General • Membership fees, candidacy or prospective candidacy of an Instruction P for a discussion of excess benefit • Dues, transactions. individual for public office is made on the basis • Assessments, and of all the facts and circumstances. See section • Investment income (such as dividends, Attach a statement describing any excess 4955 and Regulations section 53.4955. rents, and similar receipts), and normal benefit transaction, the disqualified person or recurring capital gains on investments. Use Form 4720 to figure and report these persons involved, and whether or not the

excise taxes. excess benefit transaction was corrected.

-44- Specific Instructions for Form 990-EZ
Line 40c—Taxes imposed on Line 41—List of states If the “Yes” box is checked, enter the name

organization managers or disqualified of the foreign country or countries. Attach a List each state with which the organization is separate sheet if more space is needed. File persons filing a copy of this return in full or partial Form TD F 90-22.1 by June 30, 2006, with the satisfaction of state filing requirements. For line 40c, enter the amount of taxes Department of the Treasury at the address imposed on organization managers or Line 42b. Foreign Financial Accounts shown on the form.

disqualified persons under sections 4912, Check the “Yes” box if either 1 or 2 below

4955, and 4958, unless abated. applies: You can get Form TD F 90-22.1 by calling 1. At any time during the calendar year, 1-800-TAX-FORM (1-800-829-3676) or by the organization had an interest in or signature downloading it from the IRS website at Line 40d—Taxes reimbursed by the or other authority over a financial account in a www.irs.gov. Do not file it with the IRS or organization foreign country (such as a bank account, attach it to Form 990-EZ.

For line 40d, enter the amount of tax on line securities account, or other financial account);

and 40c that was reimbursed by the organization. Line 43. Section 4947(a)(1) Nonexempt Any reimbursement of the excise tax liability of a. The combined value of the accounts

was more than $10,000 at any time during the Charitable Trusts a disqualified person or organization manager calendar year; and Section 4947(a)(1) nonexempt charitable trusts will be treated as an excess benefit unless (1) b. The accounts were not with a U.S. that file Form 990-EZ instead of Form 1041 the organization treats the reimbursement as military banking facility operated by a U.S. must complete this line. The trust should compensation during the year the financial institution. include exempt-interest dividends received reimbursement is made, and (2) the total 2. The organization owns more than 50% from a mutual fund or other regulated

compensation to that person, including the of the stock in any corporation that would investment company as well as tax-exempt

reimbursement, is reasonable. answer “Yes” to item 1 above. interest received directly.

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United

States. You are required to give us the information. We need it to ensure that you are complying with these laws. Section 6109 requires return

preparers to provide their identifying numbers on the return.

The organization is not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form

displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become

material in the administration of any Internal Revenue law. The rules governing the confidentiality of the Form 990, and Form 990-EZ, are covered in

Code section 6104.

The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The estimated average

times are:

Form Recordkeeping Learning about the law or Preparing Copying, assembling,

the form the and sending the form

form to the IRS

990 102 hr., 36 min. 15 hr., 4 min. 21 hr., 8 min. 1 hr., 4 min.

990-EZ 29 hr., 10 min. 11 hr., 33 min. 14 hr., 24 min. 32 min.

Schedule A (Form 990 or 990-EZ) 49 hr., 44 min. 9 hr., 26 min. 10 hr., 39 min. –0–

Schedule B (Form 990, 990-EZ, or 4 hr., 46 min. 1 hr., 23 min. 1 hr., 31 min. –0–

990-PF)

We welcome comments on forms. If you have comments concerning the accuracy of these time estimates or suggestions for making these

forms simpler, we would be happy to hear from you. You can write to the Internal Revenue Service, Tax Products Coordinating Committee,

SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6406, Washington, DC 20224.

Do not send the form to this address. Instead, see When and Where To File in General Instruction H.

Specific Instructions for Form 990-EZ -45-
Index

A Definitions ........................ 8 Fundraising expenses . . . . . . . . . . . . 23 Loans to or from officers, directors,

Accounting fees .............. 24, 41 Depletion expense . . . . . . . . . . . . . . . . 24 Fundraising fees . . . . . . . . . . . . . . . . . 24 trustees, and key employees . . . . 44

Accounting method Lobbying activities, cost . . . . . . . . . 5, 17, 37 Depreciation expense . . . . . . . . . . . . . 24 Fundraising records for tax-deductible

Accounting period contributions .................... 7 allocation . . . . . . . . . . . . . . . . . . . . . . 31 . . . . . . . . . . 5, 17, 37 Direct expenses . . . . . . . . . . . . . . . . . . 40

Accounting periods and methods Funds, current . . . . . . . . . . . . . . . . . . . 27 Lobbying expenses ........... 32, 43 .... 5 Disclosure requirements for charitable

Accounts payable contributions .................... 7 Lotteries . . . . . . . . . . . . . . . . . . . . . . . . . 40 . . . . . . . . . . . . . . . . 26

Accounts receivable . . . . . . . . . . . . . . 25 Disclosure statement .............. 8

Disclosures regarding certain G Activities, analysis of Gaming ..................... 21, 40 M income-producing . . . . . . . . . . . . . . 34 information and services

GEN (Group exemption Maintenance expense . . . . . . . . . . . . 41 Activities, change in furnished . . . . . . . . . . . . . . . . . . . . . . 11 .......... 29, 42 number) Management and general Disclosures regarding certain ................... 17, 37 Address and name ........... 17, 37 General Instructions ( expenses . . . . . . . . . . . . . . . . . . . . . . 22 transactions and See also Table of Address, change ............. 17, 37 relationships . . . . . . . . . . . . . . . . . . . 11 Contents) ....................... 2 Medicare and Medicaid

Address, Website ............ 17, 37 Gifts payments . . . . . . . . . . . . . . . . . . . . . . 34 Disqualified persons .... 11, 12, 33, 45 ..................... 18, 19, 38 Administrative expenses . . . . . . . . . . 40 Government contributions Meetings, expense of . . . . . . . . . . . . . 24 Disregarded benefits . . . . . . . . . . . . . . 12 ..... 19, 38 Affiliated organizations . . . . . . . . . . . . 12 Government fees and Members benefits ............ 24, 41 Disregarded entities . . . . . . . . 2, 17, 35 Affiliates ..................... 22, 40 contracts ............... 19, 34, 39 Membership assessments ..... 20, 39 Dissolution .................. 29, 43 Agencies, federated fundraising . . . . 22 Government grants Membership dues ..... 19, 20, 22, 38, Dividends ................ 20, 34, 39 . . . . . . . . . . . . . . . 19

Agent, acting as ................... 3 Grants 39, 41 Documents, changes in ................ 18, 19, 38, 40 Amended returns . . . . . . . . . 5, 6, 17, 37 Grants and allocations Miscellaneous expenses, reporting for organizing ................. 29, 43 . . . . . . . . . . . . 23 Analysis of Income-Producing state . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Donations . . . . . . . . . . . . . . 5, 18, 30, 38 Grants equivalent to Activities . . . . . . . . . . . . . . . . . . . . . . 34 Mortgages payable . . . . . . . . . . . . . . . 27 Dues .... 20, 22, 30, 32, 34, 38, 39, 41 contributions ............... 19, 38 Application pending . . . . . . . . . 2, 17, 37 Dues notices ................. 30, 43 Grants payable . . . . . . . . . . . . . . . . . . . 26

Assessments .......... 20, 32, 34, 39 Dues, membership .... 19, 20, 22, 38, Grants receivable . . . . . . . . . . . . . . . . 26 N Assets, net .................. 27, 41 39, 41 Grants, government . . . . . . . . . . . . . . 19 Name and address ........... 17, 37 Assets, other ................ 26, 41 Gross receipts . . . . . . 3, 17, 33, 38, 44 Name change ................ 17, 37 Assets, sale of noninventory . . . . . . 20, Gross receipts test ................ 3 Net assets ................ 22, 27, 42 39

Attachments

E Gross receipts, calculating . . . . . . . 3, 17 Nondeductible dues .......... 30, 32 . . . . . . . . . . . . . . . . . . . . . 15

Audit guides Electronic filing .................... 6 Group exemption number ..... 17, 37 Nondiscrimination policy ...... 33, 44 ...................... 5 Employee benefit plans (section Group return ................. 14, 17 Notes payable . . . . . . . . . . . . . . . . . . . 27 501(c)(9), (17), or (18)) ........... 5 Notes receivable . . . . . . . . . . . . . . . . . 26 Employee benefits . . . . . . . . . . . . . . . . 24 B Employees, key .............. 27, 42 H Backup withholding . . . . . . . . . . . . . . . 14 Employees, reporting of . . . . . . . . . . . 34 Heading of Form 990, completion O Balance sheets .............. 25, 41 Employer identification number (EIN): of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Occupancy expense .......... 24, 41 Benefits, disregarded . . . . . . . . . . . . . 12 Disregarded entities . . . . . . . . . . . . 17 Heading of Form 990-EZ, completion Officers, directors, trustees, and key Benefits, employee ........... 24, 41 Section 501(c)(9) of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 employees, list of ........... 27, 42 Benefits, members ........... 24, 41 organizations ............ 17, 37 Help by phone .................... 1 Organization managers ....... 33, 45 Bonds, tax-exempt . . . . . . . . . . . . . . . 27 Equipment rental and maintenance Hospitals . . . . . . . . . . . . . . . . . . . . . . . . 20 Organization, type of .......... 17, 38 Bonus, discretionary . . . . . . . . . . . . . . 13 expense . . . . . . . . . . . . . . . . . . . . . . . 24 Organizations in foreign countries and Erroneous backup withholding . . . . . 14 U.S. possessions . . . . . . . . . . . . . . . 14

Excess benefit transactions .... 11-14, I Organizations not required to file .... 2 C 12, 33, 44 Income, investment . . . . . . . . . . . . . . . 39 Organizations, affiliated . . . . . . . . . . . 12 Calculating gross receipts . . . . . . . . . 17 Excess benefit, correcting . . . . . . . . . 13 Income, unrelated business .... 29, 43 Organizations, compensation from Capital stock accounts . . . . . . . . . . . . 27 Excise taxes ........... 13, 33, 44, 45 Indirect public support . . . . . . . . . . . . 19 related . . . . . . . . . . . . . . . . . . . . . . . . 28 Capital surplus . . . . . . . . . . . . . . . . . . . 27 Exempt organizations, types of ...... 3 Influence, substantial . . . . . . . . . . . . . 11 Organizations, relation to other . . . . . 29 Cash ........................ 25, 41 Exempt purposes, relationship of Information Regarding Taxable Other expenses .............. 25, 41 Change of address ........... 17, 37 Subsidiaries and Disregarded activities . . . . . . . . . . . . . . . . . . . . . . . 35 Other information ............. 29, 42 Change of name ............. 17, 37 Exemption, revocation of . . . . . . . . . . 14 Entities . . . . . . . . . . . . . . . . . . . . . . . . 35

Changes in net assets . . . . . . . . . . . . 41 Expenses ..... 20, 22, 23, 24, 25, 26, Information regarding transfers

Checklist for a properly completed 30, 32, 40, 41, 43, 44 associated with personal benefit P

Expenses, functional . . . . . . . . . . . . . . 22 contracts .................. 14, 35 return . . . . . . . . . . . . . . . . . . . . . . . . . 16 Paid preparer . . . . . . . . . . . . . . . . . . . . 15

Children, photographs of missing Expenses, fundraising . . . . . . . . . . . . 23 Information, other . . . . . . . . . . . . . . . . 42 .... 2 Paid-in capital . . . . . . . . . . . . . . . . . . . . 27

Co-venture, contributions Expenses, indirect . . . . . . . . . . . . . . . . 23 Initial contracts . . . . . . . . . . . . . . . . . . . 12 ...... 19, 38 Paperwork reduction act notice . . . . 45

Colleges and universities Expenses, management and Initial return (first return) ....... 17, 37 . . . . . . . . . . 20 Payables .................... 27, 44

Compensation general . . . . . . . . . . . . . . . . . . . . . . . . 22 Interest ................ 20, 24, 34, 39 ......... 12, 24, 28, 41 Payment, fixed . . . . . . . . . . . . . . . . . . . 12

Completing all lines Expenses, political ............ 30, 44 Intermediate Sanction . . . . . . . . . . . . . . . 15 Payment, non-fixed . . . . . . . . . . . . . . . 13

Expenses, program service . . . . . . . . 22 Regulations ................. 11-14 Contemporaneous ................. 8 Payroll taxes . . . . . . . . . . . . . . . . . . . . . 24

Extension of time to file ............ 6 Inventory, sales of ............ 21, 40 Contracts, initial . . . . . . . . . . . . . . . . . . 12 Penalties . . . . . . . . . . . . . . . . . . . . 4, 6, 8 Investment income ........... 20, 39 Contracts, personal benefit .... 14, 35 Pension plan contributions . . . . . . . . . 24 Investments .............. 20, 26, 41 Contribution, quid pro quo .......... 8 Personal benefit contracts ..... 14, 35 F Investments, program-related . . . . . 20, Contributions . . . 7, 18, 19, 21, 30, 38, Personal benefit contracts-Form Fair market value . . . . . . . . . . . . . . . . . 12 39 40 990-EZ filers . . . . . . . . . . . . . . . . . . . 42

Fees ........................ 24, 41 Investments, savings, and temporary Contributions, acknowledgment of Phone help ....................... 1

Fees and contracts, cash . . . . . . . . . . . . . . . . . . . . . . . . . . 25 charitable contributions .......... 7 Pledges receivable . . . . . . . . . . . . . . . 25

Contributions, co-venture . . . . . . . . . . 38 government . . . . . . . . . . . . . . . . . . . . 34 Political expenses ............ 30, 32

Contributions, definitions ........... 8 Fees for copies . . . . . . . . . . . . . . . . . . 10 J Political organization, public inspection

Contributions, disclosure Filing tests ........................ 2 rules: Joint costs . . . . . . . . . . . . . . . . . . . . . . . 25 statement ...................... 7 Final return . . . . . . . . . 6, 17, 29, 37, 43 Penalties ....................... 9

Contributions, government . . . . . . . . . 19 Fixed payment . . . . . . . . . . . . . . . . . . . 12 Political organizations . . . . . . . . . . . 2, 14

Contributions, indirect . . . . . . . . . . . . . 38 Foreign organizations . . . . . . . . . . . . . 14 K Postage expense ............. 24, 41

Contributions, insubstantial Form 1041 ........................ 4 Key employee . . . . . . . . . . . . . . . . . . . 28 Prepaid expenses . . . . . . . . . . . . . . . . 26

value .......................... 7 Form 1098 ........................ 4 Printing expense ............. 24, 41

Contributions, noncash ............. 7 Form 1099 series .................. 4 Private delivery services ........... 6

Contributions, nondeductible, Form 1120-POL ................... 4 L Program service accomplishments, solicitations of ................... 7 Form 990 or Form 990-EZ, Labor organizations (section statement of ............... 25, 42

Contributions, pension plan . . . . . . . . 24 assembling . . . . . . . . . . . . . . . . . . . . 15 501(c)(5)) ...................... 5 Program service expenses . . . . . . . . 22

Contributions, quid pro quo ......... 7 Form 990 or Form 990-EZ, assembling Land and buildings . . . . . . . . . . . . . . . 41 Program service revenue ...... 19, 34,

Contributions, special events . . . . . . 21 and completing properly . . . . . . . . . 15 Land, buildings, and 38, 39

Contributors, schedule of . . . . . . . 7, 18, Form 990-T ....................... 4 equipment ................. 26, 27 Program-related investment

19, 37, 39 Form LM-2 and LM-3, Labor Law firms, public interest . . . . . . . . . . 14 income . . . . . . . . . . . . . . . . . . . . . . . . 39

Costs, joint . . . . . . . . . . . . . . . . . . . . . . 25 Organization Annual Report ...... 5 Legal fees ................... 24, 41 Program-related investments . . . . . . 20

Former officers, directors, trustees, and Liquidation ................... 29, 43 Proxy tax .............. 30, 31, 32, 43 key employees, list of . . . . . . . . . . . 29 List of Officers, Directors, Trustees, Public inspection . . . . . . 5, 8-11, 15, 30 D Forms and publications ............ 3 and Key Employees ........ 27, 42 Through the IRS ................ 8

Deferred charges . . . . . . . . . . . . . . . . . 26 Functional expenses . . . . . . . . . . . . . . 22 Loans from officers, directors, trustees, Through the organization ......... 8

Deferred revenue . . . . . . . . . . . . . . . . . 26 Fund balances ......... 22, 27, 41, 42 and key employees . . . . . . . . . . . . . 27 Public interest law firms . . . . . . . . . . . 14

Definition, key employee . . . . . . . . . . 28 Fundraising agencies . . . . . . . . . . . . . 22 Loans receivable . . . . . . . . . . . . . . . . . 26 Public support, indirect . . . . . . . . . . . . 19

-46- Index
Publication 78, Cumulative list of Revenue, program service ..... 19, 34, Section 501(c)(7) Sweepstakes, raffles, and

section 170(c) organizations ...... 2 38, 39 organizations .............. 33, 44 lotteries ................... 21, 40

Publications and forms ............. 3 Revenue, special events ...... 18, 21, Section 501(c)(9)

Publications expense . . . . . . . . . . . . . 41 38, 40 organizations .............. 17, 37 T Purpose of form ................... 1 Rounding off to whole dollars . . . . . . 15 Section 501(c)(9), (17), (18)

organizations .............. 18, 38 Tax Forms Committee . . . . . . . . . . . . 45

Section 6033(e) exceptions .... 30, 43 Tax-exempt bond liabilities . . . . . . . . 27

Q S Section 6033(e) notice and reporting Tax-exempt organization, public

Quid pro quo contribution ........... 8 Sales of Federal government materials, inspection rules requirements and proxy tax . . . . . 30, ................. 9

Quid pro quo contributions . . . . . . . 7, 30 disclosure for . . . . . . . . . . . . . . . . . . 11 43 Taxable subsidiaries . . . . . . . . . . . . . . 35

Sales of inventory ............ 20, 21 Securities ................ 20, 26, 39 Taxes, excise . . . . . . . . . . . . . . . . . . . . 13

Savings . . . . . . . . . . . . . . . . . . . . . . . . . 41 SFAS 116 ................ 22, 23, 38 Taxes, payroll . . . . . . . . . . . . . . . . . . . . 24

R Schedule A (Form 990 or SFAS 117 . . . . . . . . . . . . . . . . . . . . . . . 27 Taxes, reimbursement of . . . . . . . . . . 45 Raffles . . . . . . . . . . . . . . . . . . . . . . . . . . 40 990-EZ) . . . . . . . . . . . . . . . 2, 3, 18, 38 Shipping expense ............ 24, 41 TE/GE EO Determinations .......... 2

Reasonableness, presumption Schedule B (Form 990, 990-EZ, or Signature . . . . . . . . . . . . . . . . . . . . . . . . 15 Telephone expense . . . . . . . . . . . . . . . 24 of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 990-PF) . . . . . . . . 4, 7, 18, 19, 37, 39 Solicitations of contributions . . . . . . . 30 Telephone number ........... 17, 37 Rebuttable presumption . . . . . . . . . . . 13 Schedule B (Form 990, 990-EZ, or Solicitations of nondeductible Termination .................. 29, 43 Receivable, accounts . . . . . . . . . . . . . 25 990-PF) guidelines ......... 18, 37 contributions .................... 7 Test, facts and circumstances . . . . . 11 Receivable, grants . . . . . . . . . . . . . . . . 26 Schedule of contributors . . . . 7, 18, 19, Special events ..... 18, 19, 21, 38, 40 Travel expense . . . . . . . . . . . . . . . . . . 24 Receivable, notes and loans . . . . . . . 26 37, 39 Specific instructions for Form 990 (See Trust fund recovery penalty ......... 4 Receivable, pledges Section 4911, 4912, or 4955 . . . . . . 33, . . . . . . . . . . . . . . 25 also Table of Contents for these Trust principal account . . . . . . . . . . . . 27 Receivables 44 ................. 27, 44 Section 4947(a)(1) trusts specific instructions.) . . . . . . . . . . . 17 Trusts, section 4947(a)(1) . . . . . . 2, 34, Receivables from officers, directors, . . . . 2, 34, 45 Specific Instructions for Form 990-EZ 45 trustees, and key employees . . . . 26 Section 4958 .......... 11-14, 33, 44 (See also Table of Contents for

Reconciliation statements . . . . . . . . . 27 Section 4958, churches . . . . . . . . . . . 13 these specific instructions.) . . . . . . 37

Recordkeeping Section 4958, excise taxes: . . . . . . . . . . . . . . . . . . . 15 State, reporting to . . . . . . . . . . . 4, 6, 25 U

Relationship of Activities to the Disqualified persons . . . . . . . . . . . . 13 Statement of Functional Unrelated business income .... 29, 43

Accomplishment of Exempt Organization managers . . . . . . . . . 13 Expenses . . . . . . . . . . . . . . . . . . . . . 22 Unrelated trade or business

Purposes . . . . . . . . . . . . . . . . . . . . . . 35 Section 501(a), (e), (f), (k), and (n) Statement of Position 98-2 . . . . . . . . 25 activities ................... 20, 39

Rent expense organizations ................... 2 ................ 20, 41 Statement of program service Utilities expense . . . . . . . . . . . . . . . . . . 41

Rental income (loss) Section 501(c)(12) . . . . . . . . . . . . . . 34 accomplishments ........... 25, 42 organizations . . . . . . . . . . . . . . . . . . 33 Rents, gross ................. 20, 39 States, list of ................. 34, 45

Requirements for a properly completed Section 501(c)(15) organizations .... 2 W Subsidiaries, taxable . . . . . . . . . . . . . . 35

Form 990 or Form 990-EZ . . . . . . . 15 Section 501(c)(3) Website address ............. 17, 37 Substantial influence . . . . . . . . . . . . . . 11

Retained earnings . . . . . . . . . . . . . . . . 27 organizations ........ 18, 30, 38, 44 Who must file ..................... 2

Applicable organization Substantiation .................... 8

Return, final . . . . . . . . 6, 17, 29, 37, 43 . . . . . . . . . 11 Withholding, backup . . . . . . . . . . . . . . 14

Section 501(c)(3) organizations, Substantiation and disclosure

Return, group ................ 14, 17 requirements for charitable disclosure of transactions and ■ Return, initial (first) ........... 17, 37 contributions .................... 7 relationships . . . . . . . . . . . . . . . . . . . 11

Returns, amended . . . . . . . . 5, 6, 17, 37 Section 501(c)(4) organizations: Substitute forms for Form 990 or Form

Revenue ................. 21, 26, 34 Applicable organization 990-EZ ......................... 5 . . . . . . . . . 11

Revenue, Expenses, and Changes in Section 501(c)(4), (5), or (6) Supplies . . . . . . . . . . . . . . . . . . . . . . . . . 24

Net Assets or Fund organizations .............. 30, 43 Support, direct public . . . . . . . . . . . . . 19

Balances .................. 18, 38

Index -47-