Department of the Treasury 2002 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)

Note: 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.

charitable trusts, and section 527 political Contents Page Contents Page organizations to provide the IRS with the

information required by section 6033. • Changes To Note ............ 1 U Political Organizations . . . . . . . . . 14

• Purpose of Form ............. 1 V Information Regarding Transfers • An organization’s completed Form 990, or

Associated With Personal Benefit Form 990-EZ, is available for public inspection • Phone Help ................. 1 as required by section 6104. Schedule B Contracts . . . . . . . . . . . . . . . . . . 14 (Form 990, 990-EZ, or 990-PF), Schedule of • Photographs of Missing Children . . 1 W Requirements for a Properly Contributors, is open for public inspection for

section 527 organizations filing Form 990 or • General Instructions ........... 1 Completed Form 990 or Form Form 990-EZ. 990-EZ . . . . . . . . . . . . . . . . . . . . 14 A Who Must File ............... 2

• Specific Instructions for Form 990 • Some members of the public rely on Form B Organizations Not Required To File 2 and Table of Contents for these 990, or Form 990-EZ, as the primary or sole

C source of information about a particular Exempt Organization Reference Specific Instructions . . . . . . . . . . . 16 organization. How the public perceives an Chart ..................... 3 • Specific Instructions for Form organization in such cases may be determined

D Forms and Publications To File or by the information presented on its return. 990-EZ and Table of Contents for Therefore, please make sure the return is Use . . . . . . . . . . . . . . . . . . . . . . 3 these Specific Instructions . . . . . . 35 complete and accurate and fully describes the

E Use of Form 990, or Form 990-EZ, organization’s programs and accomplishments. • Index . . . . . . . . . . . . . . . . . . . . . 44

To Satisfy State Reporting

Requirements • Use the Form 990, and Form 990-EZ, to ............... 4 Changes To Note send a required election to the IRS, such as

F Other Forms as Partial Substitutes • In 2002, the Treasury Department issued the election to capitalize costs under section Final Regulations interpreting the benefit 266. for Form 990 or Form 990-EZ . . . . 5 limitation provisions of section 4958 of the

G Accounting Periods and Methods 5 Internal Revenue Code. These provisions are

important to the exempt organization

H When and Where To File ....... 6 community as a whole and for ensuring Phone Help

compliance in this area. These new If you have questions and/or need help I Extension of Time To File ....... 6 Regulations advise organizations on avoiding completing Form 990, or Form 990-EZ, please

situations that may give rise to inurement. call 1-877-829-5500. This toll-free telephone J Amended Return/Final Return . . . . 6 • General Instruction K has been revised to service is available Monday through Friday

K Penalties explain in greater detail the imposition of from 8:00 a.m. to 6:30 p.m. Eastern time. ................... 6

penalties on returns containing incorrect L Contributions ................ 6 information.

M Public Inspection of Returns, etc. 8 • Public Law 107-276 changed the filing Photographs of Missing requirements for the following political

N Disclosures Regarding Certain organizations: Children

Information and Services Furnished 10 1. A qualified state or local political The Internal Revenue Service is a proud

organization must file Form 990 only if it has partner with the National Center for Missing

O Disclosures Regarding Certain gross receipts during the tax year of $100,000 and Exploited Children. Photographs of

Transactions and Relationships . . 10 or more. See Political Organizations under missing children selected by the Center may

General Instruction A for the definition of appear in instructions on pages that would P Intermediate Sanction qualified state or local political organization. otherwise be blank. You can help bring these

Regulations—Excess Benefit children home by looking at the photographs 2. Political organizations described under

Transactions . . . . . . . . . . . . . . . . 11 and calling 1-800-THE-LOST section 6033(g)(3) are exempt from filing Form (1-800-843-5678) if you recognize a child. 990 or Form 990-EZ. See General Instruction Q Erroneous Backup Withholding . . . 13 B for more information.

R Group Return . . . . . . . . . . . . . . . 13 General Instructions

S Organizations in Foreign Countries

and U.S. Possessions . . . . . . . . . 14 Purpose of Form Note: The General Instructions apply to both

• Form 990 and Form 990-EZ are used by Form 990 and Form 990-EZ. See also the

T Public Interest Law Firms . . . . . . . 14 tax-exempt organizations, nonexempt Specific Instructions for each of these forms.

Cat. No. 22386X
3. The organization files the required inquiring about their returns. When responding

A. Who Must File reports with the state. to these inquiries, these organizations should

4. The state makes such reports public give the specific reason for not filing.

Filing tests and the organization makes them open to Failure to file and its effect on public inspection in the same manner that If the organization does not meet any of the contributions exceptions listed in General Instruction B, and organizations must make Form 8872 available

for public inspection. Organizations that are eligible to receive tax its annual gross receipts are normally more deductible contributions are listed in than $25,000, it must file Form 990 or Form For additional information, including the Publication 78, Cumulative List of 990-EZ. See the gross receipts discussion in

General Instruction B. prohibition of involvement in the organization of Organizations described in Section 170(c) of a Federal candidate or office holder, see the Internal Revenue Code of 1986. An If the organization’s gross receipts during section 527(e)(5). organization may be removed from this listing if the year are less than $100,000 and its total Disregarded Entities our records show that it is required to file Form assets at the end of the year are less than 990, or Form 990-EZ, but it does not file a $250,000, it may file Form 990-EZ, instead of A disregarded entity, as described in return or advise us that it is no longer required Form 990. Even if the organization meets this Regulations sections 301.7701-1 through to file. However, contributions to such an test, it can still file Form 990. 301.7701-3, is treated as a branch or division organization may continue to be deductible by of its parent organization for Federal tax Organizations required to file Schedule A the general public until the IRS publishes a purposes. Therefore, financial and other (Form 990 or 990-EZ), Organization Exempt notice to the contrary in the Internal Revenue information applicable to a disregarded entity Under Section 501(c)(3), that do not meet the must be reported as the parent organization’s Bulletin.

support tests discussed in the instructions for information. Part IV of that schedule should contact the

Service at the following address to re-evaluate Section 4947(a)(1) nonexempt B. Organizations Not Required To

their determination-of-filing requirements. charitable trusts File

Any nonexempt charitable trust (described in Note: Organizations not required to file this Internal Revenue Service section 4947(a)(1)) not treated as a private form with the IRS may wish to use it to satisfy TE/GE Customer Account Services Office foundation is also required to file Form 990, or state reporting requirements. For details, see P.O. Box 2508 Form 990-EZ, along with a completed General Instruction E.

Cincinnati, OH 45201 Schedule A (Form 990 or 990-EZ). See the The following types of organizations exempt Combined Federal Campaign. Smaller discussion in General Instruction D for from tax under section 501(a) (section 527 for organizations applying to participate in the exceptions to filing Form 1041, U.S. Income political organizations) do not have to file Form Combined Federal Campaign may submit a Tax Return for Estates and Trusts. 990, or Form 990-EZ, with the IRS. However, if completed Form 990-EZ (instead of Form 990) the organization chooses to file a Form 990 or If an organization’s exemption to the Office of Personnel Management (OPM). Form 990-EZ, it must also attach the schedules application is pending However, these organizations must also and statements described in the instructions for

submit to OPM, attached to the Form 990-EZ, If the organization’s application for exemption these forms.

pages 1 and 2 of Form 990 with the following is pending, check the “application pending” box 1. A church, an interchurch organization of completed: Part I, lines 1a-1d and 13-15; Part in the heading of the return and complete the local units of a church, a convention or return. II, all lines. These organizations should not association of churches, an integrated auxiliary send this Form 990 attachment to the IRS. If the organization received a Form 990 of a church (such as a men’s or women’s

Section 501(a), (e), (f), (k), and (n) Package but is not required to file organization, religious school, mission society,

or youth group). organizations If the organization received a Form 990

Package with a preaddressed label, we ask 2. Church-affiliated organizations that are Except for those types of organizations listed in that the organization file a return even if it is exclusively engaged in managing funds or General Instruction B, an annual return on not required to do so. maintaining retirement programs and are Form 990, or Form 990-EZ, is required from • Attach the label to the name and address described in Rev. Proc. 96-10, 1996-1 C.B. every organization exempt from tax under space on the return. See the Specific 577. section 501(a), including foreign organizations Instructions for both Form 990, or Form 3. A school below college level affiliated and cooperative service organizations 990-EZ, Item C. with a church or operated by a religious order. described in sections 501(e) and (f); child care • Check the box in the heading of the Form 4. A mission society sponsored by, or organizations described in section 501(k); and 990, or Form 990-EZ, to indicate that the affiliated with, one or more churches or church charitable risk pools described in section organization’s gross receipts are normally not denominations, if more than half of the 501(n). more than $25,000; society’s activities are conducted in, or directed Section 501(c)(3), 501(e), (f), (k), and (n) • Sign the return; and at, persons in foreign countries. organizations must also attach a completed • Send it to the Ogden Service Center. See 5. An exclusively religious activity of any Schedule A (Form 990 or 990-EZ) to their General Instruction H. religious order. Form 990 or Form 990-EZ. • The organization does not have to complete 6. A state institution whose income is

For purposes of these instructions, the term Parts I through X of the Form 990, or Parts I excluded from gross income under section “section 501(c)(3)” includes organizations 115. through V of the Form 990-EZ. exempt under sections 501(e), (f), (k), and (n). Following the above instructions will help us 7. An organization described in section

Political Organizations to update our records, and we will not have to 501(c)(1). Section 501(c)(1) organizations are

contact the organization later to ask why no corporations organized under an Act of In general, tax-exempt political organizations return was filed. Congress that are: that have gross receipts of $25,000 or more for • Instrumentalities of the United States, If the organization files a return this way, it the tax year must file Form 990 or Form and 990-EZ. However, see General Instruction B will not be mailed a Form 990 Package in later • Exempt from Federal income taxes. years and does not have to file Form 990, or for a list of tax-exempt political organizations 8. A private foundation exempt under that are excepted from filing Form 990 or Form Form 990-EZ, again until its gross receipts are section 501(c)(3) and described in section 990-EZ. A qualified state or local political normally more than $25,000. If the organization 509(a). Use Form 990-PF, Return of Private organization terminates or undergoes a substantial (defined below) must file Form Foundation. 990 (not Form 990-EZ) only contraction, see the instructions for line 79 of if it has gross 9. A black lung benefit trust described in Form 990, or line 36 of Form 990-EZ. receipts of $100,000 or more. section 501(c)(21). Use Form 990-BL, A qualified state or local political Exempt organizations that filed Form 990, Information and Initial Excise Tax Return for

organization is a political organization that or Form 990-EZ, but are no longer required to Black Lung Benefit Trusts and Certain Related meets all of the following requirements: file because they meet a specific exemption Persons. (other than exemption 15 in General Instruction 1. The organization’s exempt functions are 10. A stock bonus, pension, or profit-sharing B) should advise their area office so their filing solely for the purpose of influencing or trust that qualifies under section 401. Use status can be updated. attemping to influence the selection, Form 5500, Annual Return/Report of

nomination, election, or appointment of any Exempt organizations that are not sure of Employee Benefit Plan.

individual to any state or local public office or their area office may call the IRS at the Phone 11. A religious or apostolic organization

office in a state or local political organization. Help line, 1-877-829-5500. Exempt described in section 501(d). Use Form 1065,

2. The organization is subject to state law organizations that stop filing Form 990, or U.S. Partnership Return of Income.

that requires it to report the information that is Form 990-EZ, without notifying their area office

similar to that required on Form 8872. may receive service center correspondence

-2- General Instructions for Form 990 and Form 990-EZ
12. A foreign organization whose annual ii. Between 1 and 3 years old and

gross receipts from sources within the U.S. are averaged $30,000 or less in gross receipts D. Forms and Publications To File

normally $25,000 or less (Rev. Proc. 94-17, during each of its first 2 tax years; or or Use

1994-1 C.B. 579). See the $25,000 gross iii. Three (3) years old or more and Personal computer. You can access the IRS receipts test in 15c. See also General averaged $25,000 or less in gross receipts for Web Site 24 hours a day, 7 days a week at Instruction A, if the organization received a the immediately preceding 3 tax years www.irs.gov to: Form 990 Package. (including the year for which the return would 13. A governmental unit or affiliate of a • Download forms, instructions, and be filed). governmental unit described in Rev. Proc. publications.

95-48, 1995-2 C.B. 418. • See answers to frequently asked tax

questions. 14. A political organization that is:

C. Exempt Organization Reference • Order IRS products on-line. • A state or local committee of a political • Search publications on-line by topic or party; Chart keyword. • A political committee of a state or local Note: To determine how the instructions for • Send us comments or request help via candidate; Form 990 and Form 990-EZ apply to you, you e-mail. • A caucus or association of state or local must know the Code section under which you • Sign up to receive local and national tax officials; are exempt. news by e-mail. • An authorized committee (as defined in You can also reach us using file transfer section 301(6) of the Federal Election Type of I.R.C. protocol at ftp.irs.gov. Campaign Act of 1971) of a candidate for Organization Section CD-ROM. Order Pub. 1796, IRS Federal Tax federal office; Corporations Organized Under Act of Products on CD-ROM, and get: • A national committee (as defined in Congress ................... 501(c)(1) • Current year forms, instructions, and section 301(14) of the Federal Election publications. Campaign Act of 1971) of a political party; Title Holding Corporations ......... 501(c)(2) • Prior year forms, instructions, and • A United States House of Charitable, Religious, Educational, publications. Representatives or United States Senate Scientific, etc., Organizations ...... 501(c)(3) • Frequently requested forms that may be campaign committee of a political party filled in electronically, printed out for committee; Civic Leagues and Social Welfare submission, and saved for recordkeeping. Organizations ................ 501(c)(4) • Required to report under the Federal • The Internal Revenue Bulletin.

Election Campaign Act of 1971 as a political Labor, Agricultural, and Horticultural Buy the CD-ROM on the Internet at

committee (as defined in section 301(4) of Organizations www.irs.gov/cdorders from the National ................ 501(c)(5) such Act); or Technical Information Service (NTIS) for $22 Business Leagues, etc. ........... 501(c)(6) • An organization described under section (no handling fee), or call 1-877-CDFORMS

6033(g)(3)(G). Social and Recreation Clubs ........ 501(c)(7) (1-877-233-6767) toll free to buy the CD-ROM

15. An organization whose annual gross for $22 (plus a $5 handling fee). Fraternal Beneficiary and Domestic 501(c)(8) receipts are normally $25,000 or less (but see By phone and in person. You can order Fraternal Societies and Associations & (10) General Instruction A, if the organization forms and publications 24 hours a day, 7 days

received a Form 990 Package). Voluntary Employees’ Beneficiary a week, by calling 1-800-TAX-FORM

a. Calculating gross receipts. The Associations ................. 501(c)(9) (1-800-829-3676). You can also get most

organization’s gross receipts are the total forms and publications at your local IRS office. Teachers’ Retirement Fund Associations 501(c)(11) amount it received from all sources during its Schedule A (Form 990 or 990-EZ). Benevolent Life Insurance Associations, annual accounting period, without subtracting Organization Exempt Under Section 501(c)(3) Mutual Ditch or Irrigation Companies, any costs or expenses. (Except Private Foundation), 501(e), 501(f), Mutual or Cooperative Telephone 501(k), 501(n), or Section 4947(a)(1) i. Form 990. Gross receipts are the sum Companies, etc. .............. 501(c)(12) of lines 1d, 2, 3, 4, 5, 6a, 7, 8a (both columns), Nonexempt Charitable Trust. The Schedule A

9a, 10a, and 11 of Part I. Gross receipts can Cemetery Companies ............ 501(c)(13) (Form 990 or 990-EZ) is filed with Form 990, or

also be calculated by adding back the amounts Form 990-EZ, for a section 501(c)(3) State Chartered Credit Unions, Mutual on lines 6b, 8b, 9b, and 10b to the total organization that is not a private foundation Reserve Funds ............... 501(c)(14) revenue reported on line 12. (and including an organization described in

Mutual Insurance Companies or section 501(e), 501(f), 501(k), or 501(n)). It is ii. Form 990-EZ. Gross receipts are the Associations ................. 501(c)(15) also filed with Form 990, or Form 990-EZ, for a sum of lines 1, 2, 3, 4, 5a, 6a, 7a, and 8 of Part section 4947(a)(1) nonexempt charitable trust I. Gross receipts can also be calculated by Cooperative Organizations To Finance that is not treated as a private foundation. An adding back the amounts on lines 5b, 6b, and Crop Operations .............. 501(c)(16) 7b to the total revenue reported on line 9. organization is not required to file Schedule A

Supplemental Unemployment Benefit (Form 990 or 990-EZ) if its gross receipts are

Example. On line 9 of its Form 990-EZ for Trusts ..................... 501(c)(17) normally $25,000 or less. See the gross

the year 2002, Organization M reported receipts discussion in General Instruction B. Employee Funded Pension Trusts $50,000 as total revenue. M added back the Schedule B (Form 990, 990-EZ, or 990-PF). (created before 6/25/59) ......... 501(c)(18) costs and expenses it had deducted on lines Schedule of Contributors. Schedule B (Form 5b ($2,000); 6b ($1,500); and 7b ($500) to its Organizations of Past or Present 501(c)(19) 990, 990-EZ, or 990-PF) is used by all total revenue of $50,000 and determined that Members of the Armed Forces . . . . . & (23) organizations required to file Form 990, its gross receipts for the tax year were 990-EZ, or 990-PF, to provide the contributor Black Lung Benefit Trusts .......... 501(c)(21) $54,000. information required for line 1 of those forms. b. Gross receipts when acting as agent. Withdrawal Liability Payment Funds . . . 501(c)(22) Forms W-2 and W-3. Wage and Tax If a local chapter of a section 501(c)(8) Title Holding Corporations or Trusts . . . 501(c)(25) Statement and Transmittal of Wage and Tax fraternal organization collects insurance Statements. premiums for its parent lodge and merely State-Sponsored Organizations Form W-9. Request for Taxpayer Identification sends those premiums to the parent without Providing Health Coverage for Number and Certification. asserting any right to use the funds or High-Risk Individuals ........... 501(c)(26)

otherwise deriving any benefit from collecting Form 940. Employer’s Annual Federal State-Sponsored Workmen’s Unemployment (FUTA) Tax Return. them, the local chapter should not include the Compensation and Insurance and premiums in its gross receipts. The parent Form 941. Employer’s Quarterly Federal Tax Reinsurance Organizations ....... 501(c)(27) lodge should report them instead. The same Return. Used to report social security,

treatment applies in other situations in which Religious and Apostolic Associations . . 501(d) Medicare, and income taxes withheld by an

one organization collects funds merely as an employer and social security and Medicare Cooperative Hospital Service agent for another. taxes paid by an employer. Organizations ................ 501(e) c. $25,000 gross receipts test. An Form 943. Employer’s Annual Tax Return for

organization’s gross receipts are considered Cooperative Service Organizations of Agricultural Employees.

normally to be $25,000 or less if the Operating Educational Organizations 501(f) Trust Fund Recovery Penalty. If certain

organization is: Child Care Organizations .......... 501(k) excise, income, social security, and Medicare

i. Up to a year old and has received, or taxes that must be collected or withheld are not Charitable Risk Pools ............ 501(n) donors have pledged to give, $37,500 or less collected or withheld, or these taxes are not

during its first tax year; Political Organizations . . . . . . . . . . . . 527 paid to the IRS, a Trust Fund Recovery Penalty

General Instructions for Form 990 and Form 990-EZ -3-
may apply. The Trust Fund Recovery Penalty discount, distributions from pensions, Publication 526. Charitable Contributions.

may be imposed on all persons (including annuities, retirement or profit-sharing plans, Publication 538. Accounting Periods and volunteers) who the IRS determines were IRAs, insurance contracts, etc., and proceeds Methods.

responsible for collecting, accounting for, and from real estate transactions. Also, use certain Publication 598. Tax on Unrelated Business paying over these taxes, and who acted of these returns to report amounts that were Income of Exempt Organizations. willfully in not doing so. received as a nominee on behalf of another

person. Publication 910. Guide to Free Tax Services. This penalty does not apply to volunteer,

unpaid members of any board of trustees or Form 1120-POL. U.S. Income Tax Return for Publication 946. How To Depreciate

directors of a tax-exempt organization, if these Certain Political Organizations. Property.

members are solely serving in an honorary Form 1128. Application To Adopt, Change, or Publication 1771. Charitable Contributions—

capacity, do not participate in the day-to-day or Retain a Tax Year. Substantiation and Disclosure Requirements.

financial activities of the organization, and do Form 3115. Application for Change in not have actual knowledge of the failure to

collect, account for, and pay over these taxes. Accounting Method. E. Use of Form 990, or Form

However, the preceding sentence does not Form 4506-A. Request for Public Inspection 990-EZ, To Satisfy State Reporting apply if it results in no person being liable for or Copy of Exempt or Political Organization Requirements the penalty. IRS Form. Some states and local government units will The penalty is equal to the unpaid trust fund Form 4562. Depreciation and Amortization. accept a copy of Form 990, or Form 990-EZ, tax. See the instructions for Pub. 15 (Circular Form 4720. Return of Certain Excise Taxes Schedule A (Form 990 or 990-EZ), and E), Employer’s Tax Guide, for more details, on Charities and Other Persons Under Schedule B (Form 990, 990-EZ, or 990-PF) in including the definition of responsible persons. Chapters 41 and 42 of the Internal Revenue place of all or part of their own financial report

Form 990-T. Exempt Organization Business Code. forms. The substitution applies primarily to Income Tax Return. Filed separately for Form 5500. Annual Return/Report of section 501(c)(3) organizations, but some of organizations with gross income of $1,000 or Employee Benefit Plan. Employers who the other types of section 501(c) organizations more from business unrelated to the maintain pension, profit-sharing, or other are also affected.

organization’s exempt purpose. The Form funded deferred compensation plans are If you use Form 990, or Form 990-EZ, to 990-T is also filed to pay the section 6033(e)(2) generally required to file the Form 5500. This satisfy state or local filing requirements, such proxy tax. For Form 990, see line 85 and its requirement applies whether or not the plan is as those under state charitable solicitation instructions; for Form 990-EZ, see line 35 and qualified under the Internal Revenue Code and acts, note the following— its instructions. whether or not a deduction is claimed for the

Form 990-W. Estimated Tax on Unrelated Determine state filing requirements current tax year. Business Taxable Income for Tax-Exempt You should consult the appropriate officials of Form 5768. Election/Revocation of Election by Organizations. all states and other jurisdictions in which the an Eligible Section 501(c)(3) Organization To Form 1040. U.S. Individual Income Tax Make Expenditures To Influence Legislation. organization does business to determine their

Return. specific filing requirements. “Doing business” in Form 8282. Donee Information Return. a jurisdiction may include any of the following: Form 1041. U.S. Income Tax Return for Required of the donee of “charitable deduction (a) soliciting contributions or grants by mail or Estates and Trusts. Required of section property” who sells, exchanges, or otherwise otherwise from individuals, businesses, or 4947(a)(1) nonexempt charitable trusts that disposes of the property within 2 years after other charitable organizations; (b) conducting also file Form 990 or Form 990-EZ. However, if receiving the property. programs; (c) having employees within that such a trust does not have any taxable income The form is also required of any successor jurisdiction; (d) maintaining a checking under Subtitle A of the Code, it can file Form donee who disposes of charitable deduction account; or (e) owning or renting property 990, or Form 990-EZ, and does not have to file property within 2 years after the date that the there. Form 1041 to meet its section 6012 filing donor gave the property to the original donee. requirement. If this condition is met, complete Monetary tests may differ It does not matter who gave the property to the Form 990, or Form 990-EZ, and do not file successor donee. It may have been the original Some or all of the dollar limitations applicable Form 1041. donee or another successor donee. to Form 990, or Form 990-EZ, when filed with

A section 4947(a)(1) nonexempt charitable the IRS may not apply when using Form 990, Form 8283. Noncash Charitable trust that normally has gross receipts of not or Form 990-EZ, in place of state or local more than $25,000 (see the gross receipts Contributions. report forms. Examples of the IRS dollar discussion in General Instruction B) and has no Form 8300. Report of Cash Payments Over limitations that do not meet some state

taxable income under Subtitle A must complete $10,000 Received in a Trade or Business. requirements are the $25,000 gross receipts line 92 and the signature block on page 6 of Used to report cash amounts in excess of minimum that creates an obligation to file with the Form 990. On the Form 990-EZ, complete $10,000 that were received in a single the IRS (see the gross receipts discussion in line 43 and the signature block on page 2 of transaction (or in two or more related General Instruction B) and the $50,000 the return. In addition, complete only the transactions) in the course of a trade or minimum for listing professional fees in Part II following items in the heading of Form 990 or business (as defined in section 162). of Schedule A (Form 990 or 990-EZ). Form 990-EZ: However, if the organization receives a Additional information may be charitable cash contribution in excess of required Item $10,000, it is not subject to the reporting

A Tax year (fiscal year or short period, if State or local filing requirements may require requirement since the funds were not received

applicable) you to attach to Form 990, or Form 990-EZ, in the course of a trade or business.

B Applicable checkboxes one or more of the following: (a) additional Form 8822. Change of Address. Used to C Name and address financial statements, such as a complete notify the IRS of a change in mailing address D Employer identification number (EIN) analysis of functional expenses or a statement that occurs after the return is filed. J Section 4947(a)(1) nonexempt charitable trust of changes in net assets; (b) notes to financial

box. Form 8868. Application for Extension of Time statements; (c) additional financial schedules;

To File an Exempt Organization Return. (d) a report on the financial statements by an Form 1096. Annual Summary and Transmittal Form 8870. Information Return for Transfers independent accountant; and (e) answers to

of U.S. Information Returns. Associated With Certain Personal Benefit additional questions and other information.

Form 1098 series. Information returns to Contracts. Used to identify those personal Each jurisdiction may require the additional

report student loan interest and tuition and benefit contracts for which funds were material to be presented on forms they provide.

related expenses received. transferred to the organization, directly or The additional information does not have to be

submitted with the Form 990, or Form 990-EZ, Form 1099 series. Information returns to indirectly, as well as the transferors for, and

beneficiaries of, those contracts. filed with the IRS. report acquisitions or abandonments of

secured property, proceeds from broker and Even if the Form 990, or Form 990-EZ, that Form 8871. Political Organization Notice of barter exchange transactions, cancellation of the organization files with the IRS is accepted Section 527 Status.

debt, dividends and distributions, certain by the IRS as complete, a copy of the same Form 8872. Political Organization Report of government and state qualified tuition program return filed with a state will not fully satisfy that Contributions and Expenditures. payments, taxable distributions from state’s filing requirement if required information Publication 463. Travel, Entertainment, Gift, cooperatives, interest payments, payments of is not provided, including any of the additional and Car Expenses. long-term care and accelerated death benefits, information discussed above, or if the state

miscellaneous income payments, distributions Publication 525. Taxable and Nontaxable determines that the form was not completed by

from a medical savings account, original issue Income. following the applicable Form 990, or Form

-4- General Instructions for Form 990 and Form 990-EZ
990-EZ, instructions or supplemental state 2002 and the date the fiscal year ended in the Employee benefit plans (section

instructions. If so, the organization may be year 2003. 501(c)(9), (17), or (18)) asked to provide the missing information or to An employee benefit plan may be able to Short period. Use the 2002 Form 990, or submit an amended return. substitute Form 5500 for part of Form 990 or Form 990-EZ, to report on a short accounting

Use of audit guides may be required Form 990-EZ. The substitution can be made if period (less than 12 months) that began in

the organization filing Form 990, or Form 2002 and ended November 30, 2003, or To ensure that all organizations report similar 990-EZ, and the plan filing Form 5500, meet all earlier. transactions uniformly, many states require

that contributions, gifts, grants, etc., and the following tests: Because the Form 990, or Form 990-EZ, for

functional expenses be reported according to 1. The Form 990, or Form 990-EZ, filer is the year 2003 may not be distributed until the

the AICPA industry audit guide, Not-For-Profit organized under section 501(c)(9), (17), or year 2004, use the prior year form, the 2002

Organizations (New York, NY, AICPA, 2001), (18); Form 990, or Form 990-EZ, to report on a short

supplemented by Standards of Accounting and 2. The Form 990, or Form 990-EZ, filer accounting period that begins in the year 2003

Financial Reporting for Voluntary Health and and Form 5500 filer are identical for financial and ends November 30, 2003, or earlier. Strike

Welfare Organizations (Washington, DC, reporting purposes and have identical receipts, the 2002 year on the form and show the year

National Health Council, Inc., 1998, 4th disbursements, assets, liabilities, and equity 2003.

edition). accounts; If the organization changes its accounting 3. The employee benefit plan does not period, it must file a return on Form 990, or Donated services and facilities include more than one section 501(c) Form 990-EZ, for the short period resulting Even though reporting donated services and organization, and the section 501(c) from the change. Write “Change of Accounting facilities as items of revenue and expense is organization is not a part of more than one Period” at the top of this short-period return. called for in certain circumstances by the two employee benefit plan;

4. The organization’s accounting year and If the organization changed its accounting publications named above, many states and period within the 10-calendar-year period that the IRS do not permit the inclusion of those the employee plan year are the same. If they

are not, you may want to change the includes the beginning of the short period, and amounts in Parts I and II of Form 990 or Part I

organization’s accounting year, as explained in it had a Form 990, or Form 990-EZ, filing of Form 990-EZ. The optional reporting of General Instruction G, so it will coincide with requirement at any time during that 10-year donated services and facilities is discussed in

the plan year. period, it must also attach a Form 1128 to the the instructions for Part III for both Form 990 short-period return. See Rev. Proc. 85-58, and Form 990-EZ.

Allowable substitution areas 1985-2 C.B. 740.

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

990, or Form 990-EZ, originally to meet that Form 990

state’s filing requirement. Accounting methods • Lines 13 through 15 of Part I (but complete

lines 16 through 21); Unless instructed otherwise, the organization If a state requires the organization to file an • Part II; and should generally use the same accounting amended Form 990, or Form 990-EZ, to • Part IV (but complete lines 59, 66, and 74, method on the return to figure revenue and correct conflicts with Form 990, or Form columns (A) and (B)). expenses as it regularly uses to keep its books 990-EZ, instructions, it must also file an and records. To be acceptable for Form 990, or amended return with the IRS. Form 990-EZ Form 990-EZ, reporting purposes, however,

Method of accounting • Lines 10 through 16 of Part I (but complete the method of accounting used must clearly

Most states require that all amounts be lines 17 through 21). reflect income. • Part II (but complete lines 25 through 27, reported based on the accrual method of Generally, the organization must file Form columns (A) and (B)). accounting. See also General Instruction G. 3115 to change its accounting method. Notice If an organization substitutes Form LM-2 or 96-30, 1996-1 C.B. 378, provides relief from Time for filing may differ LM-3 for any of the Form 990, or Form 990-EZ, filing Form 3115 to section 501(c) The deadline for filing Form 990, or Form Parts or line items mentioned above, it must organizations that change their methods of 990-EZ, with the IRS differs from the time for attach a reconciliation sheet to show the accounting to comply with the provisions of filing reports with some states. relationship between the amounts on the DOL SFAS 116, Accounting for Contributions forms and the amounts on Form 990 or Form

Public inspection Received and Contributions Made. In SFAS 990-EZ. This is particularly true of the 116, the Financial Accounting Standards Board The Form 990, or Form 990-EZ, information relationship of disbursements shown on the revised certain generally accepted accounting made available for public inspection by the IRS DOL forms and the total expenses on line 17, principles relating to contributions received and may differ from that made available by the Part I, of both Form 990 and Form 990-EZ. The contributions awarded by not-for-profit states. See the discussion for the required organization must make this reconciliation organizations. schedule of contributors (Schedule B (Form because the cash disbursements section of the

990, 990-EZ, or 990-PF), in General DOL forms includes nonexpense items. If the A not-for-profit organization that changes

Instruction L. organization substitutes Form LM-2, be sure to its method of accounting for Federal income

complete its separate schedule of expenses. tax purposes to conform to the method

provided in SFAS 116 should report any

F. Other Forms as Partial adjustment required by section 481(a) on line

Substitutes for Form 990 or Form G. Accounting Periods and 20 of Form 990, or Form 990-EZ, as a net

Methods asset adjustment made during the year the 990-EZ

Note: change is made. The adjustment should be For further information, see Pub. 538. Except as provided below, the Internal identified as the effect of changing to the Revenue Service will not accept any form as a Accounting periods method provided in SFAS 116. The beginning substitute for one or more parts of Form 990 or of year statement of financial position (balance Calendar year. Use the 2002 Form 990, or Form 990-EZ. sheet) should not be restated to reflect any Form 990-EZ, to report on the 2002 calendar prior period adjustments. Labor organizations (section 501(c)(5)) year accounting period. A calendar year

accounting period begins on January 1 and State reporting. If the organization prepares A labor organization that files Form LM-2, ends on December 31. Form 990, or Form 990-EZ, for state reporting Labor Organization Annual Report, or the purposes, it may file an identical return with the shorter Form LM-3, Labor Organization Annual Fiscal year. If the organization has

Report, with the U.S. Department of Labor established a fiscal year accounting period, IRS even though the return does not agree

with the books of account, unless the way one (DOL) can attach a copy of the completed DOL use the 2002 Form 990, or Form 990-EZ, to or more items are reported on the state return form to Form 990, or Form 990-EZ, to provide report on the organization’s fiscal year that conflicts with the instructions for preparing some of the information required by Form 990 began in 2002 and ended 12 months later. A Form 990, or Form 990-EZ, for filing with the or Form 990-EZ. This substitution is not fiscal year accounting period should normally IRS. permitted if the organization files a DOL report coincide with the natural operating cycle of the

that consolidates its financial statements with organization. Be certain to indicate in the Example 1. The organization maintains its

those of one or more separate subsidiary heading of Form 990, or Form 990-EZ, the books on the cash receipts and disbursements

organizations. date the organization’s fiscal year began in method of accounting but prepares a state

General Instructions for Form 990 and Form 990-EZ -5-
return based on the accrual method. It could all the information called for by the form and not apply (sections 6652(c)(1)(C) and (D)). Any

use that return for reporting to the IRS. instructions, not just the new or corrected person who willfully fails to comply with the

information. Check the “Amended return” box public inspection requirements for annual Example 2. A state reporting requirement in the heading of the return. returns or exemption applications will be requires the organization to report certain subject to an additional penalty of $5,000 revenue, expense, or balance sheet items The organization may file an amended (section 6685). differently from the way it normally accounts for return at any time to change or add to the them on its books. A Form 990, or Form information reported on a previously filed return There are also penalties—fines and 990-EZ, prepared for that state is acceptable for the same period. It must make the imprisonment—for willfully not filing returns for the IRS reporting purposes if the state amended return available for public inspection and for filing fraudulent returns and statements reporting requirement does not conflict with the for 3 years from the date of filing or 3 years with the IRS (sections 7203, 7206, and 7207). Form 990, or Form 990-EZ, instructions. from the date the original return was due, States may impose additional penalties for An organization should keep a whichever is later. failure to meet their separate filing reconciliation of any differences between its The organization must also send a copy of requirements. See also the discussion of the books of account and the Form 990, or Form the information or amended return to any state Trust Fund Recovery Penalty, General 990-EZ, that is filed. with which it filed a copy of Form 990, or Form Instruction D.

Most states that accept Form 990, or Form 990-EZ, originally to meet that state’s filing

990-EZ, in place of their own forms require that requirement.

all amounts be reported based on the accrual Use Form 4506-A to obtain a copy of a L. Contributions

method of accounting. For further information, previously filed return. You can obtain blank see General Instruction E. Schedule B (Form 990, 990-EZ, or forms for prior years by calling

1-800-TAX-FORM (1-800-829-3676). 990-PF), Schedule of Contributors

Schedule B (Form 990, 990-EZ, or 990-PF) is H. When and Where To File If the return is a final return, see the specific a required attachment for the Form 990, File Form 990, or Form 990-EZ, by the 15th instructions for Form 990 for line 79, Part VI. 990-EZ, or 990-PF, and is used to report on For Form 990-EZ, see the specific instructions day of the 5th month after the organization’s tax-deductible and non-tax-deductible for line 36, Part V. accounting period ends. If the regular due date contributions. See the instructions for Schedule falls on a Saturday, Sunday, or legal holiday, B for the public inspection rules applicable to file on the next business day. A business day is K. Penalties that form. See also the Specific Instructions for any day that is not a Saturday, Sunday, or both Form 990 and Form 990-EZ, under legal holiday. Against the organization Completing the Heading . . .where the

If the organization is liquidated, dissolved, instructions are keyed to items in the heading Under section 6652(c)(1)(A), a penalty of $20 a or terminated, file the return by the 15th day of of Form 990 or Form 990-EZ. day, not to exceed the smaller of $10,000 or the 5th month after the liquidation, dissolution, 5% of the gross receipts of the organization for or termination. the year, may be charged when a return is filed Solicitations of nondeductible

If the return is not filed by the due date late, unless the organization can show that the contributions

(including any extension granted), attach a Any fundraising solicitation by or on behalf of late filing was due to reasonable cause.

statement giving the reasons for not filing on any section 501(c) or 527 organization that is Organizations with annual gross receipts

time. exceeding $1 million are subject to a penalty of not eligible to receive contributions deductible $100 for each day the failure continues (with a as charitable contributions for Federal income Send the return to the Internal Revenue maximum penalty with respect to any one tax purposes must include an explicit Service Center, Ogden, UT 84201-0027. return of $50,000). The penalty begins on the statement that contributions or gifts to it are not Private delivery services. You can use due date for filing the Form 990 or Form deductible as charitable contributions. The

certain private delivery services designated by 990-EZ. statement must be in an easily recognizable the IRS to meet the “timely mailing as timely format whether the solicitation is made in The penalty may also be charged if the filing/paying” rule for tax returns and payments. written or printed form, by television or radio, or organization files an incomplete return. To The most recent list of designated private by telephone. This provision applies only to avoid having to supply missing information delivery services was published by the IRS in those organizations whose annual gross later, be sure to complete all applicable line September 2002. The list includes only the receipts are normally more than $100,000 items; answer “Yes,” “No,” or “N/A” (not following: (section 6113 and Notice 88-120, 1988-2 C.B. applicable) to each question on the return; • Airborne Express (Airborne): Overnight Air 454). make an entry (including a zero when Express Service, Next Afternoon Service, appropriate) on all total lines; and enter “None” Second Day Service. Failure to disclose that contributions are not or “N/A” if an entire part does not apply. • DHL Worldwide Express (DHL): DHL “Same deductible could result in a penalty of $1,000 Day” Service, DHL USA Overnight. Also, this penalty may be imposed if the for each day on which a failure occurs. The • Federal Express (FedEx): FedEx Priority organization’s return contains incorrect maximum penalty for failures by any Overnight, FedEx Standard Overnight, FedEx information. For example, an organization that organization, during any calendar year, shall 2Day, FedEx International Priority, FedEx reports contributions net of related fundraising not exceed $10,000. In cases where the failure

International First. expenses may be subject to this penalty. to make the disclosure is due to intentional • United Parcel Service (UPS): UPS Next Day disregard of the law, more severe penalties Use of a paid preparer does not relieve the Air, UPS Next Day Air Saver, UPS 2nd Day apply. No penalty will be imposed if the failure organization of its responsibility to file a Air, UPS 2nd Day Air A.M., UPS Worldwide is due to reasonable cause (section 6710). complete and accurate return. Express Plus, and UPS Worldwide Express.

The private delivery service can tell you Against responsible person(s) Keeping fundraising records for how to get written proof of the mailing date. If the organization does not file a complete tax-deductible contributions

return or does not furnish correct information, Section 501(c) organizations that are eligible to

I. Extension of Time To File the IRS will send the organization a letter that receive tax-deductible contributions under

Use Form 8868 to request an automatic includes a fixed time to fulfill these section 170(c) of the Code must keep sample requirements. After that period expires, the copies of their fundraising materials, such as: 3-month extension of time to file. Use Form

8868 also to apply for an additional (not person failing to comply will be charged a • Dues statements, penalty of $10 a day. The maximum penalty on automatic) 3-month extension if the original 3 • Fundraising solicitations, all persons for failures with respect to any one months was not enough time. To obtain this • Tickets, return shall not exceed $5,000 (section additional extension of time to file, you must • Receipts, or 6652(c)(1)(B)(ii)). show reasonable cause for the additional time • Other evidence of payments received in requested. See the instructions for Form 8868. Any person who does not comply with the connection with fundraising activities.

public inspection requirements, as discussed in

General Instruction M, will be assessed a IF . . . THEN . . . J. Amended Return/Final Return penalty of $20 for each day that inspection was

To change the organization’s return for any not permitted, up to a maximum of $10,000 for Organizations advertise They must keep year, file a new return including any required each return. The penalties for failure to comply their fundraising events, samples of the attachments. Use the revision of Form 990, or with the public inspection requirements for advertising copy. Form 990-EZ, applicable to the year being applications is the same as those for annual

amended. The amended return must provide returns, except that the $10,000 limitation does

-6- General Instructions for Form 990 and Form 990-EZ
Donor’s contribution preferred membership benefits package for Organizations use radio They must keep $300. E’s written acknowledgment satisfies the or television to make samples of: Less: Organization’s money, and goods substantiation requirement if it describes the their solicitations, (a) Scripts, or services given in return poster, gives a good faith estimate of its fair (b) Transcripts, or Equals: Donor’s deductible charitable market value ($20), and disregards the (c) Other evidence of remaining membership benefits. on-air solicitations. contribution. 2. If F received only the basic membership

package for its $300 payment, E’s Organizations use They must keep Exception: No disclosure statement required acknowledgment need state only that no goods outside fundraisers, samples of the if the organization gave: or services were provided. fundraising materials 3. G Theater Group performs four plays. 1. Goods or services of insubstantial value used by the outside Each play is performed twice. Nonmembers 2. Certain membership benefits, or fundraisers. can purchase a ticket for $15. For a $60 3. An intangible religious benefit. membership fee, however, members are For each fundraising event, organizations See Regulations sections 1.170A-1, offered free admission to any of the must keep records to show that portion of any 1.170A-13, and 1.6115-1. performances. H makes a payment of $350 payment received from patrons that is not Certain goods or services disregarded for and accepts this membership benefit. Because deductible; that is, the retail value of the goods substantiation and disclosure purposes. of the limited number of performances, the or services received by the patrons. See Goods or services with insubstantial membership privilege cannot be exercised “Disclosure statement for quid pro quo value. Generally, under section 170, the frequently. Therefore, G’s acknowledgment contributions” below. deductible amount of a contribution is must describe the free admission benefit and

determined by taking into account the fair estimate its value in good faith. Noncash contributions

market value, not the cost to the charity, of any See the instructions for Schedule B (Form 990, Certain goods or services provided to benefits received in return. However, the cost 990-EZ, or 990-PF). donor’s employees or partners. Certain to the charity may be used in determining goods or services provided to employees or If the organization received a partially whether the benefits are insubstantial. See partners of donors may be disregarded for completed Form 8283 from a donor, complete below. substantiation and disclosure purposes. it and return it so the donor can get a charitable Cost basis. If a taxpayer makes a Describe such goods or services. A good faith contribution deduction. Keep a copy for your payment of $39.50 or more to a charity and estimate is not needed. records. See also the reference to Form 8282 receives only token items in return, the items in General Instruction D. have insubstantial value if they: Example. Museum J offers a basic

• Bear the charity’s name or logo, and membership benefits package for $40. It Substantiation and disclosure • Have an aggregate cost to the charity of includes free admission and a 10% gift shop requirements for charitable $7.90 or less (“low-cost article” amount of discount. Corporation K makes a $50,000 contributions section 513(h)(2)). payment to J and in return, J offers K’s

Acknowledgment to substantiate charitable employees free admission, a tee shirt with J’s Fair market value basis. If a taxpayer contributions. An organization (donee) logo that costs J $4.50, and a 25% gift shop makes a payment to a charitable organization discount. Because the free admission is should be aware that a donor of a charitable in a fundraising campaign and receives contribution of $250 or more cannot take an offered in both benefit packages and the value benefits with a fair market value of not more

income tax deduction unless the donor obtains of the tee shirts is insubstantial, K’s written than 2% of the amount of the payment, or $79, the organization’s acknowledgment to acknowledgment need not value the free whichever is less, the benefits received have admission benefit or the tee shirts. However, substantiate the charitable contribution. insubstantial value in determining the because the 25% gift shop discount to K’s The organization’s acknowledgment must: taxpayer’s contribution. employees differs from the 10% discount

1. Be written The dollar amounts given above are offered in the basic membership benefits

2. Be contemporaneous applicable to tax year 2002. They are adjusted package, K’s written acknowledgment must 3. State the amount of any cash it received annually for inflation. describe the 25% discount, but need not

4. State: When a donee organization provides a estimate its value.

a. Whether the organization gave the donor only with goods or services having Definitions.

donor any intangible religious benefits (no insubstantial value under Rev. Proc. 2001-59,

2001-52 I.R.B. 623 (2001-2 C.B. 623) (and any Substantiation. It is the responsibility of valuation needed) successor documents), the contemporaneous the donor: b. Whether or not the organization gave written acknowledgment may indicate that no • To value a donation, and the donor any goods or services in return for goods or services were provided in exchange • To obtain an organization’s written the donor’s contribution (a quid pro quo acknowledgment substantiating the donation. contribution) for the donor’s payment. There is no prescribed format for the 5. Describe goods or services the Certain membership benefits. Other organization’s written acknowledgment of a organization: goods or services that are disregarded for donation. Letters, postcards, or a. Received (no valuation needed) substantiation and disclosure purposes are computer-generated forms may be acceptable. b. Gave (good faith estimate needed). annual membership benefits offered to a The acknowledgment must, however, provide taxpayer in exchange for a payment of $75 or sufficient information to substantiate the Exception. An organization need not make a less per year that consist of: amount of the deductible contribution. good faith estimate of a quid pro quo 1. Any rights or privileges that the taxpayer contribution if the goods or services given to a The organization may either provide: can exercise frequently during the membership donor are: • Separate statements for each contribution of period such as: • Insubstantial in value $250 or more, or a. Free or discounted admission to the • Certain membership benefits for $75 or less • Furnish periodic statements substantiating organization’s facilities or events, per year contributions of $250 or more. b. Free or discounted parking, • Certain goods or services given to the Separate contributions of less than $250 2. Admission to events that are: donor’s employees or partners. are not subject to the requirements of section a. Open only to members, and are, per 170(f)(8), regardless of whether the sum of the Disclosure statement for quid pro quo person, contributions made by a taxpayer to a donee contributions. If the organization receives a b. Within the “low-cost article” limitation. organization during a tax year equals $250 or quid pro quo contribution of more than $75, an more. organization must provide a disclosure Examples.

statement to the donor. The organization’s Contemporaneous. A written 1. E offers a basic membership benefits disclosure statement must: acknowledgment is contemporaneous if the package for $75. The package gives members donor obtains it on or before the earlier of: 1. Be written the right to buy tickets in advance, free parking, • The date the donor files the original return 2. Estimate in good faith the organization’s and a gift shop discount of 10%. E’s $150 for the tax year in which the contribution was goods or services given in return for donor’s preferred membership benefits package also made; or contribution includes a $20 poster. Both the basic and • The due date (including extensions) for filing 3. Describe, but need not value, certain preferred membership packages are for a the donor’s original return for that year. goods or services given donor’s employees or 12-month period and include about 50

partners productions. E offers F, a patron of the arts, the Substantiation of payroll contributions.

4. Inform donor that a deductible charitable preferred membership benefits in return for a An organization may substantiate a payroll

contribution deduction is limited as follows: payment of $150 or more. F accepts the contribution by:

General Instructions for Form 990 and Form 990-EZ -7-
• A pay stub, Form W-2, or other document consideration for a taxpayer’s payment if, at organization. Section 527 political

showing a contribution to a donee organization; the time the taxpayer makes the payment to organizations required to file Form 990, or

and the donee organization, the taxpayer receives, Form 990-EZ, must, in general, make their

• A pledge card or other document from the or expects to receive, goods or services in Form 8871, 8872, 990, or 990-EZ available for

donee organization stating that organization exchange for that payment. public inspection in the same manner as

provides no goods or services for any payroll annual information returns of section 501(c) Goods or services a donee organization contributions. organizations and 4947(a)(1) nonexempt provides in consideration for a payment by a The amount withheld from each payment of charitable trusts are made available. See the taxpayer include goods or services provided in wages to a taxpayer is treated as a separate public inspection rules for “tax-exempt a year other than the year in which the donor contribution. makes the payment to the donee organization. organizations” below. Generally, Form 8871

Substantiation of payments to a college and Form 8872 are available for inspection and Intangible religious benefits. Intangible or university for the right to purchase printing from the Internet. The Web site religious benefits must be provided by address for both of these forms is http:// tickets to athletic events. The right to organizations organized exclusively for purchase tickets for an athletic event is valued eforms.irs.gov. religious purposes. at 20% of the payment. Note that a section 527 political Example. When a taxpayer pays $312.50 Examples include: organization (and an organization filing Form for the right to purchase tickets for an athletic • Admission to a religious ceremony, and 990-PF) must disclose their Schedule B (Form event, the right is valued at $62.50. The • De minimis tangible benefits, such as wine, 990, 990-EZ, or 990-PF), Schedule of remaining $250 is a charitable contribution that provided in connection with a religious Contributors. See the instructions for Schedule

the taxpayer must substantiate. ceremony. B.

Substantiation of matched payments. If

a taxpayer’s payment to a donee organization The penalties discussed in General Distributing organization as donee. An Instruction K also apply to section 527 political is matched by another payor, and the taxpayer organization described in section 170(c), or an receives goods or services in consideration for organizations (Rev. Rul. 2000-49, 2000-44 organization described as a Principal I.R.B. 430). its payment and some or all of the matching Combined Fund Organization for purposes of payment, those goods or services will be the Combined Federal Campaign, that receives Public inspection and distribution of treated as provided in consideration for the a payment made as a contribution is treated as applications for tax exemption and annual taxpayer’s payment and not in consideration a donee organization even if the organization information returns of tax-exempt for the matching payment. distributes the amount received to one or more organizations. Under Regulations sections Disclosure statement. An organization organizations described in section 170(c). 301.6104(d)-1 through 301.6104(d)-3, a must provide a written disclosure statement to Penalties. A charity that knowingly tax-exempt organization must: donors who make a payment, described as a provides a false substantiation • Make its application for recognition of “quid pro quo contribution,” in excess of $75 acknowledgment to a donor may be subject to exemption and its annual information returns (section 6115). This requirement is separate the penalties under section 6701 for aiding and available for public inspection without charge at from the written substantiation abetting an understatement of tax liability. its principal, regional and district offices during acknowledgment a donor needs for Charities that fail to provide the required regular business hours. deductibility purposes. While, in certain disclosure statement for a quid pro quo • Make each annual information return circumstances, an organization may be able to contribution of more than $75 will incur a available for a period of 3 years beginning on meet both requirements with the same written penalty of $10 per contribution, not to exceed the date the return is required to be filed document, an organization must be careful to $5,000 per fundraising event or mailing. The (determined with regard to any extension of satisfy the section 6115 written disclosure charity may avoid the penalty if it can show that time for filing) or is actually filed, whichever is statement requirement in a timely manner later. the failure was due to reasonable cause because of the penalties involved. (section 6714). • Provide a copy without charge, other than a Quid pro quo contribution. A ‘‘quid pro reasonable fee for reproduction and actual quo contribution’’ is a payment that is given postage costs, of all or any part of any both as a contribution and as a payment for M. Public Inspection of Returns, application or return required to be made goods or services provided by the donee etc. available for public inspection to any individual organization. who makes a request for such copy in person

Example. A donor gives a charity $100 in Through the IRS or in writing (except as provided in Regulations

consideration for a concert ticket valued at $40 Use Form 4506-A to request: sections 301.6104(d)-2 and -3).

(a quid pro quo contribution). In this example, • A copy of an exempt or political Definitions. $60 would be deductible. Because the donor’s organization’s return, report, notice, or payment exceeds $75, the organization must Tax-exempt organization is any exemption application; furnish a disclosure statement even though the organization that is described in section 501(c) • An inspection of a return, report, notice, or taxpayer’s deductible amount does not exceed or (d) and is exempt from taxation under exemption application at an IRS office. $75. Separate payments of $75 or less made section 501(a). The term tax-exempt The IRS can provide copies of exempt at different times of the year for separate organization also includes any section organization returns on a compact disk fundraising events will not be aggregated for 4947(a)(1) nonexempt charitable trust or (CD-ROM). Requesters can order the complete purposes of the $75 threshold. nonexempt private foundation that is subject to set (all Forms 990 and 990-EZ or all Forms Good faith estimate. An organization the reporting requirements of section 6033. 990-PF filed for a year) or a partial set by state may use any reasonable method in making a or by month. For more information on the cost good faith estimate of the value of goods or Application for tax exemption includes and how to order CD-ROMs, call the toll-free services provided by an organization in (except as described later): Phone-Help number (1-877-829-5500) or write consideration for a taxpayer’s payment to that • Any prescribed application form (such as to the IRS in Cincinnati, OH at the address in organization. A good faith estimate of the value Form 1023 or Form 1024), General Instruction A. of goods or services that are not generally • All documents and statements the IRS

available in a commercial transaction may be The IRS may not disclose portions of an requires an applicant to file with the form,

determined by reference to the fair market exemption application relating to any trade • Any statement or other supporting document

value of similar or comparable goods or submitted in support of the application, and secrets, etc. See the instructions for Schedule

B (Form 990, 990-EZ, or 990-PF) that discuss services. Goods or services may be similar or • Any letter or other document issued by the the disclosure of that schedule. comparable even though they do not have the IRS concerning the application.

unique qualities of the goods or services that You can only request Forms 990 or 990-EZ “Application for tax exemption” does not

are being valued. for section 527 organizations for tax years include:

Goods or services. beginning after June 30, 2000. Goods or services • Any application for tax exemption filed

mean: You may inspect a return, report, notice, or before July 15, 1987, unless the organization

• Cash, exemption application at an IRS office free of filing the application had a copy of the

• Property, charge. You may also obtain a copy of these application on July 15, 1987;

• Services, items through the organization as discussed in • In the case of a tax-exempt organization • Benefits, and the following section. other than a private foundation, the name and • Privileges. address of any contributor to the organization; Through the organization or

In consideration for. A donee Public inspection and distribution of • Any material that is not available for public

organization provides goods or services in returns and reports for a political inspection under section 6104.

-8- General Instructions for Form 990 and Form 990-EZ
Annual information return includes: during those periods when office hours are Requires payment in Is required to provide • An exact copy of the Form 990, or Form limited, or not available, as though it were an advance, the copies within 30 990-EZ filed by a tax-exempt organization as organization without a permanent office. days from the date it required by section 6033. receives payment. • Any amended return the organization files

with the IRS after the date the original return is Special rules relating to copies. Receives a request or Is deemed to have filed.

Time and place for providing copies in payment by mail, received it 7 days after The copy must include all information response to requests made in-person. A the date of the furnished to the IRS on Form 990, or Form tax-exempt organization must: postmark, absent 990-EZ, as well as all schedules, attachments • Provide copies of required documents under evidence to the contrary. and supporting documents, except for the

name and address of any contributor to the section 6104(d) in response to a request made

organization. See the instructions for Schedule in person at its principal, regional and district Receives a request Is deemed to have

B (Form 990, 990-EZ, or 990-PF). offices during regular business hours. transmitted by electronic received it the day the • Provide such copies to a requester on the mail or facsimile, request is transmitted Annual returns more than 3 years old. day the request is made, except for unusual successfully. An annual information return does not include circumstances (see below). any return after the expiration of 3 years from

the date the return is required to be filed Receives a written Must notify the Unusual circumstances. In the case of (including any extension of time that has been request without payment requester of the an in-person request, where unusual granted for filing such return) or is actually or with an insufficient prepayment policy and circumstances exist so that fulfilling the request filed, whichever is later. payment, when payment the amount due within 7 on the same business day causes an in advance is required, days from the date of If an organization files an amended return, unreasonable burden to the tax-exempt the request’s receipt. however, the amended return must be made organization, the organization must provide the

available for a period of 3 years beginning on copies no later than the next business day Receives consent from May provide a copy of the date it is filed with the IRS. following the day that the unusual an individual making a the requested document Local or subordinate organizations. For circumstances cease to exist, or the 5th request, exclusively by electronic business day after the date of the request, rules relating to annual information returns of mail (the material is whichever occurs first. local or subordinate organizations, see provided on the date the Regulations section 301.6104(d)-1(f)(2). Unusual circumstances include: organization

Regional or district offices. A regional or successfully transmits • Requests received that exceed the district office is any office of a tax-exempt the electronic mail). organization’s daily capacity to make copies; organization, other than its principal office, that • Requests received shortly before the end of has paid employees, whether part-time or regular business hours that require an Request for a copy of parts of a full-time, whose aggregate number of paid extensive amount of copying; or document. A tax-exempt organization must hours a week are normally at least 120. • Requests received on a day when the fulfill a request for a copy of the organization’s A site is not considered a regional or district organization’s managerial staff capable of entire application for tax exemption or annual office, however, if— fulfilling the request is conducting special information return or any specific part or

The only services provided at the site duties, such as student registration or schedule of its application or return. A request attending an off-site meeting or convention, further exempt purposes (such as day care, for a copy of less than the entire application or

health care or scientific or medical research); rather than its regular administrative duties. less than the entire return must specifically

and identify the requested part or schedule. Agents for providing copies. For rules The site does not serve as an office for Fees for copies. A tax-exempt relating to use of agents to provide copies, see management staff, other than managers who Regulations sections 301.6104(d)-1(d)(1) and organization may charge a reasonable fee for are involved solely in managing the exempt providing copies. (2). function activities at the site. Before the organization provides the Request for copies in writing. A documents, it may require that the individual Special rules relating to public inspection. tax-exempt organization must honor a written requesting copies of the documents pay the

Permissible conditions on public request for a copy of documents (or the fee. If the organization has provided an requested part) required under section 6104(d) inspection. A tax-exempt organization— individual making a request with notice of the if the request: fee, and the individual does not pay the fee

• May have an employee present in the room 1. Is addressed to, and delivered by mail, within 30 days, or if the individual pays the fee

during an inspection. electronic mail, facsimile, or a private delivery by check and the check does not clear upon

• Must allow the individual conducting the service, as defined in section 7502(f), to a deposit, the organization may disregard the

inspection to take notes freely during the principal, regional, or district office of the request.

inspection. organization; and Form of payment—(A) Request made in • Must allow the individual to photocopy the 2. Sets forth the address to which the copy person. If a tax-exempt organization charges a document at no charge, if the individual of the documents should be sent. fee for copying, it must accept payment by provides photocopying equipment at the place cash and money order for requests made in of inspection. Time and manner of fulfilling written person. The organization may accept other Organizations that do not maintain requests. forms of payment, such as credit cards and permanent offices. A tax-exempt personal checks. organization with no permanent office— IF the tax-exempt THEN the organization (B) Request made in writing. If a organization tax-exempt organization charges a fee for • Must make its application for tax exemption copying and postage, it must accept payment and its annual information returns available for Receives a written Must mail the copy of by certified check, money order, and either inspection at a reasonable location of its request for a copy, the requested personal check or credit card for requests choice. documents (or the made in writing. The organization may accept • Must permit public inspection within a requested parts) within other forms of payment. reasonable amount of time after receiving a 30 days from the date it request for inspection (normally not more than Avoidance of unexpected fees. Where a receives the request. 2 weeks) and at a reasonable time of day. tax-exempt organization does not require

• May mail, within 2 weeks of receiving the prepayment and a requester does not enclose Mails the copy of the Is deemed to have request, a copy of its application for tax payment with a request, an organization must requested document, provided the copy on the exemption and annual information returns to receive consent from a requester before postmark date or private the requester instead of allowing an inspection. providing copies for which the fee charged for delivery mark (if sent by • May charge the requester for copying and copying and postage exceeds $20. certified or registered actual postage costs only if the requester mail, the date of Documents to be provided by regional consents to the charge. and district offices. Except as otherwise registration or the date However, an organization that has a provided, a regional or district office of a of the postmark on the permanent office, but has no office hours, or tax-exempt organization must satisfy the same sender’s receipt). very limited hours during certain times of the rules as the principal office with respect to

year, must make its documents available allowing public inspection and providing copies

General Instructions for Form 990 and Form 990-EZ -9-
of its application for tax exemption and annual organization. The central or parent notice to the individual immediately. If the

information returns. organization must fulfill such requests in the request is made in writing, the notice must be

time and manner specified in the paragraphs, provided within 7 days of receiving the request. A regional or district office is not required, Special rules relating to public inspection however, to make its annual information return Tax-exempt organization subject to and Special rules relating to copies above. available for inspection or to provide copies harassment campaign. If the Director EO

until 30 days after the date the return is Failure to comply. If an organization fails Examination (or designee) determines that the

required to be filed (including any extension of to comply with the requirements specified in organization is being harassed, a tax-exempt

time that is granted for filing such return) or is this paragraph, the penalty provisions of organization is not required to comply with any

actually filed, whichever is later. sections 6652(c)(1)(C), 6652(c)(1)(D), and request for copies that it reasonably believes is

Documents to be provided by local and 6685 apply. part of a harassment campaign.

subordinate organizations. Making applications and returns widely Whether a group of requests constitutes a

Applications for tax exemption. Except as available. A tax-exempt organization is not harassment campaign depends on the relevant

otherwise provided, a tax-exempt organization required to comply with a request for a copy of facts and circumstances such as:

that did not file its own application for tax its application for tax exemption or an annual A sudden increase in requests; an exemption (because it is a local or subordinate information return if the organization has made extraordinary number of requests by form organization covered by a group exemption the requested document widely available (see letters or similarly worded correspondence; letter) must, upon request, make available for below). hostile requests; evidence showing bad faith or public inspection, or provide copies of, the An organization that makes its application deterrence of the organization’s exempt application submitted to the IRS by the central for tax exemption and/or annual information purpose; prior provision of the requested or parent organization to obtain the group return widely available must nevertheless documents to the purported harassing group; exemption letter and those documents which make the document available for public and a demonstration that the organization were submitted by the central or parent inspection as required under Regulations routinely provides copies of its documents organization to include the local or subordinate section 301.6104(d)-1(a). upon request. organization in the group exemption letter. A tax-exempt organization makes its A tax-exempt organization may disregard However, if the central or parent application for tax exemption and/or an annual any request for copies of all or part of any organization submits to the IRS a list or information return widely available if the document beyond the first two received within directory of local or subordinate organizations organization complies with the Internet posting any 30-day-period or the first four received covered by the group exemption letter, the requirements and the notice requirements within any 1-year-period from the same local or subordinate organization is required to given below. individual or the same address, regardless of provide only the application for the group Internet posting. A tax-exempt whether the Director EO Examination (or exemption ruling and the pages of the list or organization can make its application for tax designee) has determined that the organization directory that specifically refer to it. The local or exemption and/or an annual information return is subject to a harassment campaign. subordinate organization must permit public

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

made in person, within a reasonable amount of World Wide Web page that the tax-exempt determination that it is the subject of a

time (normally not more than 2 weeks) after organization establishes and maintains or by harassment campaign and that compliance

receiving a request made in person for public having the document posted, as part of a with requests that are part of the campaign

inspection or copies and at a reasonable time database of similar documents of other would not be in the public interest by

of day. See Regulations section tax-exempt organizations, on a World Wide submitting a signed application to the Director

301.6104(d)-1(f) for further information. Web page established and maintained by EO Examination (or designee) for the area another entity. The document will be where the organization’s principal office is Annual information returns. A local or considered widely available only if— located. subordinate organization that does not file its (A) The World Wide Web page through own annual information return (because it is In addition, the organization may suspend which it is available clearly informs readers that affiliated with a central or parent organization compliance with any request it reasonably the document is available and provides believes to be part of the harassment that files a group return) must, upon request, instructions for downloading it; make available for public inspection, or provide campaign until it receives a response to its

copies of, the group returns filed by the central (B) The document is posted in a format application for a harassment campaign

or parent organization. that, when accessed, downloaded, viewed and determination. However, if the Director EO

printed in hard copy, exactly reproduces the Examination (or designee) determines that the However, if the group return includes image of the application for tax exemption or organization did not have a reasonable basis separate schedules with respect to each local annual information return as it was originally for requesting a determination that it was or subordinate organization included in the filed with the IRS, except for any information subject to a harassment campaign or group return, the local or subordinate permitted by statute to be withheld from public reasonable belief that a request was part of the organization receiving the request may omit disclosure; and campaign, the officer, director, trustee, any schedules relating only to other employee, or other responsible individual of the organizations included in the group return. (C) Any individual with access to the organization remains liable for any penalties for Internet can access, download, view and print The local or subordinate organization must not providing the copies in a timely fashion. the document without special computer permit public inspection, or comply with a See Regulations section 301.6104(d)-3. hardware or software required for that format request for copies made in person, within a (other than software that is readily available to reasonable amount of time (normally not more

than 2 weeks) after receiving a request made members of the public without payment of any N. Disclosures Regarding Certain fee) and without payment of a fee to the in person for public inspection or copies and at tax-exempt organization or to another entity Information and Services

a reasonable time of day. maintaining the World Wide Web page. Furnished

In a case where the requester seeks Reliability and accuracy. In order for the A section 501(c) organization that offers to sell inspection, the local or subordinate document to be widely available through an or solicits money for specific information or a organization may mail a copy of the applicable Internet posting, the entity maintaining the routine service for any individual that could be documents to the requester within the same World Wide Web page must have procedures obtained by such individual from a Federal time period instead of allowing an inspection. for ensuring the reliability and accuracy of the government agency free or for a nominal In such a case, the organization may charge document that it posts on the page and must charge must disclose that fact conspicuously the requester for copying and actual postage take reasonable precautions to prevent when making such offer or solicitation. Any costs only if the requester consents to the alteration, destruction or accidental loss of the organization that intentionally disregards this charge. document when posted on its page. In the requirement will be subject to a penalty for

If the local or subordinate organization event that a posted document is altered, each day on which the offers or solicitations

receives a written request for a copy of its destroyed or lost, the entity must correct or are made. The penalty imposed for a particular

annual information return, it must fulfill the replace the document. day is the greater of $1,000 or 50% of the total

request by providing a copy of the group return cost of the offers and solicitations made on that Notice requirement. If a tax-exempt in the time and manner specified in the day that lacked the required disclosure (section organization has made its application for tax paragraph above, Request for copies in 6711). exemption and/or an annual information return writing. widely available, it must notify any individual O. Disclosures Regarding Certain The requester has the option of requesting requesting a copy where the documents are

from the central or parent organization, at its available (including the address on the World Transactions and Relationships

principal office, inspection or copies of group Wide Web, if applicable). If the request is made In their annual returns on Schedule A (Form

returns filed by the central or parent in person, the organization must provide such 990 or 990-EZ), section 501(c)(3)

-10- General Instructions for Form 990 and Form 990-EZ
organizations must disclose information transaction. Persons who hold certain powers, What about persons who staff affiliated

regarding their direct or indirect transfers to, responsibilities, or interests are among those organizations? In the case of multiple

and other direct or indirect relationships with, who are in a position to exercise substantial affiliated organizations, the determination of

other section 501(c) organizations (except influence over the affairs of the organization. whether a person has substantial influence is

other section 501(c)(3) organizations) or This would include, for example, voting made separately for each applicable

section 527 political organizations (section members of the governing body, and persons tax-exempt organization. A person may be a

6033(b)(9)). This provision helps prevent the holding the power of: disqualified person with respect to transactions

diversion or expenditure of a section 501(c)(3) with more than one organization. • Presidents, chief executive officers, or chief

organization’s funds for purposes not intended operating officers. Excess Benefit Transaction by section 501(c)(3). All section 501(c)(3) • Treasurers and chief financial officers.

organizations must maintain records regarding A disqualified person also includes certain An excess benefit transaction is a transaction

all such transfers, transactions, and family members of a disqualified person, and in which an economic benefit is provided by an

applicable tax-exempt organization, directly or relationships. See also General Instruction K 35% controlled entities of a disqualified person.

regarding penalties. indirectly, to or for the use of any disqualified

Who is not a disqualified person? The rules person, and the value of the economic benefit

also clarify which persons are not considered provided by the organization exceeds the value

P. Intermediate Sanction to be in a position to exercise substantial of the consideration (including the performance

Regulations—Excess Benefit influence over the affairs of an organization. of services) received for providing such benefit.

They include: Transactions To determine whether an excess benefit • An employee who receives benefits that total transaction has occurred, all consideration and Final Regulations that interpret the benefit less than the ‘‘highly compensated’’ amount benefits exchanged between a disqualified limitation provisions of section 4958 were ($90,000 in 2002) and who does not hold the person and the applicable tax-exempt issued in January of 2002. These rules are executive or voting powers just mentioned; is organization, and all entities it controls, are important to the exempt organization not a family member of a disqualified person; taken into account. For purposes of community as a whole, and for ensuring and is not a substantial contributor; determining the value of economic benefits, the compliance in this area. The new rules provide • Tax-exempt organizations described in value of property, including the right to use a roadmap by which an organization may steer section 501(c)(3); and property, is the fair market value. Fair market clear of situations that may give rise to • Section 501(c)(4) organizations with respect value is the price at which property, or the right inurement. to transactions engaged in with other section to use property, would change hands between Under section 4958, any disqualified 501(c)(4) organizations. a willing buyer and a willing seller, neither

person who benefits from an excess benefit Who else may be considered a disqualified being under any compulsion to buy, sell or transaction with an applicable tax-exempt transfer property or the right to use property, person? Other persons not described above organization is liable for a 25% tax on the and both having reasonable knowledge of can also be considered disqualified persons, excess benefit. The disqualified person is also relevant facts. depending on all the relevant facts and liable for a 200% tax on the excess benefit if circumstances. An excess benefit can occur in an the excess benefit is not corrected by a certain exchange of compensation and other date. Also, organization managers who Facts and circumstances tending to compensatory benefits in return for the participate in an excess benefit transaction show substantial influence: services of a disqualified person, or in an knowingly, willfully, and without reasonable • The person founded the organization. exchange of property between a disqualified cause are liable for a 10% tax on the excess • The person is a substantial contributor to the person and the exempt organization. benefit, not to exceed $10,000 for all organization under the section 507(d)(2)(A) participating managers on each transaction. When does an excess benefit transaction definition, only taking into account contributions usually occur? An excess benefit transaction Applicable Tax-Exempt Organization to the organization for the past 5 years. occurs on the date the disqualified person • The person’s compensation is primarily These rules only apply to certain ‘‘applicable’’ receives the economic benefit from the based on revenues derived from activities of section 501(c)(3) and 501(c)(4) organizations. organization for Federal income tax purposes. the organization that the person controls. An applicable tax-exempt organization is a However, when a single contractual • The person has or shares authority to control section 501(c)(3) or a section 501(c)(4) arrangement provides for a series of or determine a substantial portion of the organization that is tax-exempt under section compensation payments or other payments to organization’s capital expenditures, operating 501(a), or was such an organization at any a disqualified person during the disqualified budget, or compensation for employees. time during a 5-year period ending on the day person’s tax year, any excess benefit • The person manages a discrete segment or of the excess benefit transaction. transaction with respect to these payments activity of the organization that represents a occurs on the last day of the taxpayer’s tax An applicable tax-exempt organization does substantial portion of the activities, assets, year. not include: income, or expenses of the organization, as • A private foundation as defined in section compared to the organization as a whole. In the case of the transfer of property

509(a). • The person owns a controlling interest subject to a substantial risk of forfeiture, or in

• A governmental entity that is exempt from (measured by either vote or value) in a the case of rights to future compensation or

(or not subject to) taxation without regard to corporation, partnership, or trust that is a property, the transaction occurs on the date the

section 501(a) or relieved from filing an annual disqualified person. property, or the rights to future compensation

return under Regulations section • The person is a nonstock organization or property, is not subject to a substantial risk

1.6033-2(g)(6). controlled directly or indirectly by one or more of forfeiture. Where the disqualified person

• Certain foreign organizations. disqualified persons. elects to include an amount in gross income in

An organization is not treated as a section the tax year of transfer under section 83(b), the

501(c)(3) or 501(c)(4) organization for any Facts and circumstances tending to excess benefit transaction occurs on the date

show no substantial influence: period covered by a final determination that the the disqualified person receives the economic

organization was not tax-exempt under section • The person is an independent contractor benefit for Federal income tax purposes.

501(a), but only if the determination was not whose sole relationship to the organization is Section 4958 applies only to based on private inurement or one or more providing professional advice (without having post-September 1995 transactions. Section

excess benefit transactions. decision-making authority) with respect to 4958 applies to excess benefit transactions transactions from which the independent Disqualified Person occurring on or after September 14, 1995. contractor will not economically benefit. Section 4958 does not apply to any transaction The vast majority of section 501(c)(3) or • The person has taken a vow of poverty. occurring pursuant to a written contract that 501(c)(4) organization employees and • Any preferential treatment the person was binding on September 13, 1995, and at all contractors will not be affected by these rules. receives based on the size of the person’s times thereafter before the transaction occurs. Only the few influential persons within these donation is also offered to others making What is reasonable compensation? organizations are covered by these rules when comparable widely solicited donations. Reasonable compensation is the valuation they receive benefits, such as compensation, • The direct supervisor of the person is not a standard that is used to determine if there is an fringe benefits, or contract payments. The IRS disqualified person. excess benefit in the exchange of a disqualified calls this class of covered individuals • The person does not participate in any

management decisions affecting the person’s services for compensation. ‘‘disqualified persons.’’ A disqualified person,

regarding any transaction, is any person who Reasonable compensation is the value that organization as a whole or a discrete segment

was in a position to exercise substantial would ordinarily be paid for like services by like of the organization that represents a

influence over the affairs of the applicable enterprises under like circumstances. This is substantial portion of the activities, assets,

tax-exempt organization at any time during a the section 162 standard that will apply in income, or expenses of the organization, as

5-year period ending on the date of the determining the reasonableness of compared to the organization as a whole.

General Instructions for Form 990 and Form 990-EZ -11-
compensation. The fact that a bonus or • Benefits to members or donors: An includes data on compensation paid by three

revenue-sharing arrangement is subject to a economic benefit provided to a member of an comparable organizations in the same or

cap is a relevant factor in determining the organization due to the payment of a similar communities for similar services.

reasonableness of compensation. membership fee, or to a donor as a result of a 3. The authorized body adequately

deductible contribution, if a significant number documents the basis for its determination For determining the reasonableness of of nondisqualified persons make similar concurrently with making that determination. compensation, all items of compensation payments or contributions and are offered a The documentation should include: provided by an applicable tax-exempt

organization in exchange for the performance similar economic benefit. a. The terms of the approved transaction

of services are taken into account in • Benefits to a charitable beneficiary: An and the date approved;

determining the value of compensation (except economic benefit provided to a person solely b. The members of the authorized body

for certain economic benefits that are as a member of a charitable class that the who were present during debate on the

disregarded, as discussed in What benefits applicable tax-exempt organization intends to transaction that was approved and those who

are disregarded? benefit as part of the accomplishment of its voted on it; below). Items of

compensation include: exempt purpose. c. The comparability data obtained and • Benefits to a governmental unit: A transfer • All forms of cash and noncash relied upon by the authorized body and how

compensation, including salary, fees, bonuses, of an economic benefit to or for the use of a the data was obtained;

severance payments, and deferred and governmental unit, as defined in section d. Any actions by a member of the

noncash compensation; 170(c)(1), if exclusively for public purposes. authorized body having a conflict of interest;

• The payment of liability insurance premiums Is there an exception for initial contracts? and

for, or the payment or reimbursement by the Section 4958 does not apply to any ‘‘fixed e. Documentation of the basis for the

organization of taxes or certain expenses payment’’ made to a person pursuant to an determination before the later of the next

under section 4958, unless excludable from initial contract. This is a very important meeting of the authorized body or 60 days after

income as a de minimis fringe benefit under exception, since it would potentially apply, for the final actions of the authorized body are

section 132(a)(4). (A similar rule applies in the example, to all initial contracts with new, taken, and approval of records as reasonable,

private foundation area.) Inclusion in previously unrelated officers and contractors. accurate and complete within a reasonable

compensation for purposes of determining time thereafter. An ‘‘initial contract’’ is a binding written reasonableness under section 4958 does not contract between an applicable tax-exempt Special rebuttable presumption rule for control inclusion in income for income tax organization and a person who was not a nonfixed payments. As a general rule, in the purposes. disqualified person immediately prior to case of a nonfixed payment, no rebuttable • All other compensatory benefits, whether or entering into the contract. presumption arises until the exact amount of not included in gross income for income tax A ‘‘fixed payment’’ is an amount of cash or the payment is determined, or a fixed formula purposes. other property specified in the contract, or for calculating the payment is specified, and • Taxable and nontaxable fringe benefits, determined by a fixed formula that is specified the three requirements creating the except fringe benefits described in section 132. in the contract, which is to be paid or presumption have been satisfied. However, if • Foregone interest on loans. transferred in exchange for the provision of the authorized body approves an employment Written intent required to treat benefits specified services or property. contract with a disqualified person that includes as compensation. An economic benefit is not a nonfixed payment (e.g., discretionary bonus) A ‘‘fixed formula’’ may, in general, treated as consideration for the performance of with a specified cap on the amount, the incorporate an amount that depends upon services unless the organization providing the authorized body may establish a rebuttable future specified events or contingencies, as benefit clearly indicates its intent to treat the presumption as to the nonfixed payment when long as no one has discretion when calculating benefit as compensation when the benefit is the employment contract is entered into by, in the amount of a payment or deciding whether paid. effect, assuming that the maximum amount to make a payment (such as a bonus). An applicable tax-exempt organization (or payable under the contract will be paid, and Treatment as new contract. A binding entity that it controls) is treated as clearly satisfying the requirements giving rise to the written contract providing that it may be indicating its intent to provide an economic rebuttable presumption for that maximum terminated or cancelled by the applicable benefit as compensation for services only if the amount. tax-exempt organization without the other organization provides written substantiation An IRS challenge to the presumption of party’s consent (except as a result of that is contemporaneous with the transfer of reasonableness. The Internal Revenue substantial non-performance) and without the economic benefits under consideration. Service may refute the presumption of Ways to provide contemporaneous written substantial penalty, is treated as a new reasonableness only if it develops sufficient contract, as of the earliest date that any substantiation of its intent to provide an contrary evidence to rebut the probative value termination or cancellation would be effective. economic benefit as compensation include: of the comparability data relied upon by the Also, a contract in which there is a ‘‘material • The organization produces a signed written authorized body. This provision gives change,’’ which includes an extension or employment contract; taxpayers added protection if they faithfully find renewal of the contract (except for an • The organization reports the benefit as and use contemporaneous persuasive extension or renewal resulting from the compensation on an original Form W-2, Form comparability data when they provide the exercise of an option by the disqualified 1099 or Form 990, or on an amended form benefits. person), or a more than incidental change to filed prior to the start of an IRS examination; or the amount payable under the contract, is Organizations that do not establish a • The disqualified person reports the benefit treated as a new contract as of the effective presumption of reasonableness. An as income on the person’s original Form 1040 date of the material change. Treatment as a organization may still comply with section 4958 or on an amended form filed prior to the start of new contract may cause the contract to fall even if it did not establish a presumption of an IRS examination. outside the initial contract exception, and it reasonableness. In some cases, an Exception. To the extent the economic thus would be tested under the fair market organization may find it impossible or benefit is excluded from the disqualified value standards of section 4958. impracticable to fully implement each step of person’s gross income for income tax the rebuttable presumption process described purposes, the applicable tax-exempt Rebuttable Presumption of above. In such cases, the organization should organization is not required to indicate its intent Reasonableness try to implement as many steps as possible, in to provide an economic benefit as Payments under a compensation arrangement whole or in part, in order to substantiate the compensation for services. (For example: are presumed to be reasonable and the reasonableness of benefits as timely and as employer provided health benefits, and transfer of property (or right to use property) is well as possible. If an organization does not contributions to qualified plans under section presumed to be at fair market value, if the satisfy the requirements of the rebuttable 401(a).) following three conditions are met. presumption of reasonableness, a facts and

What benefits are disregarded? The 1. The transaction is approved by an circumstances approach will be followed, using

following economic benefits are disregarded for authorized body of the organization (or an established rules for determining

purposes of section 4958: entity it controls) which is composed of reasonableness of compensation and benefit

• Nontaxable fringe benefits: An economic individuals who do not have a conflict of deductions in a manner similar to the

benefit that is excluded from income under interest concerning the transaction. established procedures for section 162

section 132. 2. Prior to making its determination, the business expenses.

• Benefits to volunteer: An economic benefit authorized body obtained and relied upon Section 4958 Taxes provided to a volunteer for the organization if appropriate data as to comparability. There is a

the benefit is provided to the general public in special safe harbor for small organizations. If Tax on disqualified persons. An excise tax

exchange for a membership fee or contribution the organization has gross receipts of less than equal to 25% of the excess benefit is imposed

of $75 or less per year. $1 million, appropriate comparability data on each excess benefit transaction between an

-12- General Instructions for Form 990 and Form 990-EZ
applicable tax-exempt organization and a benefit to the extent possible, and by taking or individual. The legislative history indicates

disqualified person. The disqualified person any additional measures necessary to place that in most instances, the imposition of this

who benefited from the transaction is liable for the organization in a financial position not intermediate sanction will be in lieu of

the tax. If the 25% tax is imposed and the worse than that in which it would be if the revocation. IRS has indicated that the following

excess benefit transaction is not corrected disqualified person were dealing under the four factors will be considered in determining

within the taxable period, an additional excise highest fiduciary standards. The organization is whether to revoke an applicable tax-exempt

tax equal to 200% of the excess benefit is not required to rescind the underlying organization’s exemption status where an

imposed. agreement; however, the parties may need to excess benefit transaction has occurred:

If a disqualified person makes a payment of modify an ongoing contract with respect to • Whether the organization has been involved

future payments. in repeated excess benefit transactions; less than the full correction amount, the 200% • The size and scope of the excess benefit tax is imposed only on the unpaid portion of the A disqualified person corrects an excess transaction; correction amount. If more than one benefit by making a payment in cash or cash disqualified person received an excess benefit • Whether, after concluding that it has been equivalents equal to the correction amount to from an excess benefit transaction, all such party to an excess benefit transaction, the the applicable tax-exempt organization. The disqualified persons are jointly and severally organization has implemented safeguards to correction amount equals the excess benefit liable for the taxes. prevent future recurrences; and plus the interest on the excess benefit; the • Whether there was compliance with other To avoid the imposition of the 200% tax, a interest rate may be no lower than the applicable laws. disqualified person must correct the excess applicable Federal rate. There is an anti-abuse

benefit transaction during the taxable period. rule to prevent the disqualified person from

The taxable period begins on the date the effectively transferring property other than cash Q. Erroneous Backup Withholding transaction occurs and ends on the earlier of or cash equivalents. Recipients of dividend or interest payments the date the statutory notice of deficiency is Property. With the agreement of the generally must certify their correct taxpayer issued or the section 4958 taxes are assessed. applicable tax-exempt organization, a identification number to the bank or other payer This 200% tax may be abated if the excess disqualified person may make a payment by on Form W-9. If the payer does not get this benefit transaction subsequently is corrected returning the specific property previously information, it must withhold part of the during a 90-day correction period. transferred in the excess benefit transaction. payments as “backup withholding.” If the Tax on organization managers. An excise The return of the property is considered a organization was subject to erroneous backup tax equal to 10% of the excess benefit may be payment of cash (or cash equivalent) equal to withholding because the payer did not realize it imposed on the participation of an organization the lesser of: was an exempt organization and not subject to manager in an excess benefit transaction • The fair market value of the property on the this withholding, it can claim credit on Form between an applicable tax-exempt organization date the property is returned to the 990-T for the amount withheld. See the

and a disqualified person. This tax, which may organization, or Instructions for Form 990-T. Claims for refund not exceed $10,000 with respect to any single • The fair market value of the property on the must be filed within 3 years after the date the transaction, is only imposed if the 25% tax is date the excess benefit transaction occurred. original return was due; 3 years after the date imposed on the disqualified person, the Insufficient payment. If the payment the organization filed it; or 2 years after the organization manager knowingly participated in resulting from the return of the property is less date the tax was paid, whichever is later. the transaction, and the manager’s than the correction amount, the disqualified participation was willful and not due to person must make an additional cash payment reasonable cause. There is also joint and to the organization equal to the difference. R. Group Return

several liability for this tax. A person may be If a parent organization wants to file a group Excess payment. If the payment resulting liable for both the tax paid by the disqualified return for two or more of its subsidiaries, it from the return of the property exceeds the person and this organization manager tax in must use Form 990. The parent organization correction amount described above, the appropriate circumstances. cannot use a Form 990-EZ for the group organization may make a cash payment to the An organization manager is any officer, return. disqualified person equal to the difference. director, or trustee of an applicable tax-exempt A central, parent, or “like” organization can organization, or any individual having powers Churches and Section 4958 file a group return on Form 990 for two or more or responsibilities similar to officers, directors, The regulations make it clear that the IRS will local organizations that are: or trustees of the organization, regardless of apply the procedures of section 7611 when 1. Affiliated with the central organization at title. An organization manager is not initiating and conducting any inquiry or the time its annual accounting period ends, considered to have participated in an excess examination into whether an excess benefit 2. Subject to the central organization’s benefit transaction where the manager has transaction has occurred between a church general supervision or control, opposed the transaction in a manner and a disqualified person. 3. Exempt from tax under a group consistent with the fulfillment of the manager’s Revenue Sharing Transactions exemption letter that is still in effect, and responsibilities to the organization. For 4. Have the same accounting period as the example, a director who votes against giving Proposed intermediate sanction regulations central organization. an excess benefit would ordinarily not be were issued in 1998. The proposed regulations

subject to this tax. had special provisions covering ‘‘any If the parent organization is required to file

A person participates in a transaction transaction in which the amount of any a return for itself, it must file a separate return

knowingly if the person has actual knowledge economic benefit provided to or for the use of a and may not be included in the group return.

of sufficient facts so that, based solely upon disqualified person is determined in whole or in See General Instruction B for a list of

such facts, the transaction would be an excess part by the revenues of one or more activities organizations not required to file.

benefit transaction. Knowing does not mean of the organization. . .’’ —so-called Every year, each local organization must having reason to know. The organization ‘‘revenue-sharing transactions.’’ Rather than authorize the central organization in writing to manager ordinarily will not be considered setting forth additional rules on include it in the group return and must declare, knowing if, after full disclosure of the factual revenue-sharing transactions, the final under penalty of perjury, that the authorization situation to an appropriate professional, the regulations reserve this section. Consequently, and the information it submits to be included in

organization manager relied on the until the Service issues new regulations for this the group return are true and complete. professional’s reasoned written opinion on reserved section on revenue-sharing If the central organization prepares a group matters within the professional’s expertise or if transactions, these transactions will be return for its affiliated organizations, check the the manager relied on the fact that the evaluated under the general rules (i.e., the fair

market value standards) that apply to all “Yes” box in item H(a), in the heading of Form requirements for the rebuttable presumption of 990, and indicate the number of organizations reasonableness have been satisfied. contractual arrangements between applicable for which the group return is filed in item H(b). Participation by an organization manager is tax-exempt organizations and their disqualified

willful if it is voluntary, conscious and persons. For item H(c), check “Yes,” to indicate that

intentional. An organization manager’s the group return includes all affiliated Revocation of Exemption and Section participation is due to reasonable cause if the organizations covered by the group ruling. If

manager has exercised responsibility on behalf 4958 you answer “No” to H(c), attach a list showing

of the organization with ordinary business care Section 4958 does not affect the substantive the name, address, and employer identification

and prudence. standards for tax exemption under section number (EIN) of each affiliated organization

501(c)(3) or section 501(c)(4), including the included in the group return. If either box in Correcting an Excess Benefit requirements that the organization be H(a) or H(d) is checked “Yes,” enter the Transaction organized and operated exclusively for exempt four-digit group exemption number (GEN). Do

 A disqualified person corrects an excess purposes, and that no part of its net earnings not confuse the four-digit GEN number to be

benefit transaction by undoing the excess inure to the benefit of any private shareholder reported for item I with the nine-digit EIN

General Instructions for Form 990 and Form 990-EZ -13-
number reported in item D of the form’s Transfers Associated With Personal Benefit corporation or association. For a trust, the

heading. Contracts, whether or not they: authorized trustee(s) must sign.

The central organization should send the 1. Received any funds, directly or Generally, anyone who is paid to annual information required to maintain a indirectly, to pay premiums on a “personal prepare the return must sign it in the group exemption letter to the: benefit contract.” Paid Preparer’s Use Only area.

TIP

2. Paid any premiums, directly or indirectly,

on a personal benefit contract. The paid preparer must: Internal Revenue Service • Sign the return, by hand, in the space Ogden Service Center Note: Filers of Form 990-EZ must make this provided for the preparer’s signature (signature Ogden, UT 84201-0027. declaration in a statement attached to their stamps and labels are not acceptable). An affiliated organization covered by a form. • Enter the preparer’s social security number group ruling may file a separate return instead (SSN), preparer tax identification number If premiums were paid on a personal benefit of being included in the group return. In such (PTIN), or employer identification number contract, the organization must report these case, check the “Yes” box in item H(d), in the (EIN), only if the Form 990, or Form 990-EZ, is payments on Form 8870 and pay an excise heading of Form 990, and enter the GEN for a section 4947(a)(1) nonexempt charitable tax, equal to premiums paid, with Form 4720. number in item I. trust that is not filing Form 1041. Section 170(f)(10)(F)(iii) requires a Parts IV-A and IV-B of Form 990 do not • Complete the required preparer information. charitable organization to report annually its have to be completed on group returns. • Give a copy of the return to the organization. premium payments on a personal benefit Leave the paid preparer’s space blank if the contract with respect to a transferor and to return was prepared by a regular employee of S. Organizations in Foreign identify the beneficiaries of those contracts. A the filing organization. Countries and U.S. Possessions transferor of funds to a charitable organization Recordkeeping. The organization’s records receives no charitable contribution deduction if Refer to General Instruction B for the filing should be kept for as long as they may be the organization, directly or indirectly pays, or exemption for foreign organizations with needed for the administration of any provision has previously paid, any premium on a $25,000 or less in gross receipts from U.S. of the Internal Revenue Code. Usually, records personal benefit contract with respect to the sources. that support an item of income, deduction, or transferor, or there is an understanding or Report amounts in U.S. dollars and state credit must be kept for 3 years from the date expectation that any person will directly or what conversion rate you use. Combine the return is due or filed, whichever is later. indirectly pay any premium on a personal amounts from within and outside the United Keep records that verify the organization’s benefit contract with respect to the transferor States and report the total for each item. All basis in property for as long as they are (section 170(f)(10)(A)). needed to figure the basis of the original or information must be written in English. A “personal benefit contract,” generally, is replacement property. any life insurance, annuity, or endowment The organization should also keep copies T. Public Interest Law Firms contract that benefits, directly or indirectly, the of any returns it has filed. They help in transferor, a member of the transferor’s family, A public interest law firm exempt under section preparing future returns and in making or any other person designated by the 501(c)(3) or 501(c)(4) must attach a statement computations when filing an amended return. transferor (other than an organization that lists the cases in litigation, or that have described in section 170(c)). A charitable Rounding off to whole dollars. You may been litigated during the year. For each case, organization is an organization described in show money items as whole-dollar amounts. describe the matter in dispute and explain how section 170(c). Drop any amount less than 50 cents and the litigation will benefit the public generally. increase any amount from 50 through 99 cents Also attach a report of all fees sought and Section 170(f)(10)(F)(i) imposes on a to the next higher dollar. recovered in each case. See Rev. Proc. 92-59, charitable organization an excise tax equal to

the premiums paid by the organization on any Completing all lines. Unless the organization 1992-2 C.B. 411.

personal benefit contract, if the payment of is permitted to use certain DOL forms or Form

premiums is in connection with a transfer for 5500 as partial substitutes for Form 990, or

U. Political Organizations which a deduction is not allowed under section Form 990-EZ (see General Instruction F), do

A political organization subject to section 527 is 170(f)(10)(A). For purposes of this excise tax, not leave any applicable lines blank or attach

a party, committee, association, fund, or other section 170(f)(10)(F)(ii) provides that premium any other forms or schedules instead of

organization (whether or not incorporated) payments made by any other person, pursuant entering the required information on the

appropriate line on Form 990 or Form 990-EZ. organized and operated primarily for the to an understanding or expectation described

purpose of directly or indirectly accepting in section 170(f)(10)(A), are treated as made Assembling Form 990 or Form 990-EZ.

contributions or making expenditures, or both, by the charitable organization. Before filing the Form 990, or Form 990-EZ,

for an exempt function. For more information on the reporting assemble the package of forms and

attachments in the following order: The exempt function of a political requirements of section 170(f)(10), see Notice

2000-24, 2000-17 I.R.B. 952 (2000-1 C.B. 952) • Form 990 or Form 990-EZ. organization is influencing or attempting to

and Announcement 2000-82, 2000-42 I.R.B. • Schedule A (Form 990 or 990-EZ). The influence the selection, nomination, election or

385 (2000-2 C.B. 385). requirement to attach Schedule A (Form 990 or appointment of an individual to a federal, state, 990-EZ) applies to all section 501(c)(3) or local public office or office in a political organizations and all section 4947(a)(1) organization. A political organization must be W. Requirements for a Properly nonexempt charitable trusts that file Form 990 organized for the primary purpose of carrying Completed Form 990 or Form or Form 990-EZ. on exempt function activities. • Schedule B (Form 990, 990-EZ, or 990-PF). A political organization does not need to be 990-EZ • Attachments to Form 990 or Form 990-EZ. formally chartered or established as a Public inspection. In general, all information • Attachments to Schedule A (Form 990 or corporation, trust, or association. A separate the organization reports on or with its Form 990-EZ). bank account in which political campaign funds 990, or Form 990-EZ, including attachments, • Attachments to Schedule B (Form 990, are deposited and disbursed only for political will be available for public inspection. Note, 990-EZ, or 990-PF). campaign expenses can qualify as a political however, the public inspection rules for the Attachments. Use the schedules on the organization. Schedule B (Form 990, 990-EZ, or 990-PF), a official form unless you need more space. If Public Law 107-276, enacted on November required attachment for organizations that file you use attachments, they must: 2, 2002, revised certain reporting and Form 990 or Form 990-EZ. Make sure the 1. Show the form number and tax year; disclosure rules for political organizations. See forms and attachments are clear enough to General Instructions A and B for more 2. Show the organization’s name and EIN; photocopy legibly. 3. Identify clearly the Part or line(s) to information. Signature. To make the return complete, an which the attachments relate; officer of the organization authorized to sign it 4. Include the information required by the

V. Information Regarding Transfers must sign in the space provided. For a form and use the same format as the form; corporation, or association, this officer may be Associated With Personal Benefit 5. Follow the same Part and line sequence the president, vice president, treasurer, as the form; and Contracts assistant treasurer, chief accounting officer, or 6. Be on the same size paper as the form. Filers of Form 990 that engaged in activities other corporate, or association officer, such as

involving personal benefit contracts must a tax officer. A receiver, trustee, or assignee

declare in Part X, Information Regarding must sign any return he or she files for a

-14- General Instructions for Form 990 and Form 990-EZ
 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, 11,

or 12 of Part IV-A of the Support Schedule.

File Form 990 instead of Form 990-EZ if your organization’s gross receipts are more than $100,000 and total assets at the

end of the year are more than $250,000.

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 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.

General Instructions for Form 990 and Form 990-EZ -15-
IF the tax-exempt THEN attach these • A section 501(c)(9) voluntary employees’

Specific Instructions for organization is . . . documents. . . beneficiary association must use its own EIN

and not the EIN of its sponsor. Form 990 A corporation An amendment to the • A disregarded entity, as described in

articles of incorporation Regulations sections 301.7701-1 through Note: See also the General Instructions that

with proof of filing with 301.7701-3, however, may use the EIN of the apply to both the Form 990 and Form 990-EZ. the state of organization in Part IX if the disregarded entity

does not have its own EIN. See General Contents Page incorporation. Instruction A and the instructions for Part IX.

Completing the Heading of Form 990 . . . . . 16

A trust An amendment to the Item E—Telephone number Part I—Revenue, Expenses, and Changes in trust agreement signed Enter a telephone number of the organization Net Assets . . . . . . . . . . . . . . . . . . . . . . 17 by the trustee. that members of the public and government

Part II—Statement of Functional Expenses 21 regulators may use during normal business

An association An amendment to the hours to obtain information about the Part III—Statement of Program Service articles of association, organization’s finances and activities. If the Accomplishments . . . . . . . . . . . . . . . . . . 24 constitution, bylaws, or organization does not have a telephone

Part IV—Balance Sheets . . . . . . . . . . . . . 24 other organizing number, enter the telephone number of an

document, along with organization official who can provide such Parts IV-A and IV-B—Reconciliation signatures of at least information. Statements . . . . . . . . . . . . . . . . . . . . . . 26 two officers/members. Item F—Accounting method Part V—List of Officers, Directors, Trustees,

and Key Employees An organization must indicate the method of . . . . . . . . . . . . . . . . 26 Final return and amended return. accounting used in preparing this return. See Part VI—Other Information . . . . . . . . . . . . 27 Organizations should file final returns when General Instruction G. they cease to be section 501(a) organizations Part VII—Analysis of Income-Producing or section 527 organizations; for example, Item G—Web site

Activities . . . . . . . . . . . . . . . . . . . . . . . . 31 when they cease operations and dissolve. See Show the organization’s Web site address if a

Part VIII—Relationship of Activities to the the instructions for line 79 that discuss Web site is available. Otherwise, write ‘‘N/A’’

Accomplishment of Exempt Purposes . . . . . 32 liquidations, dissolutions, terminations, or (not applicable). Consider adding your e-mail substantial contractions. address to your Web site. Part IX—Information Regarding Taxable If the return is an amended return, check Subsidiaries and Disregarded Entities . . . . . 32 Item H—Group return, etc. the box. There are amended return

Part X—Information Regarding Transfers See General Instruction R. Attach the required requirements when filing with a state. See

Associated With Personal Benefit Contracts 33 General Instructions E and J. list, if applicable, or you will be contacted later

for the missing information. Exclusion Codes . . . . . . . . . . . . . . . . . . . 34 Application pending. If the organization’s

application for exemption is pending, check this Item I—Group exemption number

box and complete the return. Enter the four-digit group exemption number

Completing the Heading of Form (GEN) if you checked a “Yes” box in item H(a) Item C—Name and address and H(d). Contact the central/parent 990 If we mailed the organization a Form 990 organization if you are unsure of the GEN The instructions that follow are keyed to items Package with a preaddressed mailing label, assigned. in the heading for Form 990. please attach the label in the name and

address space on the return. Using the label Item J—Type of organization Item A—Accounting period helps us avoid errors in processing the return. If the organization is exempt under section Use the 2002 Form 990 to report on a calendar If any information on the label is wrong, draw a 501(c), check the applicable box and insert, year accounting period beginning January 1, line through that part and correct it. within the parentheses, the number that 2002, and ending December 31, 2002. If the organization operates under a name identifies the type of section 501(c) Use the 2002 Form 990 also to report on an different from its legal name, give the legal organization the filer is. See the chart in accounting period other than a calendar year name of the organization but identify its General Instruction C. The term “section

(either a fiscal year that began in 2002 or a alternate name, after the legal name, by writing 501(c)(3)” includes organizations exempt under short period (less than 12 months) that began ‘‘aka’’ (also known as) and the alternate name sections 501(e), (f), (k), and (n). Check the in 2002). You must show the month and day in of the organization. However, if the applicable box if the organization is a section 2002 that your fiscal year began, or the short organization has changed its name, follow the 527 political organization. See General period began. You must also show the day, instructions for Name change in Item B— Instruction U.

month, and year your fiscal year, or short Checkboxes. If the organization is a section 4947(a)(1) period, ended. See General Instruction G. Include the suite, room, or other unit nonexempt charitable trust, check the

Item B—Checkboxes number after the street address. If the Post applicable box. Note also the discussion

Office does not deliver mail to the street regarding Schedule A (Form 990 or 990-EZ) Address change, name change, and initial address and the organization has a P.O. box, and Form 1041 in General Instruction D and return. Check the appropriate box if the show the box number instead of the street the instructions to line 92 of Form 990. organization changed its address since it filed address. its previous return, or if this is the first time the Item K—Gross receipts of $25,000 or For foreign addresses, enter information in organization is filing either a Form 990 or a less

Form 990-EZ. the following order: City, province or state, and Check this box if the organization’s gross the name of the country. Follow the foreign If the tax-exempt organization has changed receipts are normally not more than $25,000. country’s practice in placing the postal code in its name, attach the following documents: However, see General Instruction A, if you the address. Please do not abbreviate the received a Form 990 Package, and note the country name. discussion on gross receipts in General If a change in address occurs after the Instruction B. return is filed, use Form 8822 to notify the IRS

of the new address. Item L—Calculating gross receipts

The organization’s gross receipts are the total Item D—Employer identification amount it received from all sources during its number annual accounting period, without subtracting The organization should have only one Federal any costs or expenses. See the gross receipts employer identification number (EIN). If it has discussion in General Instruction B.

more than one and has not been advised

which to use, notify the Internal Revenue

Service Center, Ogden, UT 84201-0027. State

what numbers the organization has, the name

and address to which each number was

assigned, and the address of its principal

office. The IRS will advise the organization

which number to use.

-16- Specific Instructions for Form 990
Item M—Schedule B (Form 990, Example. An organization announces that Then . . . 990-EZ, or 990-PF) anyone who contributes at least $40 to the The organization should Whether or not the organization enters any organization can choose to receive a book check the box in item M to worth $16 retail value. A person who gives amount on line 1d of Form 990, the certify that it is not $40, and who chooses the book, is really organization must either check the box in item required to attach purchasing the book for $16 and also making a M or attach Schedule B (Form 990, 990-EZ, or Schedule B (Form 990, contribution of $24. The contribution of $24, 990-PF). Failure to either check the box in item 990-EZ, or 990-PF). which is the difference between the buyer’s M or file Schedule B (Form 990, 990-EZ, or payment and the $16 retail value of the book, 990-PF) will result in a determination that the Otherwise . . . would be reported on line 1a and again on line return is incomplete. See the instructions for Complete and attach 9a (within the parentheses). The revenue Schedule B (Form 990, 990-EZ, or 990-PF), Schedule B (Form 990, received ($16 retail value of the book) would Schedule of Contributors, for more information. 990-EZ, or 990-PF). be reported in the right-hand column on line Note: “Contributor” includes individuals, * Total a contributor’s gifts of $1,000 or more to 9a. fiduciaries, partnerships, corporations, determine if a contributor gave $5,000 or more. Do

associations, trusts, and exempt organizations. not include smaller gifts. If a contributor gives more than $40, that

person would be making a larger contribution,

Guidelines for meeting the schedule of the difference between the book’s retail value

contributor requirements of Schedule B of $16 and the amount actually given. Rev.

(Form 990, 990-EZ, or 990-PF) Part I—Revenue, Expenses, and Rul. 67-246, 1967-2 C.B. 104, explains this

Changes in Net Assets or Fund principle in detail. See also the line 9

If . . . Balances instructions and Pub. 526.

A section 501(c)(3) All organizations filing Form 990 with the IRS Report the expenses that relate directly to organization that met the or any state must complete Part I. Some states the sale of the book on line 9b. Report the

1/3 support test of the that accept Form 990 in place of their own expenses of raising contributions (shown within Section 501(c)(3) regulations under forms require additional information. the parentheses on line 9a and again on line org., meeting the 509(a)(1)/170(b)(1)(A) did 1a) in Fundraising, column (D), Part II, and on 1/3 support test Line 1—In General not receive a contribution line 15 of Part I. of 170(b)(1)(A) of the greater of $5,000 or Note: At the time of any solicitation or

2% of the amount on line Contributions, gifts, grants, and payment, organizations that are eligible to

1d of Form 990, from any similar amounts received receive tax-deductible contributions should

one contributor,* • On lines 1a through 1c, report amounts advise patrons of the amount deductible for

received as voluntary contributions; that is, Federal tax purposes. See General Then . . . payments, or the part of any payment, for Instruction L. The organization should which the payer (donor) does not receive full check the box in item M to Contributions can arise from special retail value (fair market value) from the certify that it is not events when items of only nominal recipient (donee) organization. required to attach • Report gross amounts of contributions value are given or offered

Schedule B (Form 990, collected in the charity’s name by fundraisers. If an organization offers goods or services of

990-EZ, or 990-PF). • Report all expenses of raising contributions only nominal value through a special event or

in Fundraising, column (D), Part II, and on line distributes free, unordered, low-cost items to Otherwise . . . 15 of Part I. You must show on line 30 patrons, report the entire amount received for Complete and attach professional fundraising fees relating to the such benefits as a contribution on line 1a Schedule B (Form 990, gross amounts of contributions collected in the (direct public support). Report all related 990-EZ, or 990-PF). charity’s name by fundraisers. expenses in Fundraising, column (D), Part II.

• Report the value of noncash contributions at See General Instruction L for a definition of If . . . the time of the donation. For example, report benefits that have a nominal or insubstantial A section 501(c)(7), (8), or the gross value of a donated car at the time the value. (10) organization did not car was received as a donation. receive any contribution or Section 501(c)(3) organizations • For grants, see Grants that are equivalent bequest for use exclusively Correctly dividing gross receipts from special to contributions, on the following page. for religious, charitable, Reporting for line 1, in accordance with events into revenue and contributions is

Section 501(c)(7), scientific, literary, or SFAS 116, is acceptable for Form 990 especially important for a section 501(c)(3)

(8), or (10) educational purposes, or purposes, but not required by IRS. However, organization that claims public support as

organization the prevention of cruelty to described in section 509(a)(1)/170(b)(1)(A)(vi) see General Instruction E.

children or animals (and or section 509(a)(2). In the public support An organization that receives a grant to be did not receive any computations of these Code sections, the paid in future years should, according to SFAS revenue portion of gross receipts may be (a) noncharitable contributions 116, report the grant’s present value on line 1. excluded entirely, (b) treated as public support, of $5,000 or more as Accruals of present value increments to the or (c) if the revenue represents unrelated trade described below under unpaid grant should also be reported on line 1 or business income, treated as nonpublic general rule), in future years. support.

Then . . . Contributions can arise from special Section 501(c)(3) organizations must The organization should events when an excess payment is separate gross receipts from special events check the box in item M to received for items offered into revenue and contributions when preparing certify that it is not the Support Schedule in Part IV-A of Schedule Fundraising activities relate to soliciting and required to attach A (Form 990 or 990-EZ). receiving contributions. However, special Schedule B (Form 990, fundraising activities such as dinners, Section 501(c)(9), (17), and (18) 990-EZ, or 990-PF). door-to-door sales of merchandise, carnivals, organizations

Otherwise . . . and bingo games can produce both These organizations provide participants with Complete and attach contributions and revenue. life, sickness, accident, welfare, and

Schedule B (Form 990, If a buyer, at such a “special event,” pays unemployment insurance, pensions, or similar

990-EZ, or 990-PF). more for goods or services than their retail benefits, or a combination of these benefits.

value, report, as a contribution, both on line 1a When such an organization receives payments If . . . and on line 9a (within the parentheses), any from participants or their employers to provide All other Form The organization did not amount paid in excess of the retail value. This these benefits, report the payments on line 2 990 or Form show as part of line 1d of situation usually occurs when organizations as program service revenue, rather than on 990-EZ the Form 990, a seek public support through solicitation line 1 as contributions.

organizations contribution of $5,000 or programs that are in part special events or Donations of services are not (general rule) more from any one activities and are in part solicitations for

contributions. The primary purpose of such contributions contributor,* solicitations is to receive contributions and not In Part I, do not include the value of services

to sell the merchandise at its retail value even donated to the organization, or items such as

though this might produce a profit. the free use of materials, equipment, or

Specific Instructions for Form 990 -17-
facilities as contributions on line 1. See the • Amounts received from individuals, trusts, 2. Payments under government programs

instructions for Part III and for Part VI, line 82, corporations, estates, and foundations, or to nursing homes or homes for the aged in

for the optional reporting of such amounts in raised by an outside professional fundraiser. order to provide health care or other services

Parts III and VI. • Include contributions and grants from public to their residents.

Any unreimbursed expenses of officers, charities and other exempt organizations that 3. Payments to child placement or child

employees, or volunteers do not belong on the are neither fundraising organizations nor guidance organizations under government

Form 990 or Form 990-EZ. See the instructions affiliates of the filing organization. programs serving children in the community.

• See the instructions for line 1b. The general public gets the primary and direct for charitable contributions and employee

business expenses in Pub. 526 and Pub. 463, benefit from these payments and any benefit to Membership dues. Report on line 1a the governmental unit itself would be indirect respectively. membership dues and assessments that and insubstantial as compared to the public Grants that are equivalent to represent contributions from the public rather benefit. than payments for benefits received or contributions payments from affiliated organizations. See the Grants that encourage an organization Line 1d—Total contributions, etc. instructions for line 3. receiving the grant to carry on programs or Enter the total of amounts reported on lines 1a activities that further its exempt purposes are Government contributions (grants). Report through 1c. In the entry spaces in the grants that are equivalent to contributions. government grants on line 1c if they represent description column for line 1d, enter the Report them on line 1. The grantor may require contributions, or on line 2 (and on line 93(g) of separate totals for cash and noncash Part VII), if they represent fees for services. that the programs of the grant recipient contributions, gifts, grants, and similar amounts (grantee) conform to the grantor’s own policies See the instructions under the heading, Grants received. The total of the two amounts must

and may specify the use of the grant, such as that are equivalent to contributions, above equal the total on line 1d. use for the restoration of a historic building or a and the instructions for line 1c below. Report as cash contributions, etc., only voter registration drive. Commercial co-venture. Report amounts contributions, etc., received in the form of cash,

A grant is still equivalent to a contribution if contributed by a commercial co-venture on line checks, money orders, credit card charges, the grant recipient provides a service or makes 1a as a contribution received directly from the wire transfers, and other transfers and deposits a product that benefits the grantor incidentally. public. These are amounts received by an to a cash account of the organization. If your See examples in the line 1c instructions. organization (donee) for allowing an outside organization records pledges as contributions, However, a grant is a payment for services, organization (donor) to use the donee’s name etc., at the time the pledges are made (rather and not a contribution, if the grant requires the in a sales promotion campaign. In such a than when the pledges are collected), include grant recipient to provide that grantor with a campaign, the donor advertises that it will as cash contributions, etc., only those pledges specific service, facility, or product rather than contribute a certain dollar amount to the donee actually collected in cash during the year and to give a direct benefit primarily to the general organization for each unit of a particular pledges uncollected at the end of the year that public or to that part of the public served by the product or service sold or for each occurrence are reasonably expected to be paid in cash in a organization. In general, do not report as of a specific type. later year. Report all other contributions, etc., contributions any payments for a service, Contributions received through special as noncash contributions, etc., in the space facility, or product that primarily give some events. Report contributions received through provided. Be sure to include as a noncash economic or physical benefit to the payer special events on line 1a. See the preceding contribution donated items like cars and

(grantor). clothing valued as of the time of their receipt line 1 instructions and the instructions for line

Example. A public interest organization 9. even if these items were made available for

described in section 501(c)(4) makes a grant to sale immediately after they were received. See

another organization to conduct a nationwide Line 1b—Indirect public support General Instruction L and Schedule B (Form

survey to determine voter attitudes on issues of Enter the total contributions received indirectly 990, 990-EZ, or 990-PF), and lines 1 and 1a

interest to the grantor. The grantor plans to use for a discussion of noncash contributions. from the public through solicitation campaigns the results of the survey to plan its own conducted by federated fundraising agencies Noncash contributions do not include donated

program for the next 3 years. Under these and similar fundraising organizations (such as services, which may be reported on line 82 and

circumstances, since the survey serves the a United Way organization and certain in the narrative section of Part III.

grantor’s direct needs and benefits the grantor sectarian federations). These organizations Schedule of contributors. Attach Schedule B

more than incidentally, the grant to the normally conduct fundraising campaigns within (Form 990, 990-EZ, or 990-PF). See General organization making the survey is not a a single metropolitan area or some part of a Instruction L and the Specific Instructions for contribution. The grant recipient should not particular state and allocate part of the net Completing the Heading of Form 990, Item M. report the grant as a contribution but should proceeds to each participating organization on Lines 2 through 11 report it on line 2 as program service revenue. the basis of the donors’ individual designations

Treat research to develop products for the and other factors. Note: Do not enter any contributions on lines 2

payer’s use or benefit as directly serving the through 11. Enter all contributions on line 1. If Include on line 1b amounts contributed by payer. However, generally, basic research or you enter contributions on lines 2 through 11, other organizations closely associated with the studies in the physical or social sciences you will be unable to complete Part VII reporting organization. This includes should not be treated as serving the payer’s correctly. Line 105 (the sum of amounts contributions received from a parent needs. entered in columns (B), (D), and (E) for lines organization, subordinate, or another 93 through 103 of Part VII, Analysis of See Regulations section 1.509(a)-3(g) to organization with the same parent. National Income-Producing Activities) should match the determine if a grant is a contribution reportable organizations that share in fundraising total of amounts entered for correlating lines 2 on line 1, or a revenue item reportable campaigns conducted by their local affiliates through 11 of Part I. See the instructions for elsewhere on Form 990. should report the amount they receive on line Part VII.

Line 1a—Direct public support 1b.

Line 2—Program service revenue Contributions, gifts, grants, and similar Line 1c—Government contributions including Medicare, Medicaid amounts received. Enter the gross amounts (grants) payments and government fees and of contributions, gifts, grants, and bequests The general line 1 instructions, under the contracts that the organization received directly from the heading, Grants that are equivalent to public. Include: Enter the total of program service revenue contributions, above apply to this item in • All donated items. For example, (exempt function income) as reported in Part a car is particular. A grant or other payment from a donated to an organization. Immediately after VII, lines 93(a) through (g), columns (B), (D), governmental unit is treated as a contribution if the organization receives the donated car, the and (E). Program services are primarily those its primary purpose is to enable the donee to organization sells the car. The organization that form the basis of an organization’s provide a service to, or maintain a facility for, includes the value of the car as of the time of exemption from tax. For a more detailed the direct benefit of the public rather than to its receipt as a contribution on line 1a and description of program services, refer to the serve the direct and immediate needs of the

includes it in the total on line 1d as a noncash instructions for Part II, column (B), Program grantor even if the public pays part of the contribution. services. expense of providing the service or facility. • All funds or the entire value of noncash Examples. A hospital would report on this The following are examples of items raised by an outside fundraiser in a line all of its charges for medical services

charity’s name and not governmental grants and other payments that just the amount (whether to be paid directly by the patients or

actually received by the charity. For example, are treated as contributions: through Medicare, Medicaid, or other

a corporation solicits and sells cars in a 1. Payments by a governmental unit for the third-party reimbursement), hospital parking lot

charity’s name. When a car is received, its construction or maintenance of library or fees, room charges, laboratory fees for hospital

entire value is reported as a contribution. hospital facilities open to the public. patients, and related charges for services.

-18- Specific Instructions for Form 990
Program service revenue includes income that have a reasonable relationship to dues, (Program services) any rental expenses

earned by the organization for providing a although benefits to members may be indirect. allocable to rental income reportable as

government agency with a service, facility, or program service revenue on line 2. Dues or assessments received that exceed

product that benefited that government agency the value of available membership benefits. Line 6c—Net rental income or (loss) directly rather than benefiting the public as a Whether or not membership benefits are used, whole. See the line 1c instructions for reporting Subtract line 6b from line 6a. Show any loss in dues received by an organization, to the extent guidelines when payments are received from a parentheses. they are more than the monetary value of the government agency for providing a service, membership benefits available to the dues Line 7—Other investment income

facility, or product for the primary benefit of the payer, are a contribution that should be Enter the amount of investment income not general public. reported on line 1a. See Rev. Rul. 54-565, reportable on lines 4 through 6 and describe Program service revenue also includes: 1954-2 C.B. 95 and Rev. Rul. 68-432, 1968-2 the type of income in the space provided or in tuition received by a school; revenue from C.B. 104. an attachment. The income should be the

admissions to a concert or other performing Dues received primarily for the gross amount derived from investments arts event or to a museum; royalties received organization’s support. If a member pays reportable on line 56. Include, for example, as author of an educational publication dues mainly to support the organization’s royalty income from mineral interests owned by distributed by a commercial publisher; interest activities and not to obtain benefits of more the organization. However, do not include income on loans a credit union makes to its than nominal monetary value, those dues are a income from program-related investments. See members; payments received by a section contribution to the organization includible on the instructions for line 2. Also, do not include 501(c)(9) organization from participants, or line 1a. unrealized gains and losses on investments employers of participants, for health and Examples of membership benefits. These carried at market value. See the instructions for

welfare benefits coverage; insurance premiums include subscriptions to publications, line 20.

received by a fraternal beneficiary society; and newsletters (other than one about the Lines 8a through 8d—Gains (or registration fees received in connection with a organization’s activities only), free or meeting or convention. losses) from sale of assets other than reduced-rate admissions to events the inventory Program-related investments. Program organization sponsors, the use of its facilities,

service revenue also includes income from and discounts on articles or services that both Report, on lines 8a through 8c, all sales of

program-related investments. These members and nonmembers can buy. In figuring securities in column (A). Use column (B) to

investments are made primarily to accomplish the value of membership benefits, do not report sales of all other types of investments

an exempt purpose of the investing (such as real estate, royalty interests, or include intangible benefits, such as the right to

organization rather than to produce income. attend meetings, vote or hold office in the partnership interests) and all other

Examples are scholarship loans and low organization, and the distinction of being a noninventory assets (such as program-related

interest loans to charitable organizations, member of the organization. investments and fixed assets used by the

indigents, or victims of a disaster. organization in its related and unrelated Line 4—Interest on savings and activities). Rental income from an exempt function is temporary cash investments another example of program-related On line 8a, for each column, enter the total

investment income. When an organization Enter the amount of interest income from gross sales price of all such assets. Total the savings and temporary cash investments rents to an unaffiliated exempt organization at cost or other basis (less depreciation) and reportable on line 46. So-called dividends or less than fair rental value for the purpose of selling expenses and enter the result on line earnings received from mutual savings banks, aiding that tenant’s exempt function, the 8b. On line 8c, enter the net gain or loss. money market funds, etc., are actually interest reporting organization should report such rental On lines 8a and 8c, also report capital gains and should be entered on line 4. income as program service revenue on line 2. dividends, the organization’s share of capital

See also the instructions for line 6a. For Line 5—Dividends and interest from gains and losses from a partnership, and

purposes of this return, report all rental income securities capital gains distributions from trusts. Indicate

from an affiliated organization on line 2. Enter the amount of dividend and interest the source on the schedule described below.

Unrelated trade or business activities. income from equity and debt securities (stocks Combine the gain and/or loss figures

Unrelated trade or business activities (not and bonds) of the type reportable on line 54. reported on line 8c, columns (A) and (B) and

including any special events or activities) that Include amounts received from payments on report that total on line 8d. Do not include any

generate fees for services may also be securities loans, as defined in section unrealized gains or losses on securities carried

program service activities. A social club, for 512(a)(5). Do not include any capital gains at market value in the books of account. See

example, should report as program service dividends that are reportable on line 8. See the the instructions for line 20.

revenue the fees it charges both members and instructions for line 2 for reporting income from For reporting sales of securities on Form nonmembers for the use of its tennis courts program-related investments. 990, you may use the more convenient and golf course. Line 6a—Gross rents average cost basis method to figure the

Sales of inventory items by hospitals, organization’s gain or loss. When a security is Enter on line 6a the rental income received for colleges, and universities. Books and sold, compare its sales price with the average the year from investment property reportable records maintained in accordance with cost basis of the particular security to on line 55. Do not include on line 6a rental generally accepted accounting principles for determine gain or loss. However, generally, for income related to the reporting organization’s hospitals, colleges, and universities are more reporting sales of securities on Form 990-T, do exempt function (program service). Report specialized than books and records maintained not use the average cost basis to determine such income on line 2. For example, an according to those accounting principles for gain or loss. exempt organization whose exempt purpose is other types of organizations that file Form 990. to provide low-rental housing to persons with Nonpublicly traded securities and Accordingly, hospitals, colleges, and low income would report that rental income as noninventory items. Attach a schedule

universities may report, as program service program service revenue on line 2. Rental showing the sale or exchange of nonpublicly revenue on line 2, sales of inventory items traded securities and the sale or exchange of income received from an unaffiliated exempt otherwise reportable on line 10a. In that event, organization is generally considered as other assets that are not inventory items. The show the applicable cost of goods sold as unrelated to the reporting organization’s schedule should show security transactions program service expense on line 13 of Part I exempt purpose and reportable on line 6a. separately from the sale of other assets. Show and in column (B) of Part II. All other However, note an exception given in the for each of these assets:

organizations, however, should not report sales • Date acquired and how acquired, instructions for line 2 when the reporting of inventory items on line 2. organization aids an unaffiliated organization • Date sold and to whom sold,

Line 3—Membership dues and with its exempt function. • Gross sales price,

• Cost, other basis, or if donated, value at time assessments Only for purposes of completing this return, acquired (state which), Enter members’ and affiliates’ dues and the reporting organization must report any • Expense of sale and cost of improvements assessments that are not contributions. rental income received from an affiliated made after acquisition, and exempt organization as program service Dues and assessments received that • If depreciable property, depreciation since revenue on line 2. compare reasonably with available benefits. acquisition.

When dues and assessments are received that Line 6b—Rental expenses Publicly traded securities. On the attached compare reasonably with membership benefits Enter the expenses paid or incurred for the schedule, for sales of publicly traded securities received, report such dues and assessments income reported on line 6a. Include interest through a broker, total the gross sales price, on line 3. related to rental property and depreciation if it the cost or other basis, and the expenses of

Organizations described in section is recorded in the organization’s books and sale on all such securities sold, and report

501(c)(5), (6), or (7) generally provide benefits records. Report in column (B) of Part II lump-sum figures in place of the detailed

Specific Instructions for Form 990 -19-
reporting required by the above paragraph. see the line 1 instructions. See also General On line 10a, report gross sales revenue

Publicly traded securities include common and Instruction L and its references. from sales of inventory items, whether the

preferred stocks, bonds (including sales activity is an exempt function of the Sales or gifts of goods or services of only governmental obligations), and mutual fund organization or an unrelated trade or business. nominal value. If the goods or services given shares that are listed and regularly traded in an or offered at special events have only nominal On line 10b, report the cost of goods sold over-the-counter market or on an established value, include all of the receipts as related to the sales of such inventory. The exchange and for which market quotations are contributions on line 1a and all of the related usual items included in cost of goods sold are published or otherwise readily available. expenses as fundraising expenses on line 15 direct and indirect labor, materials and supplies and in column (D) of Part II. See General consumed, freight-in, and a proportion of Lines 9a through 9c—Special events Instruction L for a description of nominal or overhead expenses. Marketing and distribution and activities insubstantial benefits. costs are not included in cost of goods sold but On the appropriate line, enter the gross An activity may generate only are reported in Part II, column (B), Program revenue, expenses, and net income (or loss) contributions. An activity that generates only services. from all special events and activities, such as contributions, such as a solicitation campaign Attached schedule. In an attached schedule, dinners, dances, carnivals, raffles, bingo by mail, is not a special event and should not give a breakdown of items sold; (e.g., sales of games, other gambling activities, and be reported on line 9. food, souvenirs, electronic equipment, door-to-door sales of merchandise. Contributions from such an activity are uniforms, or educational publications). These activities only incidentally reportable on line 1, and the related fundraising accomplish an exempt purpose. Their sole or Line 11—Other revenue expenses are reportable in column (D), Part II. primary purpose is to raise funds that are other Enter the total amount from Part VII, lines Sweepstakes, raffles, and lotteries may than contributions to finance the organization’s 103(a) through (e) (Other revenue), columns produce revenue or contributions. The exempt activities. This is done by offering (B), (D), and (E). This figure represents the proceeds of solicitation campaigns in which the goods or services that have more than a total income from all sources not covered by names of contributors and other respondents nominal value (compared to the price charged) lines 1 through 10 of Part I. Examples of are entered in a drawing for the awarding of for a payment that is more than the direct cost income includible on line 11 are interest on prizes (so-called “sweepstakes” or “lotteries”) of those goods or services. notes receivable not held as investments or as are contributions, reportable on line 1, and the program-related investments (defined in the The gross revenue from gambling activities related expenses are fundraising expenses, line 2 instructions); interest on loans to officers, and other special events must be reported in reportable in column (D) of Part II. However, directors, trustees, key employees, and other the right-hand column on line 9a without raffles and lotteries in which a payment of at employees; and royalties that are not reduction for cash or noncash prizes, cost of least a specified minimum amount is required investment income or program service goods sold, compensation, fees, or other for each entry are special events, reportable on revenue. expenses. line 9, unless the prizes awarded have only

Characterizing any required payment as a nominal value. Reporting payments in their Lines 13 through 15—Program entirety as contributions when gifts or services services, management and general, “donation” or “contribution” on tickets or on given are nominal in value is discussed above. advertising or solicitation materials does not and fundraising expenses Attached schedule. Attach a schedule listing affect how such payments should be reported Section 4947(a)(1) nonexempt charitable the three largest special events conducted, as on Form 990 or Form 990-EZ. As discussed in measured by gross receipts. Describe each of trusts and section 501(c)(3) and (4) the instructions for line 1, the amount of the organizations. Complete Part II and then these events and show for each event: the contribution is the excess of the amount paid enter on lines 13 through 15 the appropriate gross receipts; the amount of contributions over the retail value of the goods or services amounts from the totals for columns (B), (C), included in gross receipts (see the instructions received by the payer. See also Pub. 526. and (D) reported on line 44, Part II. above); the gross revenue (gross receipts less Special events may generate both revenue contributions); the direct expenses; and the net All other organizations. All other and contributions. Special events sometimes income (or loss) (gross revenue less direct organizations are not required to complete generate both contributions and revenue. expenses). lines 13 through 15 of the Form 990. When a buyer pays more than the retail value Include the same information, in total of the goods or services furnished, enter: Line 16—Payments to affiliates figures, for all other special events held that • As gross revenue, on line 9a (in the This expense classification is used to report were not among the three largest. Indicate the right-hand column), the retail value of the certain types of payments to organizations type and number of the events not listed goods or services, “affiliated with” (closely related to) a reporting individually (e.g., three dances and two raffles). • As a contribution, on both line 1a and line 9a agency. An example of this schedule of special (within the parentheses), the amount received Payments to affiliated state or national that exceeds the retail value of the goods or events might appear in columnar form as organizations. Dues paid by the local charity services given. follows: to its affiliated state or national (parent) Report on line 9b only the expenses directly All organization are usually reported on line 16. attributable to the goods or services the buyer Special Events: (A) (B) (C) Other Total Report on this line predetermined quota receives from a special event. Fundraising Gross Receipts $xx $xx $xx $xx $xx support and dues (excluding membership dues expenses attributable to contributions, reported Less: Contributions xx xx xx xx xx of the type described below) by local agencies on both line 1a and line 9a (within the to their state or national organizations for parentheses), are reportable in Part II, column Gross Revenue xx xx xx xx xx unspecified purposes; that is, general use of (D), Fundraising. If you include an expense on Less: Direct Expenses xx xx xx xx xx funds for the national organization’s own line 9b, do not report it again on line 10b or in Net Income or (loss) $xx $xx $xx $xx $xx program and support services. Part II. Expenses reported on line 10b relate to Purchases from affiliates. Purchases of sales of inventory. Expenses reported in Part If you use the above schedule, report the goods or services from affiliates are not II, column (D), relate to contributions raised total for Contributions on line 1a of Form 990 reported on line 16 but are reported as through fundraising. and on line 9a (within the parentheses). Report expenses in the usual manner. Example. At a special event, an the totals for Gross Revenue, in the right-hand

column, on line 9a; Direct Expenses on line 9b; Expenses for providing goods or services organization received $100 in gross receipts and Net Income or (loss) on line 9c. to affiliates. In addition to payments made for goods valued at $40. The organization directly to affiliated organizations, expenses entered gross revenue of $40 on line 9a (in the Lines 10a through 10c—Gross profit incurred in providing goods or services to right-hand column) and entered a contribution or (loss) from sales of inventory affiliates may be reported on line 16 if: of $60 on both line 1a and line 9a (within the

parentheses). The contribution of $60 was the Enter the gross sales (less returns and 1. The goods or services provided are not

difference between the gross revenue of $40 allowances), cost of goods sold, and gross related to the program services conducted by

and the gross receipts of $100. profit or (loss) from the sale of inventory items. the organization furnishing them (e.g., when a

These sales do not include items sold at local organization incurs expenses in the The expenses directly relating to the sale of special events that are reportable on line 9. production of a solicitation film for the state or the goods would be reported on line 9b. Sales of inventory items reportable on line 10 national organization); and However, all expenses of raising contributions are sales of those items the organization 2. The costs involved are not connected would be reported in column (D), Fundraising, makes to sell to others or buys for resale. with the management and general or Part II and not on line 9b. Sales of investments on which the organization fundraising functions of the reporting

For more details about contributions expected to profit by appreciation and sale are organization. For example, when a local

received through fundraising, and contributions not reported here. Report sales of investments organization gives a copy of its mailing list to

and revenue received through special events, on line 8. the state or national organization, the expense

-20- Specific Instructions for Form 990
of preparing the copy provided may be Amounts to report here include adjustments of income, or any other source. Fundraising

reported on line 16, but not expenses of earlier years’ activity; unrealized gains and expenses should not be reported as program

preparing and maintaining the local losses on investments carried at market value; related expenses even though one of the

organization’s master list. and any difference between fair market value functions of the organization is to solicit

and book value of property given as an award contributions for other organizations. Federated fundraising agencies. These or grant. See General Instruction G regarding agencies (see the instructions for line 1b) Program services can also include the the reporting of a section 481(a) adjustment to should include in their own support the full organization’s unrelated trade or business conform to SFAS 116.

amount of contributions received in connection activities. For example, publishing a magazine

with a solicitation campaign they conduct, even Line 21—Net assets or fund balances, is a program service even though the

though donors designate specific agencies to end of year magazine contains both editorials and articles

receive part or all of their individual that further the organization’s exempt purpose Enter the total of lines 18, 19, and 20. This total

contributions. These fundraising organizations and advertising, the income from which is figure must equal the amount reported for the should report the allocations to participating taxable as unrelated business income. end of the year in column (B) of line 73. agencies as grants and allocations (line 22) If an organization receives a grant to do and quota support payments to their state or research, produce an item, or perform a national organization as payments to affiliates Part II—Statement of Functional service, either to meet the grantor’s specific (line 16). Expenses needs or to benefit the public directly, the costs

Voluntary awards or grants to affiliates. Do In General— incurred represent program service expenses.

not report on line 16 voluntary awards or grants Do not treat these costs as fundraising

made by the reporting agency to its state or Column (A) expenses, even if you report the grant on line 1

national organization for specified purposes. All organizations must complete column (A) as a contribution.

Report these awards or grants on line 22, unless they are using an approved DOL form

Grants and allocations. or Form 5500 as a partial substitute for Form Column (C)—Management and general

Membership dues paid to other 990. See General Instruction F. Use column (C) to report the organization’s

organizations. Report membership dues paid Columns (B), (C), and (D) expenses for overall function and

management, rather than for its direct conduct to obtain general membership benefits, such These columns are optional for all as regular services, publications, and of fundraising activities or program services. organizations except section 4947(a)(1) materials, from other organizations as “Other Overall management usually includes the nonexempt charitable trusts and section expenses” on line 43. This is the case, for salaries and expenses of the chief officer of the 501(c)(3) and (4) organizations. Section example, if a charitable organization pays dues organization and that officer’s staff. If part of 4947(a)(1) nonexempt charitable trusts and to a trade association comprised of otherwise their time is spent directly supervising program section 501(c)(3) and (4) organizations must unrelated members. services and fundraising activities, their complete columns (B), (C), and (D). salaries and expenses should be allocated Attached schedule. Attach a schedule listing In Part II, the organization’s expenses are among those functions. the name and address of each affiliate that designated by object classification (e.g., received payments reported on line 16. Specify Other expenses to report in column (C) salaries, legal fees, supplies, etc.) and the amount and purpose of the payments to include those for meetings of the board of allocated into three functions: program services each affiliate. directors or similar group; committee and staff (column (B)); management and general Note: Properly distinguishing between meetings (unless held in connection with (column (C)); and fundraising (column (D)). payments to affiliates and grants and specific program services or fundraising These functions are explained below in the allocations is especially important if you use activities); general legal services; accounting instructions for the columns. Do not include in

Form 990 for state reporting purposes. See (including patient accounting and billing); Part II any expense items you must report on General Instruction E. If you use Form 990 only general liability insurance; office management; lines 6b, 8b, 9b, 10b, or 16 in Part I. for reporting to the IRS, payments to affiliated auditing, personnel, and other centralized For reporting to the IRS only, use the state or national organizations that do not services; preparation, publication, and organization’s normal accounting method to represent membership dues reportable as distribution of an annual report; and investment report total expenses in column (A) and to “Other expenses” on line 43 (see instructions expenses (however, report rental income segregate them into functions under columns above) may be reported either on line 16 or expenses on line 6b and program-related (B), (C), and (D). However, for state reporting line 22 and explained in the required income expenses in column (B)). requirements, see General Instructions E and attachment. G. If the accounting system does not provide You should report only general expenses in

column (C). Do not use this column to report Line 17—Total expenses for this type of segregation, a reasonable

method of allocation may be used. The costs of special meetings or other activities that Organizations using only column (A) of Part II amounts reported should be accurate and the relate to fundraising or specific program should enter the total of line 16 and line 44 of

method of allocation documented in the services. column (A), Part II, on line 17. Other organization’s records. organizations should enter the total of lines 13 Column (D)—Fundraising through 16. Organizations using Form 5500 or Report, in the appropriate column, Fundraising expenses are the total expenses an approved DOL form as a partial substitute expenses that are directly attributable to a incurred in soliciting contributions, gifts, grants, for Form 990 should enter the total expense particular functional category. In general, etc. Report as fundraising expenses all figure from Form 5500, or from the required allocate expenses that relate to more than one expenses, including allocable overhead costs, reconciliation schedule if Form LM-2 or LM-3 is functional category. For example, allocate incurred in: (a) publicizing and conducting used. See General Instruction F. employees’ salaries on the basis of each fundraising campaigns; (b) soliciting bequests employee’s time. For some shared expenses Line 18—Excess or (deficit) for the and grants from foundations or other such as occupancy, supplies, and depreciation year organizations, or government grants reportable of office equipment, use an appropriate basis Enter the difference between lines 12 and 17. If on line 1c; (c) participating in federated for each kind of cost. However, you should fundraising campaigns; (d) preparing and line 17 is more than line 12, enter the report some other shared expenses in column distributing fundraising manuals, instructions, difference in parentheses. (C) only. The column instructions below and other materials; and (e) conducting special discuss allocating expenses. Line 19—Net assets or fund balances, events that generate contributions reportable beginning of year Column (A)—Total on line 1a, in addition to revenue reportable in

Enter the balance at the beginning of the year For column (A), total each line item of columns the right-hand column on line 9a. However,

as reported in column (A) of line 73 (or from (B), (C), and (D) in Part II. Except for expenses report any expenses that are directly

Form 5500 or an approved DOL form if you report on lines 6b, 8b, 9b, 10b, or 16 of attributable to revenue shown on line 9a (i.e.,

General Instruction F applies). The balance at Part I, you should use column (A) to report all the direct expenses incurred in furnishing the

the beginning of the year for line 19 was the expenses the organization paid or incurred. goods or services sold) on line 9b.

end of the year balance for line 21 and 73 as Column (B)—Program services Allocating indirect expenses reported on the organization’s prior year return. Program services are mainly those activities Colleges, universities, hospitals, and other Line 20—Other changes in net assets that the reporting organization was created to organizations that accumulate indirect or fund balances conduct and which, along with any activities expenses in various cost centers (such as the

Attach a schedule explaining any changes in commenced subsequently, form the basis of expenses of operating and maintaining the

net assets or fund balances between the the organization’s current exemption from tax. physical plant) that are reallocated to the

beginning and end of the year that are not They may be self-funded or funded out of program services and other functional areas of

accounted for by the amount on line 18. contributions, accumulated income, investment the organization in single or multiple steps may

Specific Instructions for Form 990 -21-
find it easier to report these expenses in the to be allocated, and so on. The greater the of the property when the organization gave it is

following optional manner: number of these cost centers that are allocated the measure of the award or grant, record any

out, the more difficult it is to preserve the object difference between fair market value and book First, report the expenses of these indirect classification identity of the expenses of each value in the organization’s books of account cost centers on lines 25 through 43 of column cost center (e.g., salaries, interest, supplies, and on line 20. (C), Management and general, along with the

expenses properly reportable in that column. etc.). Using the reporting method described Colleges, universities, and primary and above avoids this problem. secondary schools are not required to list the Second, allocate the total expenses for Note: The intent of the above instructions is names of individuals who were provided each cost center to columns (B), (C), and (D) only to facilitate reporting indirect expenses by scholarships or other financial assistance (Program services, Management and general, both object classification and function. These whether they are the recipients of Federal and Fundraising) as a separate item entry on instructions do not permit the allocation to grant money or not. Instead, these line 43, Other expenses. Enter the name of the other functions of expenses that should be organizations must (a) group each type of cost center on line 43. If any of the cost reported as management and general financial aid provided; (b) indicate the number center’s expenses are to be allocated to the expenses. of individuals who received the aid; and (c) expenses listed in Part I (such as the expenses specify the aggregate dollar amount. attributable to special events and activities), Line 22—Grants and allocations

enter these expenses as a negative figure in Enter the amount of awards and grants to Line 23—Specific assistance to

columns (A) and (C). This prevents reporting individuals and organizations selected by the individuals

the same expense in both Parts I and II. If part filing organization. United Way and similar Enter the amount of payments to, or for the of the total cost center expenses are to be fundraising organizations should include benefit of, particular clients or patients, allocated to columns (B), Program services, allocations to member agencies. including assistance rendered by others at the and (D), Fundraising, enter these expenses as Report voluntary awards and grants to expense of the filing organization. Do not positive amounts in these columns and as include grants to other organizations that select affiliated organizations for specific (restricted) single negative amounts in column (C), the person(s) to receive the assistance Management and general. Do not make any purposes or projects also on line 22, but not available through the use of the grant funds. required payments to affiliates reportable on entries in column (A), Total, for these offsetting For example, report a payment to a hospital to line 16. entries. cover the medical expenses of a particular Report scholarship, fellowship, and Example. An organization reports in column individual on line 23, but do not report a research grants to individuals on line 22. (C) $50,000 of its actual management and contribution to a hospital to provide some Certain other payments to, or for the benefit of, general expenses and $100,000 of expenses service to the general public or to unspecified individuals may be reportable on line 23 of an indirect cost center that are allocable in charity patients on this line. Also, do not instead. See the instructions for line 23 for part to other functions. The total of lines 25 include scholarship, fellowship, or research details. through 43 of column (C) would be $150,000 grants to individuals even though selected by

before the indirect cost center allocations were Report only the amount of actual grants and the grantor organization. Report these grants

made. Assume that $10,000 (of the $100,000 awards on line 22. Report expenses incurred in on line 22 instead.

total expenses of the cost center) was selecting recipients, or monitoring compliance Attached schedule. Attach a schedule

allocable to fundraising; $70,000 to various with the terms of a grant or award, on lines 25 showing the total payments for each particular program services; $15,000 to management through 43. class of activity, such as food, shelter, and and general functions; and $5,000 to special In the spaces provided, give separate totals clothing for indigents or disaster victims; events and activities. To report this in Part II for cash and noncash grants and allocations medical, dental, and hospital fees and charges; under this alternate method: made. Cash grants include only grants and and direct cash assistance to indigents. For

1. Indicate the cost center, the expenses of allocations paid by cash, checks, money payments to indigent families, do not identify

which are being allocated, on line 43, as orders, wire transfers, and other charges the individuals.

“Allocation of (specify) expenses”; against funds on deposit at a financial Line 24—Benefits paid to or for 2. Enter a decrease of $5,000 on the same institution. members line in the column (A), Total, representing the Reporting for line 22, in accordance with special event expenses that were already For an organization that provides benefits to SFAS 116, is acceptable for Form 990 reported on line 9b in Part I; members or dependents (such as purposes, but not required by IRS. However, 3. Enter $70,000 on the same line in organizations exempt under section 501(c)(8), see General Instruction E. column (B), Program services; (9), or (17)), attach a schedule. Show amounts

4. Enter $10,000 on the same line in An organization that makes a grant to be of: (a) death, sickness, hospitalization, or

column (D), Fundraising; and paid in future years should, according to SFAS disability benefits; (b) unemployment

5. Enter a decrease of $85,000 on the 116, report the grant’s present value on line 22. compensation benefits; and (c) other benefits

same line in column (C), Management and Accruals of present value increments to the (state their nature). Do not report the cost of

general, to represent the allocations to unpaid grant should also be reported on line 22 employment-related benefits the organization in future years. provides its officers and employees on this line. functional areas other than management and

general. Attached schedule. Attach a schedule of Report those expenses on lines 27 and 28.

amounts reported on line 22. Any grants or Line 25—Compensation of officers, Line (A) (B) (C) (D) allocations reported on line 22 that were directors, etc. approved during the year, but not paid by the 25 – 43a ...... $150,000 $ — $150,000 $ — due date for filing Form 990 (including Enter the total compensation paid to officers, 43b Allocation of

the $100,000 extensions), must be identified and listed directors, trustees, and key employees for the

indirect cost center separately in the schedule for line 22. Show on year. In Part V, give the name and

expenses reported compensation (if any) of each officer, director, the schedule: (a) each class of activity; (b) in (C) ....... (5,000) 70,000 (85,000) 10,000 grantee’s name, address, and the amount trustee, and key employee, along with the

44 ......... $145,000 $ 70,000 $ 65,000 $ 10,000 given; and (c) (in the case of grants to other information requested. If no

individuals) relationship of grantee if related by compensation was paid, enter zero. See the After making these allocations, the column blood, marriage, adoption, or employment Part V instructions for a definition of “key (C) total (line 44, column (C)) would be employee.” $65,000, consisting of the $50,000 actual (including employees’ children) to any person

management and general expense amount or corporation with an interest in the Form 941 must be filed to report income tax

and the $15,000 allocation of the aggregate organization, such as a creator, donor, director, withholding and social security and Medicare

cost center expenses to management and trustee, officer, etc. taxes. The organization must also file Form

general. On the schedule, classify activities in more 940 to report Federal unemployment taxes

detail than in such broad terms as charitable, unless the organization is not subject to these The above is an example of a one-step educational, religious, or scientific. For taxes. See Pub.15 (Circular E) for details. See allocation that shows how to report the example, identify payments for nursing also the discussion of the Trust Fund Recovery allocation in Part II. This reporting method services, laboratory construction, or Penalty given in General Instruction D. would actually be needed more for multiple fellowships. step allocations involving two or more cost Line 26—Other salaries and wages

centers. The total expenses of the first would If property other than cash is given, also Enter the total of employees’ salaries not be allocated to the other functions, including an show on the schedule: (a) a description of the reported on line 25. allocation of part of these expenses to the property; (b) its book value and how the book

second cost center. The expenses of the value was determined; (c) its fair market value Line 27—Pension plan contributions

second cost center would then be allocated to and how the fair market value was determined; Enter the employer’s share of contributions to

other functions and any remaining cost centers (d) the date of the gift. If the fair market value qualified and nonqualified pension plans for the

-22- Specific Instructions for Form 990
year. Complete Form 5500 for the are included on line 36. Do not subtract rental For an explanation of acceptable methods

organization’s plan and file as a separate income received from renting or subletting for computing depreciation, see Pub. 946.

return. If the organization has more than one rented space from the amount reported for plan, complete a form for each plan. File the occupancy expense on line 36. If the activities If the organization claims a deduction for

form by the last day of the 7th month after the of the organization’s tenant are related to the depletion, attach a schedule explaining the

plan year ends. See General Instruction D for a deduction. reporting organization’s exempt purpose, discussion of Form 5500. report rental income as program-service

revenue and allocable occupancy expenses on Line 43—Other expenses Line 28—Other employee benefits line 36. However, if the tenant’s activities are Show the type and amount of each significant Enter the organization’s contributions to not program related, report such rental income expense for which a separate line is not employee benefit programs (such as on line 6a and related rental expenses on line provided. Report all other miscellaneous insurance, health, and welfare programs) that 6b. expenses as a single total. Expenses that are not an incidental part of a pension plan might be reported here include investment included on line 27. Report expenses for Do not include, as an occupancy expense, counseling and other professional fees, but employee events such as a picnic or holiday depreciation (reportable on line 42) or any not professional fundraising fees, accounting party on line 28. salaries of the reporting organization’s own fees, or legal fees. These are reportable on employees (reportable on line 26). Line 29—Payroll taxes lines 30 through 32.

Enter the amount of Federal, state, and local Line 37—Equipment rental and Other expenses includible on line 43 are: payroll taxes for the year but only those taxes maintenance penalties, fines, and judgments; unrelated that are imposed on the organization as an business income taxes; insurance and real employer. This includes the employer’s share Enter the cost of renting and maintaining office

of social security and Medicare taxes, the estate taxes not attributable to rental property equipment and other equipment, except for Federal unemployment tax (FUTA), state or reported as occupancy expenses; and any automobile and truck expenses reportable on unemployment compensation taxes, and other marketing and distribution costs not included lines 35 and 39.

state and local payroll taxes. Do not include on other lines of Part II. Attach a schedule if

taxes withheld from employees’ salaries and more space is needed. Line 38—Printing and publications paid to the various governmental units such as

Federal and state income taxes and the Enter the printing and related costs of State reporting—miscellaneous expenses.

employees’ shares of social security and producing the reporting organization’s own Some states that accept Form 990, or Form

Medicare taxes. newsletters, leaflets, films, and other 990-EZ, in satisfaction of their filing

informational materials on this line. Also requirements may require that certain types of Line 30—Professional fundraising include the cost of any purchased publications. miscellaneous expenses be itemized

fees However, do not include any expenses, such regardless of amount. See General Instruction

Enter the organization’s fees to outside as salaries or postage, for which a separate E.

fundraisers who are paid primarily for line is provided in Part II.

solicitation campaigns they conducted or for Line 44—Total functional expenses

consultation services connected with a Line 39—Travel Add lines 22 through 43 and enter the totals on solicitation of contributions by the organization Enter the total travel expenses, including trans- line 44 in columns (A), (B), (C), and (D). Report itself. portation costs (fares, mileage allowances, and the total amounts for columns (B), (C), and (D)

automobile expenses), meals and lodging, and in Part I, lines 13 through 15. Line 31—Accounting fees per diem payments. Enter the total accounting and auditing fees Reporting of joint costs charged by outside firms and individuals who

are not employees of the reporting Line 40—Conferences, conventions, Organizations that included in program service

organization. and meetings expenses (column (B) of Part II) any joint costs

Enter the total expenses incurred by the from a combined educational campaign and

Line 32—Legal fees organization in conducting meetings related to fundraising solicitation must disclose how the

Enter the total legal fees charged by outside its activities. Include such expenses as the total joint costs of all such combined activities

firms and individuals who are not employees of rental of facilities, speakers’ fees and were reported in Part II. Organizations

the reporting organization. Do not include any expenses, and printed materials. Include the answering “Yes” to the joint-cost question

penalties, fines, or judgments imposed against registration fees (but not travel expenses) paid following line 44 must furnish the relevant

the organization as a result of legal for sending any of the organization’s staff to financial data in the spaces provided.

proceedings. Report those expenses on line conferences, meetings, or conventions 43, Other expenses. conducted by other organizations. However, do An organization conducts a combined

not include on this line the salaries and travel educational campaign and fundraising Line 33—Supplies expenses of the reporting organization’s own solicitation when it solicits contributions (by

Enter the total for office, classroom, medical, officers, directors, trustees, and employees mail, telephone, broadcast media, or any other

and other supplies used during the year, as who participate. means) and includes, with the solicitation,

determined by the organization’s normal educational material or other information that

method of accounting for supplies. furthers a bona fide nonfundraising exempt Line 41—Interest purpose of the organization. Line 34—Telephone Enter the total interest expense for the year.

Do not include any interest attributable to rental Enter the total telephone, telegram, and similar Expenses attributable to providing property (reportable on line 6b) or any expenses for the year. information regarding the organization itself, its mortgage interest treated as occupancy use of past contributions, or its planned use of Line 35—Postage and shipping expense on line 36. contributions received are not program service

Enter the total amount of postage, parcel expenses and should not be included in

delivery, trucking, and other delivery expenses, Line 42—Depreciation, depletion, etc. column (B). This is true whether or not the including the cost of shipping materials. Include If the organization records depreciation, organization accounts for joint costs in the costs of outside mailing services on this depletion, and similar expenses, enter the total accordance with the AICPA’s Statement of

line. for the year. Include any depreciation Position 98-2, Accounting for Costs of

(amortization) of leasehold improvements. The Materials and Activities of Not-for-Profit Line 36—Occupancy organization is not required to use the Modified Organizations and State and Local Enter the total amount paid or incurred for the Accelerated Cost Recovery System (MACRS) Government Entities that Include Fund Raising. use of office space or other facilities, heat, to compute the depreciation reported on Form Any method of allocating joint costs to program light, power, and other utilities (other than 990 or Form 990-EZ. If the organization service expenses must be reasonable under telephone expenses reported on line 34), records depreciation using MACRS, attach the facts and circumstances of each case. outside janitorial services, mortgage interest, Form 4562, or a schedule showing the same Most states with reporting requirements for property insurance, real estate taxes, and information required by Form 4562. If the charitable and other organizations that solicit similar expenses. organization does not use MACRS, attach a contributions either require or allow the

Occupancy expenses paid or incurred for schedule showing how depreciation was reporting of joint costs according to Statement

program-related income, reportable on line 2, of Position 98-2 standards. computed.

Specific Instructions for Form 990 -23-
may report the present value of the grants Part III—Statement of Program 5 The organization may show the receivable as of each balance sheet date. amount of any donated services, or Service Accomplishments use of materials, equipment, or Line 50—Receivables from officers, A program service is a major (usually ongoing) facilities it received or utilized in directors, trustees, and key employees objective of an organization, such as connection with a specific program Report all receivables due from officers, adoptions, recreation for the elderly, service. directors, trustees, and key employees, and all rehabilitation, or publication of journals or secured and unsecured loans to such persons, newsletters. • Disclose the applicable amounts on line 50 and in an attached schedule of any donated services, etc., on discussed below. Report interest from such Step Action the lines for the narrative receivables on line 11. For a definition of “key description of the appropriate employee,” see the instructions in Part V. program service. 1 State the organization’s primary When receivables should be reported

exempt purpose. • Do not separately. In the required schedule, report include these amounts in

the expense column in Part III. each receivable separately even if more than

one loan was made to the same person or the 2 All organizations must describe their • See the instructions for line 82. same terms apply to all loans. Report salary exempt purpose achievements for advances, and other advances for the personal each of their four largest program use and benefit of the recipient, and services (as measured by total Part IV—Balance Sheets receivables subject to special terms, or arising expenses incurred). If there were four from nontypical transactions, as separate loans or fewer of such activities, describe All organizations, except those that meet one for each officer, director, trustee, and key each program service activity. of the exceptions in General Instruction F, must employee. complete all of Part IV and may not submit a • Describe program service substitute balance sheet. Failure to complete When receivables should be reported as a

accomplishments through Part IV may result in penalties for filing an single total. In the required schedule, report

measurements such as clients incomplete return. See General Instruction K. If receivables that are subject to the same terms

served, days of care, therapy there is no amount to report in column (A), and conditions (including credit limits and rate

sessions, or publications issued. Beginning of year, place a zero in that column. of interest) as receivables due from the general

public (occurring in the normal course of the • Describe the activity’s objective, See General Instruction E for details on organization’s operations) as a single total for completing a Form 990, or Form 990-EZ, to be for both this time period and the all the officers, directors, trustees, and key filed with any state or local governmental longer-term goal, if the output is employees. Report travel advances for official agency. intangible, such as in a research business of the organization as a single total.

activity. When a schedule is required to be attached Schedule format. For each outstanding loan, for any line item in Part IV, it is only for the or other receivable that must be reported • Give reasonable estimates for any end-of-year balance sheet figure reported in separately, the attached schedule should show statistical information if exact column (B). Give the end-of-year figures for the following information (preferably in figures are not readily available. any receivables or depreciable assets and the columnar form): Indicate that this information is related allowances for doubtful accounts or 1. Borrower’s name and title, estimated. accumulated depreciation reported within the 2. Original amount, description column. • Be clear, concise, and complete in 3. Balance due,

your description. Avoid adding an Line 45—Cash—non-interest-bearing 4. Date of note,

attachment. 5. Maturity date, Enter the total of non-interest-bearing checking 6. Repayment terms, accounts, deposits in transit, change funds, 7. Interest rate, 3 If part of the total expenses of any petty cash funds, or any other 8. Security provided by the borrower, program service consists of grants non-interest-bearing account. Do not include 9. Purpose of the loan, and and allocations reported on line 22, advances to employees or officers or 10. Description and fair market value of the show the amount of grants and refundable deposits paid to suppliers or others. consideration furnished by the lender (e.g., allocations in the space provided and Line 46—Savings and temporary cash cash—$1,000; or 100 shares of XYZ, Inc., include the grants and allocations in common stock—$9,000). investments the “Expenses” column. Enter the total of interest-bearing checking The above detail is not required for • Section 501(c)(3) and (4) accounts, savings and temporary cash receivables or travel advances that may be organizations, and section investments, such as money market funds, reported as a single total. However, report and

4947(a)(1) nonexempt charitable commercial paper, certificates of deposit, and identify those totals separately on the

trusts, must show the amount of attachment. U.S. Treasury bills or other governmental

grants and allocations to others and obligations that mature in less than 1 year. Line 51—Other notes and loans must enter the total expenses for Report the income from these investments on receivable each program service reported. line 4.

Enter the combined total of notes receivable • For all other organizations, Line 47—Accounts receivable and net loans receivable. For notes and loans

completing the “Expenses” column Enter the total accounts receivable (reduced by that represent program-related investments

(and the “Grants and allocations” the allowance for doubtful accounts) from the (defined in the line 2 instructions), report the

entry) in Part III is optional. sale of goods and/or the performance of interest income on line 2. For all other notes

services. Report claims against vendors or and loans receivable included on line 51, report

refundable deposits with suppliers or others the income on line 11. 4 Attach a schedule that lists the

organization’s other program services. here, if not significant in amount. Otherwise, Notes receivable. Enter the amount of all

report them on line 58, Other assets. Report notes receivable not listed on line 50 and not • The detailed information required any receivables due from officers, directors, acquired as investments. Attach a schedule for the four largest services is not trustees, or key employees on line 50. Report similar to that called for in the instructions for

necessary for this schedule. receivables (including loans and advances) line 50. The schedule should also identify the due from other employees on line 58. relationship of the borrower to any officer, • Section 501(c)(3) and (4) director, trustee, or key employee of the organizations, and section Line 48—Pledges receivable organization. 4947(a)(1) nonexempt charitable Enter the total pledges receivable recorded as Notes receivable from loans by a credit trusts, however, must show the of the beginning and end of the year. Do not union to its members and scholarship loans by expenses attributable to their include the amount of pledges estimated to be a section 501(c)(3) organization do not have to program services. uncollectible. be itemized. However, identify these loans as

Line 49—Grants receivable such on a schedule and indicate the total

Enter the total grants receivable from amount of such loans that are outstanding.

governmental agencies, foundations, and other For a note receivable from another

organizations as of the beginning and end of organization exempt under the same

the year. Organizations that follow SFAS 116 paragraph of section 501(c) as the filing

-24- Specific Instructions for Form 990
organization, list only the name of the borrower organization), and, if so, state the percentage Line 57—Land, buildings, and

and the balance due. For example, a section of space used by the third party. equipment 501(c)(3) organization would have to provide Enter the book value (cost or other basis less If the tax-exempt bond or obligation is in the the full details of a loan to a section 501(c)(4) accumulated depreciation) of all land, form of a mortgage, include the amount of the organization but would have to provide only the buildings, and equipment owned by the mortgage on line 64a, and not on line 64b. For name of the borrower and the balance due on organization and not held for investment. This such mortgage, include in the above listing, the a note from a loan to another section 501(c)(3) includes any property, plant, and equipment maturity date of the debt, repayment terms, organization. owned and used by the organization in interest rate, and any security provided by the

Loans receivable. Enter the gross amount of conducting its exempt activities. Attach a organization.

loans receivable, less the allowance for schedule listing these fixed assets held at the Line 64a does not, however, refer to doubtful accounts, from the normal activities of end of the year and showing, for each item or situations where the organization only has a the filing organization such as loans by a credit category listed, the cost or other basis, contingent liability, as it would if it were a union to its members or scholarship loans by a accumulated depreciation, and book value. guarantor of tax-exempt bonds issued by a section 501(c)(3) organization. A schedule of related entity. Contingent liabilities, such as these loans is not required. Line 58—Other assets those that arise from guarantees, should be

Report loans to officers, directors, trustees, List and show the book value of each category included as an entry in the separately attached

and key employees on line 50. Report loans to of assets not reportable on lines 45 through 57. schedule required for line 64a. Attach a separate schedule if more space is other employees on line 58. needed. Line 64b—Mortgages and other notes

Line 52—Inventories for sale or use payable One type of asset reportable on line 58 is Enter the amount of materials, goods, and Enter the amount of mortgages and other program-related investments. These are supplies purchased, manufactured by the notes payable at the beginning and end of the investments made primarily to accomplish an organization, or donated and held for future year. Attach a schedule showing, as of the end exempt purpose of the filing organization rather sale or use. of the year, the total amount of all mortgages than to produce income. payable and, for each nonmortgage note Line 53—Prepaid expenses and Line 59—Total assets payable, the name of the lender and the other deferred charges Enter the total of lines 45 through 58. The information specified in items 2 through 10 of

Enter the amount of short-term and long-term the instructions for line 50. The schedule amounts on line 59 must equal the amounts on prepayments of expenses attributable to one or should also identify the relationship of the line 74 for both the beginning and end of the more future accounting periods. Examples lender to any officer, director, trustee, or key year. include prepayments of rent, insurance, and employee of the organization.

pension costs, and expenses incurred for a Line 60—Accounts payable and Line 65—Other liabilities solicitation campaign of a future accounting accrued expenses

period. List and show the amount of each liability not Enter the total of accounts payable to suppliers reportable on lines 60 through 65. Attach a Line 54—Investments—securities and others and accrued expenses, such as separate schedule if more space is needed. salaries payable, accrued payroll taxes, and Enter the book value, which may be market interest payable. Lines 67 through 69—Net assets value, of securities held as investments. Check The Financial Accounting Standards Board the appropriate box to indicate whether the Line 61—Grants payable issued Financial Statements of Not-for-Profit securities are reported at cost or fair market Enter the unpaid portion of grants and awards Organizations (SFAS 117). SFAS 117 provides value. When valuing securities at fair market that the organization has made a commitment standards for external financial statements value, use commonly accepted valuation to pay other organizations or individuals, methods. (See Regulations section 20.2031-2.) certified by an independent accountant for whether or not the commitments have been Attach a schedule that lists the securities held certain types of nonprofit organizations. SFAS communicated to the grantees. 117 does not apply to credit unions, voluntary at the end of the year. Indicate whether the employees’ beneficiary associations, securities are listed at cost (including the value Line 62—Deferred revenue supplemental unemployment benefit trusts, recorded at the time of receipt in the case of Include revenue that the organization has section 501(c)(12) cooperatives, and other donated securities) or end-of-year market received but not yet earned as of the balance member benefit or mutual benefit value. Debt securities of the U.S., state, and sheet date under its method of accounting. municipal governments, corporate stocks and organizations.

bonds, and other publicly traded securities While some states may require reporting in Line 63—Loans from officers,

(defined in the instructions for line 8) do not accordance with SFAS 117, IRS does not (see directors, trustees, and key employees have to be listed individually, except for stock General Instruction E). However, a Form 990, Enter the unpaid balance of loans received holdings that represent 5% or more of the or Form 990-EZ, return prepared in from officers, directors, trustees, and key outstanding shares of stock of the same class. accordance with SFAS 117 will be acceptable employees. See the instructions for Part V for However, show separate totals for each type of to IRS. the definition of “key employee.” For loans security (U.S. Government obligations, outstanding at the end of the year, attach a Organizations that follow SFAS 117. If the

corporate stocks, etc.). Do not include amounts schedule that shows, for each loan, the name organization follows SFAS 117, check the box reported on line 46. Report dividends and and title of the lender and the information above line 67. Classify and report net assets in interest from these securities on line 5. specified in items 2 through 10 of the three groups—unrestricted, temporarily

instructions for line 50. restricted, and permanently restricted—based Line 55—Investments—land, on the existence or absence of donor-imposed buildings, and equipment Line 64a—Tax-exempt bond liabilities restrictions and the nature of those restrictions. Enter the book value (cost or other basis less Enter the amount of tax-exempt bonds (or Show the sum of the three classes of net accumulated depreciation) of all land, other obligations) issued by the organization on assets on line 73. On line 74, add the amounts buildings, and equipment held for investment behalf of a state or local governmental unit, or on lines 66 and 73 to show total liabilities and purposes, such as rental properties. Attach a by a state or local governmental unit on behalf net assets. This figure should be the same as schedule listing these fixed assets held as of the organization, and for which the the figure for Total assets on line 59. investments at the end of the year. Show for organization has a direct or indirect liability. each item or category listed, the cost or other Line 67—Unrestricted Tax-exempt bonds include state or local bonds basis, accumulated depreciation, and book Enter the balances per books of the and any obligations, including direct borrowing value. Report the income from these assets on unrestricted class of net assets. Unrestricted from a lender, or certificates of participation, line 6a. net assets are neither permanently restricted the interest on which is excluded from the nor temporarily restricted by donor-imposed Line 56—Investments—other income of the recipient for Federal income tax stipulations. All funds without donor-imposed purposes under section 103. Enter the amount of all other investment restrictions must be classified as unrestricted, holdings not reported on line 54 or 55. Attach a For all such bonds and obligations regardless of the existence of any board schedule listing and describing each of these outstanding at any time during the year, attach designations or appropriations. investments held at the end of the year. Show a schedule showing for each separate issue:

the book value for each and indicate whether (a) the purpose of the issue; (b) the amount of Line 68—Temporarily restricted

the investment is listed at cost or end-of-year the issue outstanding; and (c) the unexpended Enter the balance per books for the temporarily

market value. Report the income from these bond proceeds, if any. Also indicate whether restricted class of net assets. Donors’

assets on line 7. Do not include any portion of any bond-financed facility was temporary restrictions may require that

program-related investments. See the used by a third party (other than a resources be used in a later period or after a

instructions for line 58. governmental unit or section 501(c)(3) specified date (time restrictions), or that

Specific Instructions for Form 990 -25-
resources be used for a specified purpose officers, directors, or trustees. The term

(purpose restrictions), or both. includes the chief management and Parts IV-A and IV-B—

Reconciliation Statements administrative officials of an organization (such Line 69—Permanently restricted as an executive director or chancellor) but Use these reconciliation statements to Enter the total of the balances for the does not include the heads of separate reconcile the differences between the revenue permanently restricted class of net assets. departments or smaller units within an and expenses shown on the organization’s Permanently restricted net assets are (a) organization. audited financial statements prepared in assets, such as land or works of art, donated

with stipulations that they be used for a accordance with SFAS 117 and the revenue A chief financial officer and the officer in

and expenses shown on the organization’s charge of administration or program operations specified purpose, be preserved, and not be Form 990. are both key employees if they have the sold or (b) assets donated with stipulations that authority to control the organization’s activities, they be invested to provide a permanent If the organization did not receive an

audited financial statement for 2002 (or the its finances, or both. The “heads of separate source of income. The latter result from gifts fiscal year for which it is completing this Form departments” reference applies to persons and bequests that create permanent 990) and prepared the return in accordance such as the head of the radiology department endowment funds.

with SFAS 117, it does not need to complete or coronary care unit of a hospital or the head Organizations that do not follow SFAS 117. Parts IV-A or IV-B and should instead enter of the chemistry, history, or English department If the organization does not follow SFAS 117, “N/A” on line a of each Part. at a college. These persons are managers check the box above line 70 and report within their specific areas but not for the account balances on lines 70 through 72. These two Parts do not have to be organization as a whole and, therefore, are not Report net assets or fund balances on line 73. completed on group returns. key employees. Complete line 74 to report the sum of the total On line d(1) of Parts IV-A and IV-B, include liabilities and net assets. only those investment expenses netted against Column (B)

Some states that accept Form 990, or Form investment income in the revenue portion of In column (B), a numerical estimate of the

990-EZ, as their basic reporting form may the organization’s audited financial statements. average hours per week devoted to the Do not include program-related investment require a separate statement of changes in net position is required for a complete answer.

assets/fund balances. See General Instruction expenses or other expenses reported as Statements such as “as needed,” “as required,”

E. program service expenses in the audited or “40+” are unacceptable. statement of activities. Line 70—Capital stock, trust principal, Column (C) or current funds Part V—List of Officers, Directors, For each person listed, report salary, fees, For corporations, enter the balance per books bonuses, and severance payments paid. for capital stock accounts. Show par or stated Trustees, and Key Employees Include current-year payments of amounts value (or for stock with no par or stated value, List each person who was an officer, director, reported or reportable as deferred total amount received upon issuance) of all trustee, or key employee (defined below) of the compensation in any prior year. classes of stock issued and, as yet, organization or disregarded entity described in

uncancelled. For trusts, enter the amount in the Regulations sections 301.7701-1 through Column (D)

trust principal or corpus account. For 301.7701-3 at any time during the year even if Include in this column all forms of deferred

organizations continuing to use the fund they did not receive any compensation from compensation and future severance payments method of accounting, enter the fund balances the organization. (whether or not funded; whether or not vested; for the organization’s current restricted and Enter a zero in columns (B), (C), (D), or (E) and whether or not the deferred compensation unrestricted funds. plan is a qualified plan under section 401(a)). if no hours were entered in column (B) and no

compensation, contributions, expenses and Include also payments to welfare benefit plans Line 71—Paid-in or capital surplus, or other allowances were paid during the on behalf of the officers, etc. Such plans land, bldg., and equipment fund reporting year, or deferred for payment to a provide benefits such as medical, dental, life Enter the balance per books for all paid-in insurance, severance pay, disability, etc. future accounting period. capital in excess of par or stated value for all Reasonable estimates may be used if precise Aid in the processing of your return by stock issued and uncancelled. If stockholders cost figures are not readily available. grouping together, preferably at the end of your or others gave donations that the organization

records as paid-in capital, include them here. list, those who received no compensation. Be Unless the amounts were reported in

Report any current-year donations you careful not to repeat names. column (C), report, as deferred compensation

included on line 71 in Part I, line 1. Enter the Give the preferred address at which in column (D), salaries and other compensation

officers, etc., want the Internal Revenue earned during the period covered by the return, fund balance for the land, building, and

equipment fund on this line. Service to contact them. but not yet paid by the date the organization

files its return. Use an attachment if there are more Line 72—Retained earnings or

accumulated income, endowment, or persons to list in Part V. Column (E)

other funds Show all forms of cash and noncash Enter both taxable and nontaxable fringe compensation received by each listed officer, benefits (other than de minimis fringe benefits For corporations, enter the balance in the etc., whether paid currently or deferred. described in section 132(e)). Include expense retained earnings, or similar account, minus If you pay any other person, such as a allowances or reimbursements that the the cost of any corporate treasury stock. For management services company, for the recipients must report as income on their trusts, enter the balance per books in the services provided by any of your officers, separate income tax returns. Examples include accumulated income or similar account. For

directors, trustees, or key employees, report amounts for which the recipient did not account those organizations using fund accounting, the compensation and other items in Part V as to the organization or allowances that were enter the total of the fund balances for the

if you had paid the officers, etc., directly. more than the payee spent on serving the permanent and term endowment funds as well organization. Include payments made under as balances of any other funds not reported on A failure to fully complete Part V can indemnification arrangements, the value of the lines 70 and 71. subject both the organization and the personal use of housing, automobiles, or other individuals responsible for such failure to Line 73—Total net assets or fund assets owned or leased by the organization (or penalties for filing an incomplete return. See balances General Instruction K. In particular, entering provided for the organization’s use without

For organizations that follow SFAS 117, enter charge), as well as any other taxable and the phrase on Part V, “Information available nontaxable fringe benefits. See Pub. 525 for the total of lines 67 through 69. For all other upon request,” or a similar phrase, is not

organizations, enter the total of lines 70 more information. acceptable.

through 72. Enter the beginning-of-the-year The organization may also provide an Line 75—Compensation from related figure on line 73, column (A), in Part I, line 19. attachment to explain the entire 2002 organizations The end-of-the-year figure on line 73, column compensation package for any person listed in (B) must agree with the figure on line 21 of Answer “Yes” to this question if any officer, Part V. Part I. director, trustee, or key employee received Each person listed in Part V should report total compensation of more than $100,000 Line 74—Total liabilities and net the listed compensation on his or her income from your organization and all related assets/fund balances tax return unless the Code specifically organizations (as defined below) and more

Enter the total of lines 66 and 73. This amount than $10,000 of this compensation was excludes any of the payments from income tax.

must equal the amount for total assets reported provided by the related organization. For this See Pub. 525 for details.

on line 59 for both the beginning and end of the A “key employee” is any person having purpose, “compensation” includes any amount

year. responsibilities or powers similar to those of that would be reportable in column (C), (D), or

-26- Specific Instructions for Form 990
(E) of Part V if provided by the filing also complete and attach a Schedule A (Form termination, etc., with all amendments or

organization. 990 or 990-EZ) to their Form 990 or Form supplements not already filed. In addition,

Report any compensation paid by a related 990-EZ. See General Instruction D for attach a schedule listing the names and

information on Schedule A (Form 990 or addresses of all persons who received the organization for only that period where a 990-EZ). assets distributed in liquidation or termination, control or other relationship existed between • Answer “Yes,” “No,” or “N/A” to each the kinds of assets distributed to each one, and the organizations. Report compensation paid question. each asset’s fair market value. by a related organization in the same period

(calendar or fiscal year) as compensation paid Line 76—Change in activities A “substantial contraction” is a partial

by the Form 990 filer. liquidation or other major disposition of assets Attach a statement to explain any significant Organizations answering “Yes” must attach except transfers for full consideration or changes in the kind of activities the distributions from current income. a schedule that lists, for each officer, director, organization conducts to further its exempt

trustee, or key employee receiving such purpose. Include new or modified activities not A “major disposition of assets” means any

compensation, the name and EIN of each listed as current or planned in the disposition for the tax year that is:

related organization that provided the organization’s application for recognition of 1. At least 25% of the fair market value of

compensation and the amount each provided. exemption, or not yet reported to the IRS by a the organization’s net assets at the beginning Use the same format as required by columns letter to its Director EO Examination or by an of the tax year; or (C) through (E) of Part V. attachment to the organization’s return for any 2. One of a series of related dispositions

Providing information on compensation earlier year. Also include any major program begun in earlier years that add up to at least

received from related organizations does not activities that are being discontinued. 25% of the net assets the organization had at

violate the disclosure provisions of section the beginning of the tax year when the first Line 77—Changes in organizing or 7216(a). See also section 6033(a)(1). disposition in the series was made. Whether a governing documents major disposition of assets took place through A “related organization” is any entity Attach a conformed copy of any changes to the a series of related dispositions depends on the (whether tax-exempt or taxable) that the filing articles of incorporation, or association, facts in each case. organization directly or indirectly owns or constitution, trust instrument, or other controls, or that directly or indirectly owns or organizing document, or to the bylaws or other See Regulations section 1.6043-3 for

controls the filing organization. For example, if governing document. special rules and exceptions.

Organization A owns 90% of B, and B owns A “conformed” copy is one that agrees with Line 80—Relation to other 80% of C, then A would directly own 90% of B

and indirectly own 72% (90% of 80%) of C. the original document and all amendments to organizations it. If the copies are not signed, they must be Answer “Yes” if most (more than 50%) of the “Owns” means holding (directly or accompanied by a written declaration signed organization’s governing body, officers, indirectly) 50% or more of the voting by an officer authorized to sign for the membership rights, voting stock, profits directors, trustees, or membership are also organization, certifying that they are complete officers, directors, trustees, or members of any interest, or beneficial interest. and accurate copies of the original documents. other organization. “Control” means that: Photocopies of articles of incorporation Disregard any coincidental overlap of 1. Fifty percent (50%) or more of the filing showing the certification of an appropriate state membership with another organization; that is, organization’s officers, directors, trustees, or official do not have to be accompanied by such when membership in one organization is not a key employees are also officers, directors, a declaration. See Rev. Proc. 68-14, 1968-1 condition of membership in another trustees, or key employees of the second C.B. 768, for details. When a number of organization. For example, assume that a organization being tested for control; changes are made, attach a copy of the entire majority of the members of a section 501(c)(4) 2. The filing organization appoints 50% or revised organizing instrument or governing civic organization also belong to a local more of the officers, directors, trustees, or key document. chamber of commerce described in section employees of the second organization; or However, if your exempt organization 501(c)(6). The civic organization should 3. Fifty percent (50%) or more of the filing changes its legal structure, such as from a trust answer “No” on line 80 if it does not require its organization’s officers, directors, trustees, or to a corporation, you must file a new exemption members to belong to the chamber of key employees are appointed by the second application to establish that the new legal entity commerce. organization. qualifies for exemption. Also disregard affiliation with any statewide Control exists if the 50% test is met by any Line 78—Unrelated business income or nationwide organization. Thus, the civic one group of persons even if collectively the organization in the above example would still Political organizations described in section 527 50% test is not met. answer “No” on line 80 even if it belonged to a are not required to answer this question. Whether or not any elements of ownership state or national federation of similar Check “Yes” on line 78a if the or control are present, a related organization organizations. A local labor union whose

also includes: organization’s total gross income from all of its members are also members of a national labor unrelated trades and businesses is $1,000 or • A supporting organization operated in organization would answer “No” on line 80. more for the year. Gross income is the amount connection with the filing organization where of gross receipts less the cost of goods sold. Line 81—Expenditures for political one of the purposes of the supporting See Pub. 598 for a description of unrelated purposes organization is to benefit or further the

purposes of the filing organization; and business income and the Form 990-T filing Political organizations described in section requirements for section 501(c), (e), (f), (k), • A supported organization operated in 527 are not required to answer this and (n) organizations having such income. question. connection with the filing organization where Form 990-T is not a substitute for Form 990. one of the purposes of the filing organization is A political expenditure is one intended to Report on Form 990, or Form 990-EZ, items of to benefit or further the purposes of the influence the selection, nomination, election, or income and expense that are also reported on supported organization. appointment of anyone to a Federal, state, or Form 990-T when the organization is required For example, a hospital auxiliary that raises local public office, or office in a political to file both forms. funds for Hospital Y or coordinates the efforts organization, or the election of Presidential or Note: All tax-exempt organizations must pay of that hospital’s volunteer staff would be a Vice Presidential electors. It does not matter estimated taxes with respect to their unrelated supporting organization of Hospital Y and, whether the attempt succeeds. business income if they expect their tax liability thus, a related organization, even if the hospital An expenditure includes a payment, to be $500 or more. Use Form 990-W to does not own or control the auxiliary. Hospital distribution, loan, advance, deposit, or gift of Y, in turn, would be a supported organization of compute this tax. money, or anything of value. It also includes a the auxiliary. In any case where the $10,000 Line 79—Liquidation, dissolution, contract, promise, or agreement to make an and $100,000 minimums were met, the termination, or substantial contraction expenditure, whether or not legally hospital must report (on an attachment to its For a complete liquidation of a corporation or enforceable. return) the compensation paid by the auxiliary termination of a trust, check the “Final return” All section 501(c) organizations. An exempt to the officer, director, trustee, or key employee box in the heading on page 1 of the form. If organization that is not a political organization of the hospital. The same reporting there was a liquidation, dissolution, must file Form 1120-POL if it is treated as requirement would apply to compensation paid termination, or substantial contraction, attach a having political organization taxable income by Hospital Y to an officer, etc., of the auxiliary. statement explaining what took place. under section 527(f)(1).

On the attached statement, show whether If a section 501(c) organization establishes Part VI—Other Information the assets have been distributed and the date and maintains a section 527(f)(3) separate

• Section 501(c)(3) organizations and section of distribution. Also attach a certified copy of segregated fund, it is the fund’s responsibility

4947(a)(1) nonexempt charitable trusts must any resolution, or plan of liquidation or to file its own Form 1120-POL if the fund meets

Specific Instructions for Form 990 -27-
the Form 1120-POL filing requirements. Do not fair rental value. If so, and if the organization’s 501(c)(4), but not section 501(c)(4) social

include the segregated fund’s receipts, records either show the amount and value of welfare organizations.

expenditures, and balance sheet items on the such items or give a clearly objective basis for

Form 990, or Form 990-EZ, of the section an estimate, the organization may choose to 3. Labor unions and other labor

501(c) organization that establishes and enter this optional information on line 82b. The organizations described in section 501(c)(5),

maintains the fund. When answering questions IRS does not require any organization to keep but not section 501(c)(5) agricultural and

81a and 81b on its Form 990, this section such records. However, do not horticultural organizations. include the

501(c) organization should disregard the value of such items in Part I or II, or in the 4. Section 501(c)(4), (5), and (6) political expenses and Form 1120-POL filing expense column in Part III. You may indicate organizations that receive more than 90% of requirement of the segregated fund. the value of donated services or use of their dues from: materials, equipment, or facilities in Part III in a. Section 501(c)(3) organizations, the narrative description of program services However, when a section 501(c) rendered. See the instructions for Part III. organization transfers its own funds, to a b. State or local governments, separate segregated section 527(f)(3) fund for

use as political expenses, the 501(c) Line 83—Public inspection c. Entities whose income is exempt from

organization must report the transferred funds tax under section 115, or requirements as its own political expenses on its Form 990

or Form 990-EZ. Answer “Yes” only if the organization complied d. Organizations described in 1 through 3,

with its public inspection obligations described above.

in General Instruction M.

Section 501(c)(3) organizations. A section 5. Section 501(c)(4) and (5) organizations 501(c)(3) organization will lose its tax-exempt that receive more than 90% of their annual

status if it engages in political activity. Line 83b—Disclosure requirements for dues from:

quid pro quo contributions a. Persons,

A section 501(c)(3) organization must pay a See General Instruction L.

b. Families, or section 4955 excise tax for any amount paid or

incurred on behalf of, or in opposition to, any Line 84a—Solicitations of c. Entities who each paid annual dues of candidate for public office. The organization contributions $83 or less in 2002 (adjusted annually for must pay an additional excise tax if it fails to All organizations that qualify under section inflation). See Rev. Proc. 2001-59, 2001-52 correct the expenditure timely. I.R.B. 623 (2001-2 C.B. 623). 170(c) to receive contributions that are

deductible as charitable contributions for A manager of a section 501(c)(3) 6. Any organization that receives a private Federal income tax purposes, enter “N/A.” See organization who knowingly agrees to a letter ruling from the IRS stating that the General Instruction L. political expenditure must pay a section 4955 organization satisfies the section 6033(e)(3)

excise tax, unless the agreement is not willful exception.

and there is reasonable cause. A manager who Line 85—Section 501(c)(4), (5), or (6) 7. Any organization that keeps records to does not agree to a correction of the political organizations substantiate that 90% or more of its members expenditure may have to pay an additional Reporting membership dues, lobbying, and cannot deduct their dues (or similar amounts) excise tax. political expenses under section 6033(e). as business expenses whether or not any part

Only certain organizations that are tax-exempt of their dues are used for lobbying purposes. When a section 501(c)(3) organization under:

promotes a candidate for public office (or is 8. Any organization that is not a

used or controlled by a candidate or • Section 501(c)(4) (social welfare membership organization.

prospective candidate), amounts paid or organizations),

incurred for the following purposes are political

expenditures: • Section 501(c)(5) (agricultural and Note: Special rules treat affiliated social

horticultural organizations), or welfare organizations, agricultural and • Remuneration to such individual (a horticultural organizations, and business candidate or prospective candidate) for • Section 501(c)(6) (business leagues) leagues as parts of a single organization for speeches or other services; purposes of meeting the nondeductible dues • Travel expenses of such individual; are subject to (a) the section 6033(e) notice exception. See Rev. Proc. 98-19. • Expenses of conducting polls, surveys, or and reporting requirements, and (b) a potential Exception 2. Section 6033(e)(1) $2,000 other studies, or preparing papers or other proxy tax. These organizations must report

material for use by such individual; in-house lobbying exception. (Check “Yes” their total lobbying expenses, political for line 85b.) An organization satisfies the • Expenses of advertising, publicity, and expenses, and membership dues, or similar $2,000 in-house lobbying exception if it: fundraising for such individual; and amounts, on line 85 of Form 990. 1. Did not receive a waiver for proxy tax • Any other expense that has the primary owed for the prior year. effect of promoting public recognition or Section 6033(e) notice and reporting

otherwise primarily accruing to the benefit of requirements and proxy tax. Section 6033(e) 2. Did not make any political or foreign such individual. requires certain section 501(c)(4), (5), and (6) lobbying expenditures during the 2002

An organization is effectively controlled by a organizations to tell their members what reporting year,

candidate or prospective candidate only if such portion of their membership dues were

individual has a continuing, substantial allocable to the political or lobbying activities of 3. Made lobbying expenses during the

involvement in the day-to-day operations or the organization. If an organization does not 2002 reporting year consisting only of in-house

management of the organization. give its members this information, then the direct lobbying expenses totaling $2,000 or

organization is subject to a proxy tax. The tax less, but excluding:

is reported on Form 990-T. a. Any allocable overhead expenses, and A determination of whether the primary

purpose of an organization is promoting the b. All direct lobbying expenses of any local candidacy or prospective candidacy of an However, if the organization meets council regarding legislation of direct interest to individual for public office is made on the basis Exception 1 or 2, it is excluded from the the organization or its members. of all the facts and circumstances. See section notice, reporting, and proxy tax requirements of

4955 and Regulations section 53.4955. section 6033(e). See also Rev. Proc. 98-19,

1998-1 C.B. 547. Dues notices. An organization that checked

Use Form 4720 to figure and report the “No” for both lines 85a and 85b, and is thus

excise taxes. Exception 1. Section 6033(e)(3) exception responsible for reporting on line 85c through

for organizations whose dues are 85h, must send dues notices to its members at

nondeductible. (Check “Yes” for line 85a.) the time of assessment or payment of dues, Line 82—Donated services or facilities 1. All organizations exempt from tax under unless the organization chooses to pay the

Because Form 990, or Form 990-EZ, is open to proxy tax instead of informing its members of section 501(a), other than section 501(c)(4), public inspection, you may want the return to the nondeductible portion of its dues. These (5), and (6) organizations. show contributions the organization received in dues notices must reasonably estimate the

the form of donated services or the use of 2. Local associations of employees’ and dues allocable to the nondeductible lobbying

materials, equipment, or facilities at less than veterans’ organizations described in section and political expenditures reported on line 85d.

-28- Specific Instructions for Form 990
IF . . . THEN . . . • The actions of a covered executive branch supporting a lobbying communication, even if

official through direct communication (e.g., not yet made.

The organization’s The organization must: President, Vice President, or cabinet-level A lobbying communication is any

lobbying and political (a) Allocate all officials, and their immediate deputies) communication with any member or employee

expenses are more than membership dues to its (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

legislation that: the year, activities, and direct lobbying activities include, but are not

(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

organization’s lobbying communication was for (a) Had only de minimis not disclose to its See Regulations sections 1.162-28 and

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

• Grassroots lobbying, and as a lobbying cost to influence legislation, but (b) Paid a proxy tax, • Political activities. after the organization filed a timely return, it instead of notifying its There are no special rules related to appears the lobbying communication will not members on the determining these costs. be made under any foreseeable circumstance, allocation of dues to the organization may apply these costs to lobbying and political All methods. For all the allocation reduce its current year’s lobbying costs, but not expenses*; or methods, include labor hours and costs of below zero. The organization may carry personnel whose activities involve significant forward any amount of the costs not used to judgment with respect to lobbying activities (c) Established that reduce its current year’s lobbying costs to (lobbying personnel). substantially all of its subsequent years. membership dues, etc., Example: Ratio method. X Organization are not deductible by Special rules and definitions. incurred: members, Ratio and gross-up methods. 1. 6,000 labor hours for all activities

*(such as political campaign or grassroots lobbying 1. May use even if volunteers conduct 2. 3,000 labor hours for lobbying activities

expenses) activities. (three employees)

2. May disregard labor hours and costs of 3. $300,000 for operational costs

clerical or support personnel (other than 4. No third-party lobbying costs Members of the organization cannot take a lobbying personnel) under the ratio method. trade or business expense deduction on their X Organization allocated its lobbying costs as tax returns for the portion of their dues, etc., Alternative gross-up method. allocable to the organization’s lobbying and follows: • Disregard labor hours and political activities. • Costs of clerical or support personnel (other Lobbying

Proxy tax. than lobbying personnel). labor hrs.

3,000 × $300,000 + 0 = $150,000 6,000 IF . . . THEN . . . Third-party costs are those paid to: Total labor Total Allocable Costs • Outside parties for conducting lobbying hrs. costs of third-party allocable to

The organization’s The organization is activities, operations costs lobbying

actual lobbying and liable for a proxy tax on • Dues paid to another membership activities

political expenses are the excess and reports it organization that were declared to be Examples: Gross-up method and more than it estimated on Form 990-T. nondeductible lobbying expenses, and Alternative gross-up method. in its dues notices, • Travel and entertainment costs for lobbying A and B are employees of Y Organization. activities.

1. A’s activities involve significant The organization: All the members’ dues Direct contact lobbying is a: judgment with respect to lobbying activities. (a) Elects to pay the remain eligible for a • Meeting, 2. A’s basic lobbying labor costs (excluding proxy tax, and section 162 trade or • Telephone conversation, employee benefits) are $50,000. (b) Chooses not to give business expense • Letter, or 3. B performs clerical and support activities its members a notice deduction. • Similar means of communication that is for A. allocating dues to with a: 4. B’s labor costs (excluding employee lobbying and political 1. Legislator (other than a local legislator) benefits) in support of A’s activities are activities, or $15,000. 2. Covered executive branch official 5. Allocable third-party costs are $100,000. The organization: The IRS may permit a and that otherwise qualifies as a lobbying (a) Makes a reasonable waiver of the proxy tax. If Y Organization uses the gross-up method activity.

estimate of dues Treat all hours spent by a person in to allocate its lobbying costs, Y multiplies 175%

allocable to times its basic labor costs (excluding employee connection with direct contact lobbying as labor

nondeductible lobbying benefits) for all of the lobbying of its personnel hours allocable to lobbying activities.

and political activities, and adds its allocable third-party lobbying

and Do not treat the hours spent by a person costs as follows:

who engages in research and other (b) Agrees to adjust its background activities related to direct contact 175% × $65,000 + $100,000 = $213,750 estimate in the following lobbying, but who makes no direct contact with year*, Basic lobbying labor Allocable Costs allocable a legislator, or covered executive branch costs of A + B third-party costs to lobbying

official, as direct contact lobbying. activities *A facts and circumstances test determines whether or

not a reasonable estimate was made in good faith. De minimis rule. If less than 5% of a If Y Organization uses the alternative

person’s time is spent on lobbying activities, gross-up method to allocate its lobbying costs,

and there is no direct contact lobbying, an Y multiplies 225% times its basic labor costs Allocation of costs to lobbying activities organization may treat that person’s time spent (excluding employee benefits) for all of the and influencing legislation. An organization on lobbying activities as zero. lobbying hours of its “lobbying personnel” and that is subject to the lobbying disclosure rules adds its third-party lobbying costs as follows: of section 6033(e) must use a reasonable Influencing legislation means:

allocation method to determine its total costs of • Any attempt to influence legislation through 225% × $50,000 + $100,000 = $212,500

its direct lobbying activities; that is, costs to a lobbying communication; and Basic lobbying labor Allocable Costs allocable influence: • All activities, such as research and costs of A third-party costs to lobbying

• Legislation, and coordination for the purpose of making or activities

Specific Instructions for Form 990 -29-
Section 263A cost allocation method. The Line 85d—Lobbying and political Line 85c (dues, etc.)

examples that demonstrate this method are expenditures Less: Line 85e (dues shown in notices) found in Regulations section 1.162-28(f). Include on line 85d the total amount of

expenses paid or incurred during the 2002 Equals: Line 85f (taxable lobbying & Line 85a—Section 6033(e)(3) reporting year in connection with: political expenses), and exception for nondeductible dues

1. Influencing legislation; If your organization meets any of the criteria of

Exception 1 2. Participating or intervening in any Line 85d (lobbying & political in the line 85 instructions, answer

political campaign on behalf of (or in opposition expenses) “Yes” to question 85a. By doing so, you are

declaring that substantially all of the to) any candidate for any public office; Less: Line 85c (dues, etc.) organization’s membership dues were 3. Attempting to influence any segment of

nondeductible. Skip lines 85b through 85h. the general public with respect to elections, Equals: The excess amount to be carried

legislative matters, or referendums; or over to the following tax year and Line 85b—In-house lobbying 4. Communicating directly with a covered reported on line 85d (lobbying & expenditures executive branch official in an attempt to political expenses), or its An organization is exempt from the notice, influence the official actions or positions of equivalent, on the year 2003 Form reporting, and proxy tax liability rules of section such official. 990. 6033(e) if it meets Exception 2, the $2,000 Also include on line 85d: in-house lobbying exception. Both exceptions See Examples given below. are discussed in the instructions for line 85. 1. Excess lobbying and political

expenditures carried over from the preceding An organization should answer “Yes” to Lines 85g and 85h—Proxy tax and tax year. question 85b if it met all of the requirements of waivers 2. An amount equal to the taxable lobbying Exception 2. Skip lines 85c through 85h. and political expenditures reported on line 85f An organization must pay the section 6033(e) If the organization’s in-house direct proxy tax on the amount reported on line 85f for the preceding tax year, if the organization lobbying expenditures during the 2002 received a waiver of the proxy tax imposed on unless it has the option to check “Yes” on line reporting year were $2,000 or less, but the 85h. that amount. organization also paid or incurred other

lobbying or political expenditures during the If the amount on line 85f is zero, or less than Do not include: 2002 reporting year, or received a waiver for zero, enter on:

proxy tax owed for the prior year, it should 1. Any direct lobbying of any local council

or similar governing body with respect to Line 85g N/A answer “No” to question 85b and complete

lines 85c through 85h. However, the $2,000 or legislation of direct interest to the organization Line 85h N/A or its members. less of in-house direct lobbying expenditures

should not be included in the total on line 85d. 2. In-house direct lobbying expenditures, if

Definitions. the total of such expenditures is $2,000 or less If the organization sent dues notices to its (excluding allocable overhead). members at the time of assessment or Grassroots lobbying refers to attempts to 3. Political expenditures for which the payment of dues that reasonably estimated the influence any segment of the general public section 527 tax has been paid (on Form dues allocable to the nondeductible lobbying regarding legislative matters or referendums. 1120-POL). and political expenditures reported on line 85d, Direct lobbying includes attempting to • Reduce the current year’s lobbying enter on: influence: expenditures, but not below zero, by costs • Legislation through communication with Line 85g No previously allocated in a prior year to lobbying legislators and other government officials, and activities that were cancelled after a return Line 85h Yes • The official actions or positions of covered reporting those costs was filed. executive branch officials through direct • Carry forward any amounts not used as a Include the amount from the 2002 Form 990, communication.

reduction to subsequent years. line 85f, on the year 2003 Form 990, line 85d, Direct lobbying does not include or its equivalent. attempting to influence: Line 85e—Dues declared • Any local council on legislation of direct nondeductible in notices to members interest to the organization or its members, and If the organization did not send these dues • The general public regarding legislative Enter the total amount of dues, etc., allocable notices, enter on: matters (grassroots lobbying). to the 2002 reporting year that members were

notified were nondeductible under section Line 85g Yes Other lobbying includes: 162(e). • Grassroots lobbying, Line 85h No • Foreign lobbying, Example. • Third-party lobbying, and Report the proxy tax on Form 990-T. • Membership dues: $100,000 for the 2002 • Dues paid to another organization that were reporting year used to lobby. • Organization’s timely notices to members— Examples. Organizations A and B: In-house expenditures include: 25% of membership dues nondeductible • Salaries, and 1. Reported on the calendar year basis. • Line 85e entry—$25,000 • Other expenses of the organization’s officials 2. Incurred only grassroots lobbying

and staff (including amounts paid or incurred expenses (did not qualify for the under $2,000 Line 85f—Taxable lobbying and in-house lobbying exception (de minimis rule)). for the planning of legislative activities). political expenditures 3. Allocated dues to the tax year in which In-house expenditures do not include: The taxable amount reportable on line 85f is received. • Any payments to other taxpayers engaged in the amount of dues, etc.: lobbying or political activities as a trade or For Organization A—Dues, assessments, 1. Allocable to the 2002 reporting year and business. and similar amounts received in 2002 were 2. Attributable to lobbying and political • Any dues paid to another organization that greater than its lobbying expenses for 2002. expenditures that the organization did not are allocable to lobbying or political activities. timely notify its members were nondeductible. Workpapers (for 2002 Form 990) —

Line 85c—Dues, assessments, and Organization A If the amount on line 85c (dues, etc.) is similar amounts received 1. Total dues, assessments, etc., greater than the amount on line 85d (lobbying Enter the total dues, assessments, and similar received .................. $800 & political expenses), then: amounts allocable to the 2002 reporting year. 2. Lobbying expenses paid or incurred $600

The term “dues” means the amount the Line 85d (lobbying & political 3. Less: Total nondeductible amount of

organization requires a member to pay in order expenses) dues notices . . . . . . . . . . . . . . . 100 100

to be recognized as a member. 4. (Subtract line 3 from both lines 1 and Less: Line 85e (dues shown in notices) Payments that are similar to dues include: 2) . . . . . . . . . . . . . . . . . . . . . $700 $500

1. Members’ voluntary payments, Equals: Line 85f (taxable lobbying & 5. Taxable amount of lobbying expenses

2. Assessments to cover basic operating political expenses) (smaller of the two amounts on line 4) $500

costs, and If the amount on line 85c (dues, etc.) is less Note: The amounts on lines 1, 2, 3, and 5 of

3. Special assessments to conduct than the amount on line 85d (lobbying & the workpapers were entered on lines 85c

lobbying and political activities. political expenses), then: through 85f of the 2002 Form 990.

-30- Specific Instructions for Form 990
Because dues, etc., received were greater Investment income earned by a section Line 89b—Section 501(c)(3) and

than lobbying expenses, there is no carryover 501(c)(7) organization is not tax-exempt 501(c)(4) organizations: Disclosure of of excess lobbying expenses to line 85d of the income unless it is set aside for: section 4958 excess benefit

year 2003 Form 990. • Religious, transactions and excise taxes

See the instructions for lines 85g and 85h • Charitable, Sections 6033(b) and 6033(f) require section • Scientific, for the treatment of the $500. 501(c)(3) and (4) organizations to report the • Literary, For Organization B—Dues, assessments, amount of taxes imposed under section 4958 • Educational purposes, or and similar amounts received in 2002 were (excess benefit transactions) involving the • Prevention of cruelty to children or animals. less than its lobbying expenses for 2002. organization, unless abated, as well as any If the combined amount of an other information the Secretary may require Workpapers (for 2002 Form 990) — organization’s gross investment income and concerning those transactions. See General Organization B other unrelated business income exceeds Instruction P for a discussion of excess benefit $1,000, it must report the investment income 1. Total dues, assessments, etc., transactions.

received . . ................ $400 and other unrelated business income on Form

990-T. Attach a statement describing any excess 2. Lobbying expenses paid or incurred $600 benefit transaction, the disqualified person or

3. Less: Total nondeductible amount of Nondiscrimination policy. A section persons involved, and whether or not the

dues notices . . . . . . . . . . . . . . . 100 100 501(c)(7) organization is not exempt from excess benefit transaction was corrected. income tax if any written policy statement, 4. (Subtract line 3 from both lines 1 and including the governing instrument and bylaws, Line 89c—Taxes imposed on 2) . . . . . . . . . . . . . . . . . . . . . $300 $500 allows discrimination on the basis of race, organization managers or disqualified 5. Taxable amount of lobbying expenses color, or religion. persons (smaller of the two amounts on line 4) $300

However, section 501(i) allows social clubs For line 89c, enter the amount of taxes

Note: The amounts on lines 1, 2, 3, and 5 of imposed on organization managers or to retain their exemption under section the workpapers were entered on lines 85c disqualified persons under sections 4912, 501(c)(7) even though their membership is through 85f of the 2002 Form 990. 4955, and 4958, unless abated. limited (in writing) to members of a particular Because dues, etc., received were less religion, if the social club: Line 89d—Taxes reimbursed by the than lobbying expenses, excess lobbying 1. Is an auxiliary of a fraternal beneficiary organization expenses of $200 must be carried forward to society exempt under section 501(c)(8), and For line 89d, enter the amount of tax on line line 85d of the year 2003 Form 990 (excess of 2. Limits its membership to the members 89c that was reimbursed by the organization. $600 of lobbying expenses over $400 dues, of a particular religion; or the membership Any reimbursement of the excise tax liability of etc., received). The $200 will be included along limitation is: with the other lobbying and political expenses a disqualified person or organization manager a. A good-faith attempt to further the will be treated as an excess benefit unless (1) paid or incurred in the 2003 reporting year and teachings or principles of that religion, and the organization treats the reimbursement as reportable on line 85d (or the equivalent line) of b. Not intended to exclude individuals of a compensation during the year the the year 2003 Form 990. particular race or color. reimbursement is made, and (2) the total See the instructions for lines 85g and 85h compensation to that person, including the for the treatment of the $300. Line 87—Section 501(c)(12) reimbursement, is reasonable.

Underreporting of lobbying expenses. An organizations Line 90a—List of states organization is subject to the proxy tax for the

2002 reporting year for underreported lobbying One of the requirements that an organization List each state with which the organization is

and political expenses only to the extent that must meet to qualify under section 501(c)(12) filing a copy of this return in full or partial

these expenses (if actually reported) would is that at least 85% of its gross income consists satisfaction of state filing requirements.

have resulted in a proxy tax liability for that of amounts collected from members for the Line 90b—Number of employees year. A waiver of proxy tax for the tax year only sole purpose of meeting losses and expenses.

For purposes of section 501(c)(12), the term Enter the number of employees on your payroll applies to reported expenditures. “gross income” means gross receipts without during the pay period including March 12, An organization that underreports its reduction for any cost of goods sold. 2002, as shown on your Form 941 or Form 943 lobbying and political expenses is also subject (January-March calendar quarter return only). to the section 6652(c) daily penalty for filing an For a mutual or cooperative electric or Do not include household employees, persons incomplete or inaccurate return. telephone company, “gross income” does not who received no pay during the pay period,

Line 86—Section 501(c)(7) include amounts received or accrued as pensioners, or members of the Armed Forces. “qualified pole rentals.” organizations Line 92—Section 4947(a)(1)

Gross receipts test. A section 501(c)(7) For a mutual or cooperative telephone nonexempt charitable trusts company, “gross income” also does not include organization may receive up to 35% of its Section 4947(a)(1) nonexempt charitable trusts gross receipts, including investment income, amounts received or accrued either from that file Form 990 instead of Form 1041 must another telephone company for completing from sources outside its membership and complete this line. The trust should include long distance calls to or from or between the remain tax-exempt. Part of the 35% (up to 15% exempt-interest dividends received from a telephone company’s members, or from the of gross receipts) may be from public use of a mutual fund or other regulated investment sale of display listings in a directory furnished social club’s facilities. company as well as tax-exempt interest to the telephone company’s members. Gross receipts are the club’s income from received directly.

its usual activities and include: Line 88 • Charges, Answer “Yes” to this question if at any time Part VII—Analysis of • Admissions,

• Membership fees, during the year, the organization owned a 50% Income-Producing Activities or greater interest in a taxable corporation or • Dues, Political organizations described in section 527 partnership or an entity disregarded as • Assessments, and are not required to complete this Part. separate from the organization under • Investment income (such as dividends, Regulations sections 301.7701-2 and An organization is exempt from income rents, and similar receipts), and normal 301.7701-3. If an organization answers “Yes” taxes only if its primary purpose is to engage in recurring capital gains on investments. on line 88, complete Part IX, Information the type of activity for which it claims

Gross receipts do not include: Regarding Taxable Subsidiaries and exemption.

• Capital contributions (see Regulations Disregarded Entities. An exempt organization is subject to a tax section 1.118-1), on unrelated business taxable income if such • Initiation fees, or Line 89a—Section 501(c)(3) income is from a trade or business that is • Unusual amounts of income (such as the organizations: Disclosure of excise regularly carried on by the organization and is sale of the clubhouse). taxes imposed under section 4911, not substantially related to the organization’s

Note: College fraternities or sororities or 4912, or 4955 performance of its exempt purpose or function.

other organizations that charge membership Section 501(c)(3) organizations must disclose Generally, a tax-exempt organization with

initiation fees, but not annual dues, do include any excise tax imposed during the year under gross income of $1,000 or more for the year

initiation fees in their gross receipts. section 4911 (excess lobbying expenditures), from an unrelated trade or business must file

Form 990-T and pay any tax due. If the 35% and 15% limits do not affect the 4912 (disqualifying lobbying expenditures), or,

club’s exempt status, include the income unless abated, 4955 (political expenditures). In Part VII, show whether revenue, also

shown on line 86b on the club’s Form 990-T. See sections 4962 and 6033(b). reportable on lines 2 through 11 of Part I, was

Specific Instructions for Form 990 -31-
received from activities related to the such as interest on state and local bonds that from debt-financed property is treated as

organization’s purpose or activities unrelated to is excluded from tax by section 103. Explain in unrelated business taxable income and is

its exempt purpose. Enter gross amounts Part VIII how any amount reported in column subject to tax in the same proportion as the

unless indicated otherwise. Show also any (E) related to the accomplishment of the property remains financed by the debt. If

revenue excludable from the definition of organization’s exempt purposes. substantially all (85% or more) of any property

unrelated business taxable income. is used for an organization’s exempt purposes, Lines 93(a) through (g)—Program the property is not treated as debt-financed The sum of amounts entered in columns service revenue property. The rules for debt-financed property (B), (D), and (E) for lines 93 through 103 of List the organization’s revenue-producing do not apply to rents from personal property. Part VII should match amounts entered for program service activities on these lines. correlating lines 2 through 11 of Part I. Use the Program service activities are primarily those Lines 99 through 102 following table to verify the relationship of Part that form the basis of an organization’s In the appropriate columns, report the revenue VII with Part I. exemption from tax. Enter, in the appropriate received for these line items. General

Note: Contributions that are reportable on columns, gross revenue from each program instructions for lines 99 through 102 are given lines 1a through 1d of Part I are not reportable service activity and the business and exclusion in the instructions for Part I, lines 7 through 10. in Part VII. codes that identify this revenue. See the Lines 103(a) through (e)—Other explanation of program service revenue in the Amounts in Part VII Correspond to revenue instructions for Part I, line 2. on Line Amounts in Part List any “Other revenue” activity on these lines. I on Line Line 93(f)—Medicare and Medicaid These activities are discussed in the

 93(a) through (g) .................. 2 payments instructions for line 11, Part I. In the 94 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Enter the revenue received from Medicare and appropriate columns, enter the revenue 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Medicaid payments. See the Examples of received from these activities. Select 96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 program service revenue in the instructions for applicable business and exclusion codes. 97 and 98 . . . . . . . . . . . . . . . . . . . . . . . 6c Part I, line 2. Report as “Other revenue,” on line 11 of Part I, 99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 the total revenue entered in columns (B), (D), 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . 8d Line 93(g)—Fees and contracts from and (E) for lines 103(a) through (e). 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . 9c government agencies 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10c Line 105—Total In the appropriate columns, enter gross 103(a) through (e) . . . . . . . . . . . . . . . . . . 11 revenue earned from fees and contract Enter the total revenue reported on line 104 for 105 (plus line 1d, Part I) . . . . . . . . . . . . . . 12

payments by government agencies for a columns (B), (D), and (E). The amount

service, facility, or product that benefited the reported on line 105, plus the amount on line Completing Part VII government agency primarily, either 1d of Part I, should equal the amount entered

economically or physically. Do not include for “Total revenue” on line 12 of Part I. Column (A) government grants that enabled your In column (A), identify any unrelated business organization to benefit the public directly and taxable income reportable in column (B) by Part VIII—Relationship of primarily. See Part I, line 1c instructions for the selecting a business code from the Codes for distinction between government grants that Activities to the Accomplishment Unrelated Business Activity in the 2002 represent contributions and payments from of Exempt Purposes Instructions for Form 990-T. government agencies for a service, product, or To explain how an amount entered in Part VII, Note: The codes for unrelated business facility that primarily benefited the government column (E), was related or exempt function activity have been revised. Use the codes agencies. income, show the line number of the amount in shown in the 2002 Instructions for Form 990-T. Report on line 2 of Part I (program service column (E) and give a brief description of how revenue) the sum of the entries in columns (B), Column (B) the activity reported in column (E) specifically (D), and (E) for lines 93(a) through (g). contributed to the accomplishment of the In column (B), enter any revenue received from organization’s exempt purposes (other than by activities unrelated to the exempt purpose of Lines 94 through 96—Dues, providing funds for such purposes). Activities the organization. See the Instructions for Form assessments, interest, and dividends that generate exempt-function income are 990-T and Pub. 598 for a discussion of what is In the appropriate columns, report the revenue activities that form the basis of the unrelated business taxable income. If you enter received for these line items. General organization’s exemption from tax. an amount in column (B), then you must enter instructions for lines 94 through 96 are given in a business code in column (A). Also give the line number and an the instructions for Part I, lines 3 through 5. explanation for any income entered in column Column (C) Lines 97 and 98—Rental income (loss) (E) that is specifically excluded from gross

In column (C), enter an exclusion code from Report net rental income from investment income other than by Code sections 512, 513,

the Exclusion Codes list on the last page of the property on these lines. Also report here rental or 514. If no amount is entered in column (E),

Specific Instructions for Form 990 to identify income from unaffiliated exempt organizations. do not complete Part VIII.

any revenue excludable from unrelated Report rental income, however, from an Example. M, an organization described in business taxable income. If more than one exempt function (program service) on line 93. section 501(c)(3), operates a school for the exclusion code applies to a particular revenue Refer to the instructions for Part I, line 6. A performing arts. Admission is charged at item, use the lowest numbered exclusion code more detailed discussion of rental income is student performances. M reported admission that applies. If nontaxable revenues from given in the Instructions for Form 990-T and income in column (E) of Part VII and explained several sources are reportable on the same Pub. 598. in Part VIII that performances before an line in column (D), use the exclusion code that Rents from real property are usually audience were an essential part of the applies to the largest revenue source. If the list excluded in computing unrelated business students’ training and related to the exempt of exclusion codes does not include an item of taxable income, as are incidental amounts purpose of the organization. revenue that is excludable from unrelated (10% or less) of rental income from personal Because M also reported interest from state business taxable income, enter that item in property leased with real property (mixed bonds in column (E) of Part VII, M explained in column (E) and see the instructions for column lease). In a mixed lease where the rent Part VIII that such interest was excluded from (E). attributable to personal property is more than gross income by Code section 103.

Column (D) 50% of the total rent, neither rent from real or If you need additional space, see personal property is excluded from unrelated For column (D), identify any revenue received Attachments in General Instruction W. business taxable income. The exclusion also that is excludable from unrelated business does not apply when the real or personal taxable income. If you enter an amount in

column (D), you must enter an exclusion code property rentals depend wholly or partly on the Part IX—Information Regarding income or profits from leased property, other in column (C). Taxable Subsidiaries and than an amount based on a fixed percentage

Column (E) or percentage of gross receipts or sales. Disregarded Entities

For column (E), report any revenue from The rental exclusion from unrelated Column (A). Enter the name, address, and

activities related to the organization’s exempt business taxable income does not apply to EIN of each taxable corporation or partnership

purpose; (i.e., income received from activities debt-financed real property. In general, and each disregarded entity in which the

that form the basis of the organization’s debt-financed property is any property that the organization held a 50% or greater interest at

exemption from taxation). Also report here any organization finances by debt and holds to any time during the year. If a disregarded entity

revenue that is excludable from gross income produce income instead of for exempt does not have its own EIN, state that it uses

other than by Code section 512, 513, or 514, purposes. An exempt organization’s income the organization’s EIN.

-32- Specific Instructions for Form 990
Columns (D) and (E). Enter the corporation’s personal benefit contract, or there is an

or partnership’s total income and end-of-year understanding or expectation that any person Part X—Information Regarding

total assets as reported on each entity’s will directly or indirectly pay such premiums, Transfers Associated With

Federal tax return for the year ending within the organization must report the premiums it Personal Benefit Contracts the year covered by the parent organization’s paid and the premiums paid by others, but

Form 990. Since the financial information of a treated as paid by the organization, on Form See General Instruction V which also

disregarded entity is reported on its parent 8870. The organization must report and pay an discusses the reporting requirements for this

organization’s return, enter in Column (D) the excise tax, equal to premiums paid, on Form Part.

amount on line 12, Total revenue, that is 4720.

attributable to the disregarded entity. Enter in

Column (E) the amount on line 59, Total If, in connection with any transfer of funds

assets, Column (B), that is attributable to the to a charitable organization, the organization

disregarded entity. directly or indirectly pays premiums on any

Specific Instructions for Form 990 -33-
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

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))

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))

Section 501(c)(3) organization—Income 31—

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 (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))

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 $120 (subject

to inflation) paid to a section 501(c)(5)

agricultural or horticultural organization

(section 512(d))

-34- Specific Instructions for Form 990
If the return is an amended return, check H or attach Schedule B (Form 990, 990-EZ, or

Specific Instructions for the box. There are amended return 990-PF). Failure to either check the box in item

requirements when filing with a state. See H or file Schedule B (Form 990, 990-EZ, or Form 990-EZ General Instructions E and J. 990-PF) will result in a determination that the

Application pending. return is incomplete. See the instructions for If the organization’s Note: See also the General Instructions that application for exemption is pending, check this Schedule B (Form 990, 990-EZ, or 990-PF), apply to both Form 990 and Form 990-EZ. box and complete the return. Schedule of Contributors, for more information.

Contents Page Note: “Contributor” includes individuals, Item C—Name and address fiduciaries, partnerships, corporations, Completing the Heading of Form 990-EZ . . . 35 If we mailed the organization a Form 990 associations, trusts, and exempt organizations. Package with a preaddressed mailing label, Part I—Revenue, Expenses, and Changes in attach the label in the name and address Guidelines for meeting the schedule of Net Assets . . . . . . . . . . . . . . . . . . . . . . 36 space on the organization’s return. Using the contributor requirements of Schedule B

Part II—Balance Sheets . . . . . . . . . . . . . 39 label helps us avoid errors in processing the (Form 990, 990-EZ, or 990-PF) 

return. If any information on the label is wrong, Part III—Statement of Program Service draw a line through that part and correct it. If . . . Accomplishments . . . . . . . . . . . . . . . . . . 39

If the organization operates under a name A section 501(c)(3) Part IV—List of Officers, Directors, Trustees, different from its legal name, give the legal organization that met the and Key Employees . . . . . . . . . . . . . . . . 40 name of the organization but identify its 1/3 support test of the Section 501(c)(3) Part V—Other Information . . . . . . . . . . . . 40 alternate name, after the legal name, by writing regulations under org., meeting the ‘‘aka’’ (also known as) and the alternate name 509(a)(1)/170(b)(1)(A) did 1/3 support test of the organization. However, if the not receive a contribution of 170(b)(1)(A) Completing the Heading of Form organization has changed its name, follow the of the greater of $5,000 or instructions for Name change in Item B— 2% of the amount on line 1 990-EZ Checkboxes. of Form 990-EZ, from any The instructions that follow are keyed to items Include the suite, room, or other unit one contributor,* in the heading for Form 990-EZ. number after the street address. If the Post

Office does not deliver mail to the street Then . . . Item A—Accounting period address and the organization has a P.O. box, The organization should Use the 2002 Form 990-EZ to report on a show the box number instead of the street check the box in item H to calendar year accounting period beginning address. certify that it is not January 1, 2002, and ending December 31, For foreign addresses, enter information in required to attach 2002. the following order: City, province or state, and Schedule B (Form 990, Use the 2002 Form 990-EZ to report on an the name of the country. Follow the foreign 990-EZ, or 990-PF). accounting period other than a calendar year country’s practice in placing the postal code in

(either a fiscal year that began in 2002 or a the address. Please do not abbreviate the Otherwise . . .

short period (less than 12 months) that began country name. Complete and attach in 2002). You must show the month and day in If a change of address occurs after the Schedule B (Form 990, 2002 that your fiscal year began, or the short return is filed, use Form 8822 to notify the IRS 990-EZ, or 990-PF). period began. You must also show the day, of the new address.

month, and year your fiscal year or short period If . . . Item D—Employer identification ended. See General Instruction G. A section 501(c)(7), (8), or number (10) organization did not Item B—Checkboxes The organization should have only one Federal receive any contribution or

Address change, name change, and initial employer identification number (EIN). If the bequest for use exclusively organization has more than one EIN and has return. Check the appropriate box if the for religious, charitable, not been advised which to use, notify the organization changed its address since it filed Section 501(c)(7), scientific, literary, or Internal Revenue Service Center, Ogden, UT its previous return, or if this is the first time the (8), or (10) educational purposes, or 84201-0027. State what numbers the organization is filing either a Form 990 or a organization has, the name and address to organization the prevention of cruelty to Form 990-EZ. which each number was assigned, and the children or animals (and

If the tax-exempt organization has changed address of its principal office. The IRS will did not receive any

its name, attach the following documents: advise the organization which number to use. noncharitable contributions

Note: A section 501(c)(9) voluntary of $5,000 or more as

IF the tax-exempt THEN attach these employees’ beneficiary association must use described below under

organization is . . . documents. . . its own EIN and not the EIN of its sponsor. general rule),

Item E—Telephone number A corporation An amendment to the Then . . .

articles of incorporation Enter a telephone number of the organization The organization should

with proof of filing with that members of the public and government check the box in item H to

the state of regulators may use during normal business certify that it is not

incorporation. hours to obtain information about the required to attach organization’s finances and activities. If the Schedule B (Form 990, organization does not have a telephone A trust An amendment to the 990-EZ, or 990-PF). number, enter the telephone number of an trust agreement signed organization official who can provide such by the trustee. Otherwise . . . information. Complete and attach

An association An amendment to the Item F—Group exemption number Schedule B (Form 990,

articles of association, If the organization is covered by a group 990-EZ, or 990-PF).

constitution, bylaws, or exemption letter, enter the four-digit group

other organizing exemption number (GEN). Contact the central/ If . . .

document, along with parent organization if you are unsure of the All other Form The organization did not

signatures of at least GEN assigned. 990 or Form show as part of line 1 of

two officers/members. 990-EZ the Form 990-EZ, a Item G—Accounting method organizations contribution of $5,000 or Indicate the method of accounting used in (general rule) more from any one Final return and amended return. preparing this return. See General contributor,* Organizations should file final returns when Instruction G.

they cease to be section 501(a) organizations Item H—Schedule B (Form 990, or section 527 organizations; for example,

when they cease operations and dissolve. See 990-EZ, or 990-PF)

the instructions for line 36 that discuss Whether or not the organization enters any

liquidations, dissolutions, terminations, or amount on line 1 of Form 990-EZ, the

substantial contractions. organization must either check the box in item

Specific Instructions for Form 990-EZ -35-
organization received from individuals, trusts, unordered, low-cost items to patrons, report Then . . . corporations, estates, affiliates, foundations, the entire amount received for such benefits The organization should public charities, and other exempt as a contribution on line 1. Report all related check the box in item H to organizations, or raised by an outside expenses on lines 12 through 16. certify that it is not professional fundraiser. See General Instruction L for a definition of required to attach • Report the value of noncash contributions at benefits that have a nominal or insubstantial Schedule B (Form 990, the time of the donation. For example, report value. 990-EZ, or 990-PF). the gross value of a donated car as of the time 3. Section 501(c)(3) organizations. These the car was received as a donation.

Otherwise . . . organizations must compute the amounts of • Report all related expenses on lines 12

through 16. You must show on line 13 revenue and contributions received from Complete and attach special events according to the above Schedule B (Form 990, professional fundraising fees relating to the instructions when preparing their Support 990-EZ, or 990-PF). gross amounts of contributions collected in the Schedule in Part IV-A of Schedule A (Form 990 charity’s name by fundraisers. * Total a contributor’s gifts of $1,000 or more to or 990-EZ). Reporting for line 1, in accordance with determine if a contributor gave $5,000 or more. Do SFAS 116, Accounting for Contributions 4. Grants equivalent to contributions. not include smaller gifts. Received and Contributions Made, is Grants made to encourage an organization

acceptable for Form 990-EZ, or Form 990, receiving the grant to carry on programs or

purposes, but not required by the IRS. activities that further the grant recipient’s Item I—Web site

However, see General Instruction E. exempt purposes are grants that are equivalent Show the organization’s Web site address if a to contributions. Report them on line 1. The Web site is available. Otherwise, write ‘‘N/A’’ An organization that receives a grant to be grantor may specify which of the recipient’s (not applicable). Consider adding your e-mail paid in future years should, according to SFAS activities the grant may be used for, such as an address to your Web site. 116, report the grant’s present value on line 1. adoption program or a disaster relief project. Accruals of present value increments to the Item J—Type of organization unpaid grant should also be reported on line 1 A grant is still equivalent to a contribution if

If the organization is exempt under section in future years. the grant recipient performs a service, or

501(c), check the applicable box and insert, produces a work product, that benefits the 1. Contributions can arise from special within the parentheses, the number that grantor incidentally (but see line 1, instruction events when an excess payment is received identifies the type of section 501(c) B1, below). for items offered. Fundraising activities relate organization the filer is. See the chart in to soliciting and receiving contributions. 5. Contributions received through other General Instruction C. The term “section However, special fundraising activities such as fundraising organizations. Contributions

501(c)(3)” includes organizations exempt under dinners, door-to-door sales of merchandise, received indirectly from the public through sections 501(e), (f), (k), and (n). Check the box carnivals, and bingo games can produce both solicitation campaigns conducted by federated if the organization is a section 527 political contributions and revenue. Report as a fundraising agencies (such as United Way) are organization. See General Instruction U. contribution, both on line 1 and on line 6a included on line 1.

If the organization is a section 4947(a)(1) (within the parentheses), any amount received 6. Contributions received from associated

nonexempt charitable trust, check the through such a “special event” that is greater organizations. Include on line 1 amounts

applicable box. Note also the discussion than the fair market value (retail value) of the contributed by other organizations closely regarding Schedule A (Form 990 or 990-EZ) merchandise or services furnished by the associated with the reporting organization. This and Form 1041 in General Instruction D and organization to the contributor. includes contributions received from a parent the instructions for line 43. This situation usually occurs when organization, subordinate, or another

organizations seek support from the public organization having the same parent. Item K—Gross receipts of $25,000 or through solicitation programs that are in part 7. Contributions from a commercial less special events or activities and are in part co-venture. Include amounts contributed by a Check this box if the organization’s gross solicitations for contributions. The primary commercial co-venture on line 1. These receipts are normally not more than $25,000. purpose of such solicitations is to receive contributions are amounts received by the However, if the organization received a Form contributions and not to sell the merchandise at organization for allowing an outside 990 Package, see General Instruction A and its retail value even though this might produce organization (donor) or individual to use the the discussion on gross receipts in General a profit. recipient organization’s name in a sales Instruction B. Example. An organization announces that promotion campaign.

Item L—Calculating gross receipts anyone who contributes at least $40 to the 8. Contributions or grants from

Only those organizations with gross receipts of organization can choose to receive a book governmental units. A grant, or other

less than $100,000 and total assets of less worth $16 retail value. A person who gives payment from a governmental unit, is treated

than $250,000 at the end of the year can use $40, and who chooses the book, is really as a grant equivalent to a contribution if its

the Form 990-EZ. If the organization does not purchasing the book for $16 and also making a primary purpose is to enable the recipient to

meet these requirements, it must file Form 990. contribution of $24. The contribution of $24, provide a service to, or maintain a facility for,

The organization’s gross receipts are the total which is the difference between the buyer’s the direct benefit of the public rather than to

amount it received from all sources during its payment and the $16 retail value of the book, serve the direct and immediate needs of the

annual accounting period, without subtracting would be reported on line 1 and again on line grantor (even if the public pays part of the

any costs or expenses. See the gross receipts 6a (within the parentheses). The revenue expense of providing the service or facility).

discussion in General Instruction B. received ($16 retail value of the book) would (See also line 1, instruction B1, below.) be reported in the right-hand column on line 9. Contributions in the form of membership 6a. Any expenses directly relating to the sale of dues. Include on line 1 membership dues and Part I—Revenue, Expenses, and the book would be reported on line 6b. Any assessments to the extent they are Changes in Net Assets or Fund fundraising expenses relating to the contributions and not payments for benefits contribution of $24 would be reported on lines Balances received. (See line 3, instruction C1.) 12 through 16. All organizations filing Form 990-EZ with the If a contributor gives more than $40, that B. What is not included on line 1 IRS or any state must complete Part I. Some person would be making a larger contribution, states that accept Form 990-EZ in place of 1. Grants that are payments for services are

their own forms may require additional the difference between the book’s retail value not contributions. A grant is a payment for of $16 and the amount actually given. See also information. See General Instruction E. services, and not a contribution, when the the instructions for line 6 and Pub. 526. terms of the grant provide the grantor with a Line 1. Contributions, Gifts, Grants, Note: At the time of any solicitation or specific service, facility, or product, rather than and Similar Amounts Received payment, organizations that are eligible to providing a benefit to the general public or that

receive tax-deductible contributions should part of the public served by the grant recipient.

A. What is included on line 1 advise patrons of the amount deductible for The recipient organization would report such a

Federal tax purposes. See General grant as income on line 2 (program service • Report amounts received as voluntary Instruction L. revenue). contributions; (i.e., payments, or the part of any

payment, for which the payer (donor) does not 2. Contributions can arise from special 2. Donations of services. Do not include the

receive full retail value (fair market value) from events when items of only nominal value value of services donated to the organization,

the recipient (donee) organization). are given or offered. If an organization offers or items such as the free use of materials,

• Enter the gross amounts of contributions, goods or services of only nominal value equipment, or facilities, as contributions on line

gifts, grants, and bequests that the through a special event, or distributes free, 1. However, for the optional reporting of such

-36- Specific Instructions for Form 990-EZ
amounts, see the instruction for donated See line 1, instruction A8, for reporting B. What is not included on line 4

services in Part III. guidelines when payments are received from a 1. Capital gains dividends and unrealized government agency for providing a service, Any unreimbursed expenses of officers, gains and losses. Do not include on this line facility, or product for the primary benefit of the employees, or volunteers do not belong on the any capital gains dividends. They are reported general public. Form 990 or Form 990-EZ. See the instructions on line 5. Also do not include unrealized gains for charitable contributions and employee Line 3—Membership Dues and and losses on investments carried at market

business expenses in Pub. 526 and 463, Assessments value. See the instructions for line 20.

respectively. Enter members’ and affiliates’ dues and 2. Exempt function revenue (program 3. Section 501(c)(9), (17), and (18) assessments that are not contributions. See service). Do not include on line 4 amounts

organizations. These organizations provide also General Instruction L. that represent income from an exempt function participants with life, sickness, accident, (program service). Report these amounts on welfare and unemployment insurance, A. What is included on line 3 line 2 as program service revenue. Report pension(s), or similar benefits, or a 1. Dues and assessments received that expenses related to this income on lines 12 combination of these benefits. When such an compare reasonably with the benefits of through 16. organization receives payments from membership. When the organization receives An organization whose exempt purpose is participants, or their employers, to provide dues and assessments that compare to provide low-rental housing to persons with these benefits, report the payments on line 2 reasonably with membership benefits, report low income receives exempt function income as program service revenue, rather than on such dues and assessments on line 3. from such rentals. An organization receives line 1 as contributions.

2. Organizations that generally match dues exempt function income if it rents or sublets C. How to value noncash contributions and benefits. Organizations described in rental space to a tenant whose activities are

See General Instruction L and Schedule B section 501(c)(5), (6), or (7) generally provide related to the reporting organization’s exempt

(Form 990, 990-EZ, or 990-PF). benefits with a reasonable relationship to dues, purpose. Exempt function income also arises

although benefits to members may be indirect. when an organization rents to an unaffiliated D. Schedule of contributors exempt organization at less than fair rental

Attach Schedule B (Form 990, 990-EZ, or B. Examples of membership benefits value for the purpose of helping that

990-PF). See General Instruction L and the These include subscriptions to publications; unaffiliated organization carry out its exempt

Specific Instructions for Completing the newsletters (other than one about the purpose. Report rental income received in

Heading of Form 990-EZ, Item H. organization’s activities only); free or these instances on line 2 and not on line 4.

reduced-rate admissions to events the Line 2—Program Service Revenue Only for purposes of completing this return, organization sponsors; use of its facilities; and Including Medicare, Medicaid treat income from renting property to affiliated discounts on articles or services that both

Payments, and Government Fees and exempt organizations as exempt function members and nonmembers can buy. In figuring income and include such income on line 2 as Contracts the value of membership benefits, disregard program service revenue. Enter the total program service revenue such intangible benefits as the right to attend

(exempt function income). Program services meetings, vote, or hold office in the Lines 5a–c—Gains (or Losses) From

are primarily those that form the basis of an organization, and the distinction of being a Sale of Assets Other Than Inventory organization’s exemption from tax. member of the organization.

1. Examples. A clinic would include on line 2 C. What is not included on line 3 A. What is included on line 5

all of its charges for medical services (whether Report on line 5a all sales of securities and 1. Dues or assessments received that to be paid directly by the patients or through sales of all other types of investments (such as Medicare, Medicaid, or other third-party exceed the value of available membership real estate, royalty interests, or partnership benefits. Whether or not membership benefits reimbursement), laboratory fees, and related interests) as well as sales of all other are used, dues received by an organization, to charges for services. noninventory assets (such as program-related the extent they exceed the monetary value of Program service revenue also includes investments and fixed assets used by the the membership benefits available to the dues tuition received by a school; revenue from organization in its related and unrelated payer, are a contribution that should be admissions to a concert or other performing activities). reported on line 1. arts event or to a museum; royalties received 2. Dues received primarily for the Total the cost or other basis (less as author of an educational publication organization’s support. depreciation) and selling expenses and enter If a member pays distributed by a commercial publisher; dues primarily to support the organization’s the result on line 5b. On line 5c, enter the net payments received by a section 501(c)(9) activities, and not to obtain benefits of more gain or loss. Report capital gains dividends, the organization from participants or employers of than nominal monetary value, those dues are a organization’s share of capital gains and losses participants for health and welfare benefits contribution to the organization includible on from a partnership, and capital gains coverage; and registration fees received in distributions from trusts on lines 5a and 5c. line 1. connection with a meeting or convention. Indicate the source on the schedule described

2. Program-related investment income. Line 4—Investment Income below.

Program service revenue also includes income For this return, you may use the more from program-related investments. These A. What is included on line 4 convenient way to figure the organization’s investments are made primarily to accomplish 1. Interest on savings and temporary cash gain or loss from sales of securities by an exempt purpose of the investing investments. Include the amount of interest comparing the sales price with the organization rather than to produce income. received from interest-bearing checking average-cost basis of the particular security Examples are scholarship loans and accounts, savings, and temporary cash sold. However, generally, the average-cost low-interest loans to charitable organizations, investments, such as money market funds, basis is not used to figure the gain or loss from indigents, or victims of a disaster. Rental commercial paper, certificates of deposit, and sales of securities reportable on Form 990-T. income received from an exempt function is U.S. Treasury bills or other governmental another example of program-related B. What is not included on line 5 obligations that mature in less than 1 year. investment income. See also the instructions So-called dividends or earnings received from Do not include on line 5 any unrealized gains for line 4. mutual savings banks, money market funds, or losses on securities that are carried in the

3. Unrelated trade or business activities. etc., are actually interest and should be books of account at market value. See the

Unrelated trade or business activities (not instructions for line 20. included on this line. including any special events or activities) that

generate fees for services may also be 2. Dividends and interest from securities. C. Attached schedule

Include the amount of dividend and interest program service activities. A social club, for 1. Nonpublicly traded securities and income from equity and debt securities (stocks example, should report as program service noninventory items. Attach a schedule to and bonds) on this line. Include amounts revenue the fees it charges both members and show the sale or exchange of nonpublicly received from payments on securities loans, as nonmembers for the use of its tennis courts traded securities and the sale or exchange of defined in section 512(a)(5). and golf course. other assets that are not inventory items. The 3. Gross rents. Include gross rental income 4. Government fees and contracts. Program schedule should show security transactions received during the year from investment service revenue includes income earned by the separately from the sale of other assets. Show property. organization for providing a government for these assets:

agency with a service, facility, or product that 4. Other investment income. Include, for • Date acquired and how acquired,

benefited that government agency directly example, royalty income from mineral interests • Date sold and to whom sold,

rather than benefiting the public as a whole. owned by the organization. • Gross sales price,

Specific Instructions for Form 990-EZ -37-
• Cost, other basis, or if donated, value at time services the buyer receives from a special materials and supplies consumed, freight-in,

acquired (state which), event. If you include an expense on line 6b, do and a proportion of overhead expenses.

• Expense of sale and cost of improvements not report it again on line 7b. Report cost of Marketing and distribution expenses are not

made after acquisition, and goods related to the sale of inventory on line includible in cost of goods sold. Include those

• Depreciation since acquisition, if depreciable 7b. Fundraising expenses attributable to expenses on lines 12 through 16.

property. contributions reported on line 6a (within the 3. Investments. Do not include on line 7 sales

2. Publicly traded securities. For sales of parentheses), and also on line 1, are of investments on which the organization

publicly traded securities through a broker, you reportable on lines 12 through 16. expected to profit by appreciation and sale.

may total the gross sales price, the cost or B. What is not included on line 6 Report sales of these investments on line 5.

other basis, and the expenses of sale, and

report lump-sum figures in place of providing 1. Sales or gifts of goods or services of Line 8—Other Revenue

the detailed reporting required in the above only nominal value. If the goods or services Enter the total income from all sources not

paragraph. offered at the special event have only nominal covered by lines 1 through 7. Examples of value, include all of the receipts as types of income includible on line 8 are interest Publicly traded securities include common contributions on line 1 and all of the related on notes receivable not held as investments or and preferred stocks, bonds (including expenses on lines 12 through 16. See General as program-related investments (defined in the governmental obligations), and mutual fund Instruction L for a description of nominal or line 2 instructions); interest on loans to officers, shares that are listed and regularly traded in an insubstantial benefits. directors, trustees, key employees, and other over-the-counter market or on an established

2. Sweepstakes, raffles, and lotteries. employees; and royalties that are not exchange and for which market quotations are Report as a contribution, on line 1, the investment income or program service published or otherwise readily available. proceeds of solicitation campaigns in which the revenue. Lines 6a–c—Special Events and names of contributors and other respondents Activities Line 10—Grants and Similar Amounts are entered in a drawing for prizes. Paid On the appropriate line, enter the gross When a minimum payment is required for revenue, expenses, and net income (or loss) Reporting for line 10, in accordance with SFAS each raffle or lottery entry and prizes of only 116, is acceptable for Form 990-EZ purposes, from all special events and activities, such as nominal value are awarded, report any amount dinners, dances, carnivals, raffles, bingo but not required by IRS. However, see General received as a contribution. Report the related games, other gambling activities, and Instruction E. expenses on lines 12 through 16. door-to-door sales of merchandise. An organization that makes a grant to be 3. Activities that generate only These activities only incidentally paid in future years should, according to SFAS contributions are not special events. An

accomplish an exempt purpose. Their sole or 116, report the grant’s present value on line 10. activity that generates only contributions, such primary purpose is to raise funds that are other Accruals of present value increments to the as a solicitation campaign by mail, is not a than contributions to finance the organization’s unpaid grant should also be reported on line 10 special event. Any amount received should be exempt activities. in future years. included on line 1 as a contribution. Related

This is done by offering goods or services expenses are reportable on lines 12 through A. What is included on line 10

that have more than a nominal value 16. Enter the amount of actual grants and similar (compared to the price charged) for a payment C. Attached schedule amounts paid to individuals and organizations that is more than the direct cost of those goods Attach a schedule listing the three largest selected by the filing organization. Include or services. See line 1 instructions A1 and A2 special events conducted, as measured by scholarship, fellowship, and research grants to for a discussion on contributions reportable on gross receipts. Describe each of these events individuals. line 1 and revenue reportable on line 6. See

also General Instruction L. and indicate for each event: the gross receipts; 1. Specific assistance to individuals.

the amount of contributions included in gross Include on this line the amount of payments to, Calling any required payment a “donation” receipts (see line 6, instruction A1, above); the or for the benefit of, particular clients or or “contribution” on tickets, advertising, or gross revenue (gross receipts less patients, including assistance by others at the solicitation materials does not change how contributions); the direct expenses; and the net expense of the filing organization. these payments should be reported on Form income (gross revenue less direct expenses). 990-EZ. 2. Payments, voluntary awards, or grants to Furnish the same information, in total affiliates. Include on line 10 certain types of The gross revenue from gambling activities figures, for all other special events held that payments to organizations “affiliated with” and other special events must be reported in are not among the largest three. Indicate the (closely related to) the reporting organization. the right-hand column on line 6a without type and number of the events not listed These payments include predetermined quota reduction for cash or noncash prizes, cost of individually (e.g., three dances and two raffles). support and dues payments by local goods sold, compensation, fees, or other An example of this schedule of special organizations to their state or national expenses. events might appear in columnar form as organizations.

A. What is included on line 6 follows: Note: If the organization uses Form 990-EZ

1. Gross revenue/contributions. When an All for state reporting purposes, be sure to

organization receives payments for goods or Special Events: (A) (B) (C) Other Total distinguish between payments to affiliates and

services offered through a special event, enter: awards and grants. See General Instruction E. Gross Receipts $xx $xx $xx $xx $xx

1. As gross revenue, on line 6a (in the Less: Contributions xx xx xx xx xx B. What is not included on line 10

right-hand column), the retail value of the Gross Revenue xx xx xx xx xx 1. Administrative expenses. Do not include goods or services,

Less: Direct Expenses xx xx xx xx xx on this line expenses made in selecting 2. As a contribution, on both line 1 and line recipients or monitoring compliance with the 6a (within the parentheses), any amount Net Income or (loss) $xx $xx $xx $xx $xx terms of a grant or award. Enter those received that exceeds the retail value of the expenses on lines 12 through 16. goods or services given. If you use this format, report the total for

Contributions on line 1 of Form 990-EZ and on 2. Purchases of goods or services from Example. At a special event, an line 6a (within the parentheses). Report the affiliates. Do not report the cost of goods or organization received $100 in gross receipts totals for Gross Revenue, in the right-hand services purchased from affiliates on line 10. for goods valued at $40. The organization column, on line 6a; Direct Expenses on line 6b; Report these as expenses on lines 12 through entered gross revenue of $40 on line 6a and and Net Income or (loss) on line 6c. 16. entered a contribution of $60 on both line 1 and Lines 7a–c—Gross Sales of Inventory 3. Membership dues paid to another within the parentheses on line 6a. The organization. Report membership dues that contribution was the difference between the 1. Sales of inventory. Include on line 7a the the organization pays to another organization gross revenue of $40 and the gross receipts of gross sales (less returns and allowances) of for general membership benefits, such as $100. inventory items, whether the sales activity is an regular services, publications, and materials on 2. Raffles or lotteries. Report as revenue, on exempt function or an unrelated trade or line 16, as “Other expenses.” line 6a, any amount received from raffles or business. Include all inventory sales except

lotteries that require payment of a specified sales of goods at special events, which are C. Attached schedule

minimum amount for each entry, unless the reportable on line 6. Attach a schedule to explain the amounts prizes awarded have only nominal value. See 2. Cost of goods sold. On line 7b, report the reported on line 10. Show on this schedule: line 6, instruction B1 and B2, below. cost of goods sold related to sales of such • Each class of activity,

3. Direct expenses. Report on line 6b only the inventory. The usual items included in cost of • The grantee’s name and address,

direct expenses attributable to the goods or goods sold are direct and indirect labor, • The amount given, and

-38- Specific Instructions for Form 990-EZ
• The relationship of the grantee (in the case from employees’ salaries and paid over to the Line 20—Other Changes in Net Assets

of grants to individuals) if the relationship is by various governmental units (such as Federal or Fund Balances

blood, marriage, adoption, or employment and state income taxes and the employees’ Attach a statement explaining any changes in (including employees’ children) to any person share of social security and Medicare taxes) net assets or fund balances between the or corporation with an interest in the are part of the employees’ salaries included on beginning and end of the year that are not organization, such as a creator, donor, director, line 12. Report expenses paid or incurred for accounted for by the amount on line 18. trustee, officer, etc. employee events such as a picnic or holiday Amounts to report here include adjustments of Any grants reported on line 10 that were party on this line. earlier years’ activity; unrealized gains and approved during the year, but not paid by the Line 13—Professional Fees and Other losses on investments carried at market value; due date for filing Form 990-EZ (including Payments to Independent Contractors and any difference between fair market value extensions), must be identified and listed and book value of property given as an award separately in the line 10 schedule. Enter the total amount of legal, accounting, or grant. See General Instruction G regarding Give the name and address of each affiliate auditing, other professional fees (such as fees the reporting of a section 481(a) adjustment to that received any payment reported on line 10. for fundraising or investment services) and conform to SFAS 116.

Specify both the amount and purpose of these related expenses charged by outside firms and

payments. individuals who are not employees of the

organization. Do not include any penalties, Classify activities on this schedule in more Part II—Balance Sheets fines, or judgments imposed against the detail than by using such broad terms as organization as a result of legal proceedings. All organizations, except those that meet one charitable, educational, religious, or scientific. Report and identify those expenses on line 16. of the exceptions in General Instruction F, must For example, identify payments to affiliates; Report fees paid to directors and trustees on complete columns (A) and (B) of Part II of the payments for nursing services; fellowships; or line 12. return and may not submit a substitute balance payments for food, shelter, or medical services sheet. Failure to complete Part II may result in for indigents or disaster victims. For payments Line 14—Occupancy, Rent, Utilities, penalties for filing an incomplete return. If there to indigent families, do not identify the and Maintenance is no amount to report in column (A), Beginning individuals. Enter the total amount paid or incurred for the of year, put a zero in that column. See General

If an organization gives property other than Instruction K. use of office space or other facilities, heat, cash and measures an award or grant by the light, power, and other utilities, outside Some states require more information. See property’s fair market value, also show on this janitorial services, mortgage interest, real General Instruction E for more information schedule: estate taxes and property insurance about completing a Form 990-EZ to be filed • A description of the property, attributable to rental property, and similar with any state or local government agency. • The book value of the property, expenses. Do not subtract from rental • How you determined the book value, expenses reported on line 14 any rental Line 22—Cash, Savings, and • How you determined the fair market value, income received from renting or subletting and Investments rented space. See the instructions for lines 2 • The date of the gift. Include all interest and non-interest bearing and 4 to determine whether such income is

Any difference between a property’s fair accounts such as petty cash funds, checking reportable as exempt function income or market value and book value should be accounts, savings accounts, money market investment income. However, report on line 14 recorded in the organization’s books of account funds, commercial paper, certificates of any rental expenses for rental income reported and on line 20. deposit, U.S. Treasury bills, and other on lines 2 and 4. If the organization records

Colleges, universities, and primary and government obligations. Also include the book depreciation on property it occupies, enter the value of securities held as investments, and all secondary schools are not required to list the total for the year.

names of individuals who were provided other investment holdings including land and For an explanation of acceptable methods scholarships or other financial assistance buildings held for investment. Report the for computing depreciation, see Pub. 946. whether they are the recipients of Federal income from these investments on line 4.

grant money or not. Instead, these Line 15—Printing, Publications, organizations must (a) group each type of Line 23—Land and Buildings Postage, and Shipping financial aid provided; (b) indicate the number Enter the book value (cost or other basis less Enter the printing and related costs of of individuals who received the aid; and (c) accumulated depreciation) of all land and producing the reporting organization’s own specify the aggregate dollar amount. buildings owned by the organization and not newsletters, leaflets, films, and other held for investment. Line 11—Benefits Paid To or For informational materials on this line. Include the

Members costs of outside mailing services on this line. Line 24—Other Assets Also include the cost of any purchased For an organization that gives benefits to Enter the total of other assets along with a members or dependents (such as publications as well as postage and shipping description of those assets. Amounts to include costs not reportable on lines 5b, 6b, or 7b. Do organizations exempt under section 501(c)(8), here are (among others) receivable accounts, not include any expenses, such as salaries, for (9), or (17)), enter the amounts paid for: (a) inventories, and prepaid expenses. which a separate line is provided. death, sickness, hospitalization, or disability

benefits; (b) unemployment compensation Line 16—Other Expenses Line 25—Total Assets

benefits; and (c) other benefits. Do not include, Include here such expenses as penalties, Enter the amount of total assets. If the on this line, the cost of employment-related fines, and judgments; unrelated business end-of-year total assets entered in column (B) benefits the organization gives its officers and income taxes; insurance and real estate taxes are $250,000 or more, Form 990 must be filed employees. Report them on line 12. not attributable to rental property or reported as instead of Form 990-EZ.

Line 12—Salaries, Other occupancy expenses; depreciation on

Compensation, and Employee Benefits investment property; travel and transportation Line 27—Net Assets or Fund Balances

Enter the total salaries and wages paid to all costs; interest expense; and expenses for Subtract line 26 (total liabilities) from line 25

employees and the fees paid to officers, conferences, conventions, and meetings. (total assets) to determine net assets. Enter

directors, and trustees. Include the total of the this net asset amount on line 27. The amount Some states that accept Form 990-EZ in employer’s share of the contributions the entered in column (B) should agree with the satisfaction of their filing requirements may organization paid to qualified and nonqualified net asset or fund balance amount on line 21. require that certain types of miscellaneous pension plans and the employer’s share of expenses be itemized. See General Instruction States that accept Form 990-EZ as their contributions to employee benefit programs E. basic report form may require a separate (such as insurance, health, and welfare statement of changes in net assets. See programs) that are not an incidental part of a Line 18—Excess or (Deficit) for the General Instruction E. pension plan. Complete the Form 5500 return if Year

you are required to file it. Enter the difference between lines 9 and 17. If

Also include in the total the amount of line 17 is more than line 9, enter the difference Part III—Statement of Program Federal, state, and local payroll taxes for the in parentheses. Service Accomplishments year that are imposed on the organization as

an employer. This includes the employer’s Line 19—Net Assets or Fund Balances A program service is a major (usually ongoing)

share of social security and Medicare taxes, at Beginning of Year objective of an organization, such as

Federal unemployment tax (FUTA), state Enter the amount from the prior year’s balance adoptions, recreation for the elderly,

unemployment compensation tax, and other sheet or from Form 5500 or an approved DOL rehabilitation, or publication of journals or

state and local payroll taxes. Taxes withheld form if General Instruction F applies. newsletters.

Specific Instructions for Form 990-EZ -39-
Step Action Include current-year payments of amounts • Do not include these amounts in reported or reportable as deferred the expense column in Part III. compensation in any prior year. 1 State the organization’s primary

exempt purpose. • See the instructions for line 1, B2. Column (D)

Include in this column all forms of deferred

2 All organizations must describe their compensation and future severance payments Part IV—List of Officers, Directors, exempt purpose achievements for (whether or not funded; whether or not vested;

each of their three largest program Trustees, and Key Employees and whether or not the deferred compensation

services (as measured by total List each person who was an officer, director, plan is a qualified plan under section 401(a)).

expenses incurred). If there were trustee, or key employee (defined below) of the Include also payments to welfare benefit plans

three or fewer of such activities, organization at any time during the year even if on behalf of the officers, etc. Such plans

they did not receive any compensation from provide benefits such as medical, dental, life describe each program service insurance, severance pay, disability, etc. activity. the organization. Reasonable estimates may be used if precise Enter a zero in columns (B), (C), (D), or (E) • Describe program service cost figures are not readily available. if no hours were entered in column (B) and no accomplishments through compensation, contributions, expenses, and Unless the amounts were reported in measurements such as clients other allowances were paid during the column (C), report, as deferred compensation served, days of care, therapy reporting year, or deferred for payment to a in column (D), salaries and other compensation sessions, or publications issued. future accounting period. earned during the period covered by the return,

but not yet paid by the date the organization • Describe the activity’s objective, Aid in the processing of your return by files its return. for both this time period and the grouping together, preferably at the end of your

longer-term goal, if the output is list, those who received no compensation. Be Column (E) careful not to repeat names. intangible, such as in a research Enter both taxable and nontaxable fringe

activity. Give the preferred address at which benefits (other than de minimis fringe benefits officers, etc., want the Internal Revenue described in section 132(e)). Include amounts • Give reasonable estimates for any Service to contact them. that the recipients must report as income on statistical information if exact Use an attachment if there are more than their separate income tax returns. Examples figures are not readily available. include amounts for which the recipient did not four persons to list in Part IV. Indicate that this information is account to the organization or allowances that Show all forms of cash and noncash estimated. were more than the payee spent on serving the compensation received by each listed officer, organization. Include payments made under • Be clear, concise, and complete in etc., whether paid currently or deferred. indemnification arrangements, the value of the your description. Avoid adding an If you pay any other person, such as a personal use of housing, automobiles, or other attachment. management services company, for the assets owned or leased by the organization (or services provided by any of your officers, provided for the organization’s use without 3 If part of the total expenses of any directors, trustees, or key employees, report charge), as well as any other taxable and program service consists of grants the compensation and other items in Part IV as nontaxable fringe benefits. See Pub. 525 for reported on line 10, show the amount if you had paid the officers, etc., directly. more information.

of the grants in the space provided A failure to fully complete Part IV can Form 941 must be filed to report income tax and include the grants in the subject both the organization and the withholding and social security and Medicare “Expenses” column. individuals responsible for such failure to taxes. The organization must also file Form penalties for filing an incomplete return. See 940 to report Federal unemployment tax, • Section 501(c)(3) and (4) General Instruction K. In particular, entering unless the organization is not subject to these organizations, and section the phrase on Part IV, “Information available taxes. See Pub. 15 (Circular E) for more 4947(a)(1) nonexempt charitable upon request,” or a similar phrase, is not information. See also the Trust Fund Recovery trusts, must show the amount of acceptable. Penalty discussion in General Instruction D. grants and allocations to others and The organization may also provide an must enter the total expenses for attachment to explain the entire 2002 each program service reported. compensation package for any person listed in Part V—Other Information

Part IV. • Section 501(c)(3) organizations and section • For all other organizations, Key employee. A “key employee” is any 4947(a)(1) nonexempt charitable trusts must completing the “Expenses” column person having responsibilities or powers similar also complete and attach a Schedule A (Form (and the “Grants” entry) in Part III is to those of officers, directors, or trustees. The 990 or 990-EZ) to their Form 990-EZ. See optional. term includes the chief management and General Instruction D for information on

administrative officials of an organization (such Schedule A (Form 990 or 990-EZ). 4 Attach a schedule that lists the as an executive director or chancellor) but • Answer “Yes,” “No,” or “N/A” to each

organization’s other program services. does not include the heads of separate question.

departments or smaller units within an • The organization must attach a statement • The detailed information required organization. regarding personal benefit contracts. See for the three largest services is not General Instruction V. necessary for this schedule. A chief financial officer and the officer in

charge of administration or program operations Line 33—Change in Activities • Section 501(c)(3) and (4) are both key employees if they have the Attach a statement to explain any significant organizations, and section authority to control the organization’s activities, changes in the kind of activities the 4947(a)(1) nonexempt charitable its finances, or both. The “heads of separate organization conducts to further its exempt trusts, however, must show the departments” reference applies to persons purpose. Include new or modified activities not expenses attributable to their such as the heads of the radiology department listed as current or planned in the program services. or coronary care unit of a hospital or the head organization’s application for recognition of of the chemistry or history or English exemption or not already made known to the

5 The organization may show the department at a college. These persons are IRS by a letter to its Director EO Examination managers within their specific areas but not for amount of any donated services, or or by an attachment to the organization’s return the organization as a whole and, therefore, are use of materials, equipment, or for any earlier year. Also include any major not key employees. facilities it received or utilized in program activities that are being discontinued.

connection with a specific program Column (B) Line 34—Changes in Organizing or service. In column (B), a numerical estimate of the Governing Documents average hours per week devoted to the • Disclose the applicable amounts Attach a conformed copy of any changes to the position is required for a complete answer. of any donated services, etc., on articles of incorporation, or association, Statements such as “as needed” or “as the lines for the narrative constitution, trust instrument, or other required,” or “40+” are unacceptable. description of the appropriate organizing document, or to the bylaws or other

program service. Column (C) governing document.

For each person listed, report salary, fees, A “conformed copy” is one that agrees with

bonuses, and severance payments paid. the original document and all amendments to

-40- Specific Instructions for Form 990-EZ
it. If the copies are not signed, they must be If the organization meets Exception 1 or 2 • The official actions or positions of covered

accompanied by a written declaration signed below, it is excluded from the notice, reporting, executive branch officials through direct

by an officer authorized to sign for the and proxy tax requirements of section 6033(e), communication.

organization, certifying that they are complete and you should check “No” to line 35a, unless Direct lobbying does not include and accurate copies of the original documents. the organization had $1,000 or more of attempting to influence:

Photocopies of articles of incorporation unrelated business income. See also Rev. • Any local council on legislation of direct Proc. 98-19, 1998-1 C.B. 547. interest to the organization or its members, and showing the certification of an appropriate state

Exception 1. Section 6033(e)(3) exception • The general public regarding legislative official need not be accompanied by such a matters (grassroots lobbying). declaration. See Rev. Proc. 68-14, 1968-1 C.B. for nondeductible dues.

768, for details. When a number of changes 1. All organizations exempt from tax under Other lobbying includes:

are made, attach a copy of the entire revised section 501(a), other than section 501(c)(4), • Grassroots lobbying,

organizing instrument or governing document. • Foreign lobbying, (5), and (6) organizations.

2. Local associations of employees’ and • Third-party lobbying, and However, if your exempt organization veterans’ organizations described in section • Dues paid to another organization that were changes its legal structure, such as from a trust 501(c)(4), but not section 501(c)(4) social used to lobby. to a corporation, you must file a new exemption welfare organizations. In-house expenditures include: application to establish that the new legal entity 3. Labor unions and other labor • Salaries, and qualifies for exemption. organizations described in section 501(c)(5), • Other expenses of the organization’s officials

Line 35—Unrelated Business Income but not section 501(c)(5) agricultural and and staff (including amounts paid or incurred

and Lobbying Proxy Tax horticultural organizations. for the planning of legislative activities).

4. Section 501(c)(4), (5), and (6) In-house expenditures do not include:

Unrelated business income organizations that receive more than 90% of • Any payments to other taxpayers engaged in their dues from: lobbying or political activities as a trade or Political organizations described in section 527 a. Section 501(c)(3) organizations, business. are not required to answer this question. b. State or local governments, • Any dues paid to another organization that Check “Yes” on line 35a if the c. Entities whose income is exempt from are allocable to lobbying or political activities. organization’s total gross income from all of its tax under section 115, or Line 36—Liquidation, Dissolution, unrelated trades and businesses is $1,000 or d. Organizations described in 1 through 3,

more for the year. Gross income is gross Termination, or Substantial above.

receipts less the cost of goods sold. See Pub. 5. Section 501(c)(4) and (5) organizations Contraction

598 for a description of unrelated business that receive more than 90% of their annual If there was a liquidation, dissolution,

income and the Form 990-T filing dues from: termination, or substantial contraction, attach a

requirements. Form 990-T is not a substitute a. Persons, statement explaining what took place.

for Form 990-EZ. Items of income and b. Families, or For a complete liquidation of a corporation expense reported on Form 990-T must also be c. Entities who each paid annual dues of or termination of a trust, check the “Final reported on Form 990-EZ when the $83 or less in 2002 (adjusted annually for Return” box in the heading of the return. On organization is required to file both forms. inflation). See Rev. Proc. 2001-59, 2001-52 the attached statement, show whether the

Note: All tax-exempt organizations must pay I.R.B. 623(2001-2 C.B. 623). assets have been distributed and the date.

estimated taxes with respect to their unrelated 6. Any organization that receives a private Also attach a certified copy of any resolution,

business income if they expect their tax liability letter ruling from the IRS stating that the or plan of liquidation or termination, etc., with

to be $500 or more. Use Form 990-W to organization satisfies the section 6033(e)(3) all amendments or supplements not already

compute this tax. exception. filed. In addition, attach a schedule listing the

7. Any organization that keeps records to names and addresses of all persons who Section 6033(e) tax for lobbying substantiate that 90% or more of its members received the assets distributed in liquidation or expenditures cannot deduct their dues (or similar amounts) termination; the kinds of assets distributed to

If you check “No” to line 35a, you are certifying as business expenses whether or not any part each one; and each asset’s fair market value.

that the organization was not subject to the of their dues are used for lobbying purposes. A “substantial contraction” is a partial notice and reporting requirements of section 8. Any organization that is not a liquidation or other major disposition of assets 6033(e) and that the organization had no membership organization. except transfers for full consideration or lobbying and political expenditures potentially distributions from current income.

subject to the proxy tax. Note: Special rules treat affiliated social A “major disposition of assets” means any welfare organizations, agricultural and Section 6033(e) notice and reporting disposition for the tax year that is: horticultural organizations, and business requirements and proxy tax. Section 6033(e) 1. At least 25% of the fair market value of leagues as parts of a single organization for requires certain section 501(c)(4), (5), and (6) purposes of meeting the nondeductible dues the organization’s net assets at the beginning organizations to tell their members the portion exception. See Rev. Proc. 98-19. of the tax year; or of their membership dues that were allocable 2. One of a series of related dispositions to the political or lobbying activities of the Exception 2. Section 6033(e)(1) $2,000 begun in earlier years that add up to at least organization. If an organization does not give in-house lobbying exception. An 25% of the net assets the organization had at its members this information, then the organization satisfies the $2,000 in-house the beginning of the tax year when the first organization is subject to a proxy tax. The tax lobbying exception if it: disposition in the series was made. Whether a is reported on Form 990-T. 1. Did not receive a waiver for proxy tax major disposition of assets took place through owed for the prior year. If you check “Yes” on line 35a to declare a series of related dispositions depends on the 2. Did not make any political or foreign facts in each case. that your organization had reportable section lobbying expenditures during the 2002 6033(e) lobbying and political expenses in the See Regulations section 1.6043-3 for reporting year, 2002 reporting year (and potential liability for 3. special rules and exceptions. Incurred lobbying expenses during the the proxy tax): 2002 reporting year consisting only of in-house Line 37—Expenditures for Political 1. Complete lines 85a-h, page 5, of Form direct lobbying expenses totaling $2,000 or Purposes 990 (note instructions), and less, but excluding: 2. Attach page 5 to Form 990-EZ. Political organizations described in section a. Any allocable overhead expenses, and 527 are not required to answer this Only certain organizations that are tax b. All direct lobbying expenses of any local question. exempt under sections: council regarding legislation of direct interest to A political expenditure is one intended to • 501(c)(4) (social welfare organizations) the organization or its members. influence the selection, nomination, election, or • 501(c)(5) (agricultural and horticultural appointment of anyone to a Federal, state, or organizations), or Definitions.

local public office, or office in a political • 501(c)(6) (business leagues) Grassroots lobbying refers to attempts to organization, or the election of Presidential or are subject to (a) the section 6033(e) notice influence any segment of the general public Vice Presidential electors. It does not matter and reporting requirements, and (b) a potential regarding legislative matters or referendums. whether the attempt succeeds. proxy tax.

If your organization is not tax-exempt Direct lobbying includes attempting to An expenditure includes a payment,

under sections 501(c)(4), (5), or (6), check influence: distribution, loan, advance, deposit, or gift of

“No” on line 35a, unless there was • Legislation through communication with money, or anything of value. It also includes a

unrelated business income. legislators and other government officials, and contract, promise, or agreement to make an

Specific Instructions for Form 990-EZ -41-
expenditure, whether or not legally use and benefit of the recipient, and other unrelated business income exceeds

enforceable. receivables subject to special terms or arising $1,000, it must report the investment income

All section 501(c) organizations. An exempt from nontypical transactions, must be reported and other unrelated business income on Form

as separate loans for each officer, director, 990-T. organization that is not a political organization

must file Form 1120-POL if it is treated as trustee, and key employee. Nondiscrimination policy. A section

having political organization taxable income When loans should be reported as a single 501(c)(7) organization is not exempt from

under section 527(f)(1). total. In the required schedule, report income tax if any written policy statement,

receivables that are subject to the same terms including the governing instrument and bylaws, If a section 501(c) organization establishes and conditions (including credit limits and rate allows discrimination on the basis of race, and maintains a section 527(f)(3) separate of interest) as receivables due from the general color, or religion. segregated fund, see the specific instructions

for line 81, Form 990. public (occurring in the normal course of the However, section 501(i) allows social clubs organization’s operations) as a single total for to retain their exemption under section Section 501(c)(3) organizations. A section all the officers, directors, trustees, and key 501(c)(7) even though their membership is 501(c)(3) organization will lose its tax-exempt employees. Report travel advances for official limited (in writing) to members of a particular status if it engages in political activity. business of the organization as a single total. religion, if the social club: A section 501(c)(3) organization must pay a Schedule format. For each outstanding loan 1. Is an auxiliary of a fraternal beneficiary section 4955 excise tax for any amount paid or or other receivable that must be reported society exempt under section 501(c)(8), and incurred on behalf of, or in opposition to, any separately, the attached schedule should show 2. Limits its membership to the members candidate for public office. The organization the following information (preferably in of a particular religion; or the membership must pay an additional excise tax if it fails to columnar form): limitation is: correct the expenditure timely. • Borrower’s name and title, a. A good-faith attempt to further the A manager of a section 501(c)(3) • Original amount, teachings or principles of that religion, and organization who knowingly agrees to a • Balance due, b. Not intended to exclude individuals of a political expenditure must pay a section 4955 • Date of note, particular race or color. excise tax, unless the agreement is not willful • Maturity date,

and there is reasonable cause. A manager who • Repayment terms, Line 40a—Section 501(c)(3) does not agree to a correction of the political • Interest rate, organizations: Disclosure of excise expenditure may have to pay an additional • Security provided by the borrower, taxes imposed under section 4911, excise tax. • Purpose of the loan, and

• Description and fair market value of the 4912, or 4955 When an organization promotes a consideration furnished by the lender (e.g., Section 501(c)(3) organizations must disclose candidate for public office (or is used or cash—$1,000; or 100 shares of XYZ, Inc., any excise tax imposed during the year under controlled by a candidate or prospective common stock—$9,000). section 4911 (excess lobbying expenditures), candidate), amounts paid or incurred for the The above detail is not required for 4912 (disqualifying lobbying expenditures), or, following purposes are political expenditures: receivables or travel advances that may be unless abated, 4955 (political expenditures). • Remuneration to such individual (a reported as a single total. However, report and See sections 4962 and 6033(b). candidate or prospective candidate) for identify those totals separately in the speeches or other services; Line 40b—Section 501(c)(3) and attachment. • Travel expenses of such individual; 501(c)(4) organizations: Disclosure of • Expenses of conducting polls, surveys, or Line 39—Section 501(c)(7) section 4958 excess benefit other studies, or preparing papers or other Organizations transactions and excise taxes material for use by such individual; Gross receipts test. A section 501(c)(7) Sections 6033(b) and 6033(f) require section • Expenses of advertising, publicity, and organization may receive up to 35% of its 501(c)(3) and (4) organizations to report the fundraising for such individual; and gross receipts, including investment income, amount of taxes imposed under section 4958 • Any other expense that has the primary from sources outside its membership and (excess benefit transactions) involving the effect of promoting public recognition or remain tax-exempt. Part of the 35% (up to 15% organization, unless abated, as well as any otherwise primarily accruing to the benefit of of gross receipts) may be from public use of a other information the Secretary may require such individual.

social club’s facilities. concerning those transactions. See General An organization is effectively controlled by a Instruction P for a discussion of excess benefit candidate or prospective candidate only if such Gross receipts are the club’s income from transactions. individual has a continuing, substantial its usual activities and include:

involvement in the day-to-day operations or • Charges, Attach a statement describing any excess

management of the organization. • Admissions, benefit transaction, the disqualified person or

• Membership fees, persons involved, and whether or not the A determination of whether the primary • Dues, excess benefit transaction was corrected. purpose of an organization is promoting the

candidacy or prospective candidacy of an • Assessments, and Line 40c—Taxes imposed on • Investment income (such as dividends, individual for public office is made on the basis organization managers or disqualified of all the facts and circumstances. See section rents, and similar receipts), and normal persons 4955 and Regulations section 53.4955. recurring capital gains on investments. For line 40c, enter the amount of taxes Use Form 4720 to figure and report these imposed on organization managers or Gross receipts do not include: excise taxes. disqualified persons under sections 4912, • Capital contributions (see Regulations 4955, and 4958, unless abated. Line 38—Loans To or From Officers, section 1.118-1), Directors, Trustees, and Key • Initiation fees, or Line 40d—Taxes reimbursed by the

Employees • Unusual amounts of income (such as the organization

Enter the end-of-year unpaid balance of sale of the clubhouse). For line 40d, enter the amount of tax on line

secured and unsecured loans made to or Note: College fraternities or sororities or other 40c that was reimbursed by the organization.

received from officers, directors, trustees, and organizations that charge membership initiation Any reimbursement of the excise tax liability of

key employees. For example, if the fees, but not annual dues, do include initiation a disqualified person or organization manager

organization borrowed $1,000 from one officer fees in their gross receipts. will be treated as an excess benefit unless (1)

and loaned $500 to another, none of which has the organization treats the reimbursement as If the 35% and 15% limits do not affect the been repaid, report $1,500 on line 38b. club’s exempt status, include the income compensation during the year the

reimbursement is made, and (2) the total For loans outstanding at the end of the shown on line 39b on the club’s Form 990-T.

compensation to that person, including the year, attach a schedule as described below. Investment income earned by a section Report any interest expense on line 16 and any reimbursement, is reasonable. 501(c)(7) organization is not tax-exempt interest income on line 2, 4, or 8, depending on income unless it is set aside for: Line 41—List of states

the nature of the receivable that created the • Religious, List each state with which the organization is interest income. • Charitable, filing a copy of this return in full or partial When loans should be reported separately. • Scientific, satisfaction of state filing requirements. In the required schedule, report each loan • Literary, Line 43—Section 4947(a)(1) separately, even if more than one loan was • Educational purposes, or

made to or received from the same person, or • Prevention of cruelty to children or animals. nonexempt charitable trusts

the same terms apply to all loans made. Salary If the combined amount of an Section 4947(a)(1) nonexempt charitable trusts

advances and other advances for the personal organization’s gross investment income and that file Form 990-EZ instead of Form 1041

-42- Specific Instructions for Form 990-EZ
must complete this line. The trust should investment company as well as tax-exempt

include exempt-interest dividends received interest received directly.

from a mutual fund or other regulated

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.

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 98 hr., 17 min. 15 hr., 10 min. 21 hr., 10 min. 1 hr., 4 min.

990-EZ 28 hr., 56 min. 11 hr., 39 min. 14 hr., 30 min. 39 min.

Schedule A (Form 990 or 990-EZ) 50 hr., 13 min. 9 hr., 26 min. 10 hr., 40 min. –0–

Schedule B (Form 990, 990-EZ, or 4 hr., 46 min. 1 hr., 23 min. 1 hr., 31 min. –0–

990-PF)

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 Tax Forms Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. 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 -43-
Index

A Depletion expense . . . . . . . . . . . 23 Funds, current . . . . . . . . . . . . . 26 Medicare and Medicaid

Accounting fees ......... 23, 39 Depreciation expense . . . . . . . . . 23 payments . . . . . . . . . . . . . . . 32

Accounting method . . . . . . 5, 16, 35 Direct expenses . . . . . . . . . . . . 38 Meetings, expense of . . . . . . . . . 23

Accounting period . . . . . . . 5, 16, 35 Disclosure requirements for G Members benefits ........ 22, 39 GEN (Group exemption Accounting periods and methods . . 5 charitable contributions ...... 7 Membership assessments . . . 19, 37 number) ............. 16, 35 Accounts payable . . . . . . . . . . . 25 Disclosure statement ......... 8 Membership General Instructions (See also Accounts receivable . . . . . . . . . . 24 Disclosures regarding certain dues ...... 18, 19, 21, 36, 37, 38 Table of Contents) ......... 1 Activities, analysis of information and services Miscellaneous expenses, reporting Gifts .............. 17, 18, 36 income-producing . . . . . . . . . . 31 furnished . . . . . . . . . . . . . . . 10 for state . . . . . . . . . . . . . . . . 23

Disclosures regarding certain Mortgages payable Government contributions . . . 18, 36 Activities, change in ....... 27, 40 . . . . . . . . . . 25

transactions and Government fees and Address and name ........ 16, 35 relationships ........... 10-11 contracts .......... 18, 32, 37 Address, change ......... 16, 35 Disqualified persons ..... 11, 31, 42 Government grants . . . . . . . . . . 18 N Address, Web site ........ 16, 36 Disregarded benefits . . . . . . . . . 12 Grants ........... 17, 18, 36, 38 Name and address ....... 16, 35 Administrative expenses . . . . . . . 38 Disregarded entities . . . . . . 2, 16, 32 Grants and allocations . . . . . . . . 22 Name change ........... 16, 35 Affiliated organizations . . . . . . . . 11 Dissolution ............ 27, 41 Grants equivalent to Net assets ......... 21, 25, 26, 39 Affiliates .............. 20, 38 Dividends contributions .......... 18, 36 ........... 19, 32, 37 Nondeductible dues ....... 28, 30 Agencies, federated fundraising . . 21 Documents, changes in Grants payable . . . . . . . . . . . . . 25 Nondiscrimination policy .... 31, 42 Agent, acting as ............ 3 organizing ........... 27, 40 Grants receivable . . . . . . . . . . . 24 Notes payable . . . . . . . . . . . . . 25 Amended returns . . . . . . 5, 6, 16, 35 Donations . . . . . . . . . 5, 17, 28, 36 Grants, government . . . . . . . . . . 18 Notes receivable . . . . . . . . . . . . 24 Analysis of Income-Producing Dues .... 19, 21, 28, 30, 32, 36, 37, Gross receipts . . . 3-3, 16, 31, 36, 42 Activities . . . . . . . . . . . . . . . 31 38 Gross receipts, calculating . . . . 3, 16 Application pending . . . . . . 2, 16, 35 Dues notices ........... 28, 41 Group exemption number . . . 16, 35 O Assessments ....... 19, 30, 32, 37 Dues, Group return ......... 13-14, 16 Occupancy expense ....... 23, 39 Assets, net ............ 25, 39 membership . . . 18, 19, 21, 36, 37, Officers, directors, trustees, Assets, other ........... 25, 39 38 and key employees, list Assets, sale of H of . . . . . . . . . . . . . . . . . 26, 40 noninventory .......... 19, 37 Heading of Form 990, completion Organization managers ..... 31, 42 Attachments . . . . . . . . . . . . . . . 14 E of . . . . . . . . . . . . . . . . . . . . 16 Organization, type of ...... 16, 36 Audit guides ............... 5 Employee benefit plans (section Heading of Form 990-EZ, Organizations in foreign countries 501(c)(9), (17), or (18)) ....... 5 completion of . . . . . . . . . . . . . 35 and U.S. possessions . . . . . . . 14 Employee benefits . . . . . . . . . . . 23 Help by phone ............. 1 Organizations not required to file . . 2 B Employees, key ......... 26, 40 Hospitals . . . . . . . . . . . . . . . . . 19 Organizations, affiliated . . . . . . . . 11 Backup withholding . . . . . . . . . . 13 Employees, reporting of . . . . . . . 31 Organizations, compensation from Balance sheets .......... 24, 39 Employer identification number (EIN): related . . . . . . . . . . . . . . . . . 26 Disregarded entities . . . . . . . . 16 I Benefits, disregarded . . . . . . . . . 12 Organizations, relation to other . . . 27 Section 501(c)(9) Income, investment . . . . . . . . . . 37 Benefits, employee ....... 23, 39 organizations ........ 16, 35 Other expenses ......... 23, 39 Income, unrelated business . . 27, 41 Benefits, members ........ 22, 39 Equipment rental and Other information ........ 27, 40 Indirect public support . . . . . . . . . 18 Bonds, tax-exempt . . . . . . . . . . . 25 maintenance expense . . . . . . . 23 Influence, substantial . . . . . . . . . 11 Bonus, discretionary . . . . . . . . . . 12 Erroneous backup withholding . . . 13 Information Regarding Taxable Excess benefit P Subsidiaries and

transactions ...... 11-13, 31, 42 Disregarded Entities Package 990, receipt of ........ 2 . . . . . . . . 32 C Excess benefit, correcting . . . . . . 13 Paid preparer . . . . . . . . . . . . . . 14 Information regarding transfers Calculating gross receipts . . . . . . 16 Excise taxes ......... 12, 31, 42 associated with personal Paid-in capital . . . . . . . . . . . . . . 26 Capital stock accounts . . . . . . . . 26 Exempt organizations, types of . . . 3 benefit contracts ........ 14, 33 Paperwork reduction act notice . . . 43 Capital surplus . . . . . . . . . . . . . 26 Exempt purposes, relationship of Information, other . . . . . . . . . . . 40 Payables .............. 25, 42 Cash ................ 24, 39 activities . . . . . . . . . . . . . . . . 32 Initial contracts . . . . . . . . . . . . . 12 Payment, fixed . . . . . . . . . . . . . 12 Change of address ....... 16, 35 Exemption, revocation of . . . . . . . 13 Initial return (first return) .... 16, 35 Payment, non-fixed . . . . . . . . . . 12 Change of name ......... 16, 35 Expenses . . . 19, 21, 23, 25, 27, 30, Interest ........... 19, 23, 32, 37 Payroll taxes . . . . . . . . . . . . . . 23 Changes in net assets . . . . . . . . 39 31, 38, 39, 41 Intermediate Sanction Penalties . . . . . . . . . . . . . . 3, 6, 8 Changes to note ............ 1 Expenses, functional . . . . . . . . . 21 Regulations ............ 11-13 Pension plan contributions . . . . . . 22 Checklist for a properly completed Expenses, fundraising . . . . . . . . 21 Inventory, sales of ........ 20, 38 Personal benefit contracts . . . 14, 33 return . . . . . . . . . . . . . . . . . 15 Expenses, indirect . . . . . . . . . . . 21 Investment income ........ 19, 37 Personal benefit contracts-Form Children, photographs of missing . . 1 Expenses, management and Investments .......... 19, 25, 39 990-EZ filers . . . . . . . . . . . . . 40 Co-venture, contributions .... 18, 36 general . . . . . . . . . . . . . . . . 21 Investments, Phone help ............... 1 Colleges and universities . . . . . . . 19 Expenses, political ........ 27, 41 program-related ........ 19, 37 Pledges receivable . . . . . . . . . . 24 Combined Federal Campaign .... 2 Expenses, program service . . . . . 21 Investments, savings, and Political expenses ........ 27, 30 Compensation .... 11-12, 22, 26, 39 Extension of time to file ........ 6 temporary cash . . . . . . . . . . . 24 Political organization, public inspection Completing all lines . . . . . . . . . . 14 rules:

Contemporaneous ........... 7 Penalties ............... 8

Contracts, initial . . . . . . . . . . . . 12 F J Political organizations . . . . . . . . . 14

Contracts, personal benefit . . 14, 33 Fair market value . . . . . . . . . . . 11 Joint costs .............. 23-23 Postage expense ........ 23, 39

Contribution, quid pro quo ...... 8 Fees ................ 23, 39 Prepaid expenses . . . . . . . . . . . 25

Contributions Fees and contracts, . . . . . 6, 17, 18, 20, 28, Printing expense ......... 23, 39 government . . . . . . . . . . . . . . 32 L 36, 38 Private delivery services ....... 6 Fees for copies Labor organizations (section Contributions, acknowledgment of ............. 9 501(c)(5)) ............... 5 Program service charitable contributions . . . . . 7-7 Filing tests ................ 2 accomplishments, Land and buildings . . . . . . . . . . . 39 Contributions, co-venture . . . . . . . 36 Final return . . . . . . 6, 16, 27, 35, 41 statement of .......... 24, 39 Land, buildings, and Contributions, definitions . . . . . . 7-8 Fixed payment . . . . . . . . . . . . . 12 Program service expenses . . . . . . 21 equipment ........... 25, 26 Contributions, disclosure Foreign organizations . . . . . . . . . 14 Program service Law firms, public interest . . . . . . . 14 statement ............... 7 Form 1041 . . . . . . . . . . . . . . . 4-4 revenue ........... 18, 32, 37 Legal fees ............. 23, 39 Contributions, government . . . . . . 18 Form 1098 ................ 4 Program-related investment Liquidation ............. 27, 41 Contributions, indirect . . . . . . . . . 36 Form 1099 series ........... 4 income . . . . . . . . . . . . . . . . 37 List of Officers, Directors, Contributions, insubstantial Form 1120-POL ............ 4 Program-related investments . . . . 19 Trustees, and Key value .................. 7 Form 990 or Form 990-EZ, Proxy tax ......... 28, 29, 30, 41 Employees ........... 26, 40 Contributions, noncash ........ 7 assembling . . . . . . . . . . . . . . 14 Public inspection . . . . . . . . 5, 14, 28 Loans from officers, directors, Contributions, nondeductible, Form 990 or Form 990-EZ, Through the IRS ........... 8 trustees, and key employees . . . 25 solicitations of ............ 6 assembling and completing Through the organization ..... 8 Loans receivable . . . . . . . . . . . . 24 Contributions, pension plan . . . . . 22 properly . . . . . . . . . . . . . . . . 14 Public interest law firms . . . . . . . . 14 Loans to or from officers, directors, Contributions, quid pro quo ..... 7 Form 990-T ............... 4 Public support, indirect . . . . . . . . 18 trustees, and key employees . . . 42 Contributions, special events . . . . 20 Form LM-2 and LM-3, Labor Publication 78, Cumulative list of Lobbying activities, cost Contributors, Organization Annual Report .... 5 section 170(c) organizations . . . 2 allocation . . . . . . . . . . . . . . . 29

schedule of . . . . . 6, 17, 18, 35, 37 Forms and publications ........ 3 Publications and forms ........ 3 Lobbying expenses ..... 30, 31, 41 Costs, joint ............. 23-23 Functional expenses . . . . . . . . . 21 Publications expense . . . . . . . . . 39 Lotteries . . . . . . . . . . . . . . . . . 38 Fund balances ........ 21, 26, 39 Purpose of form ............ 1

Fundraising agencies . . . . . . . . . 21

D Fundraising expenses . . . . . . . . . 21 M

Deferred charges . . . . . . . . . . . 25 Fundraising fees . . . . . . . . . . . . 23 Maintenance expense . . . . . . . . . 39 Q

Deferred revenue . . . . . . . . . . . 25 Fundraising records for Management and general Quid pro quo contribution ....... 8

Definitions ................ 7 tax-deductible contributions .... 6 expenses . . . . . . . . . . . . . . . 21 Quid pro quo contributions . . . . 7, 28

-44- Index
R S Section 501(c)(9), (17), (18) T

Raffles . . . . . . . . . . . . . . . . . . 38 Sales of Federal government Tax Forms Committee organizations .......... 17, 37 . . . . . . . . 43

Reasonableness, presumption materials, disclosure for . . . . . . 10 Section 6033(e) exceptions . . 28, 41 Tax-exempt bond liabilities . . . . . . 25

of . . . . . . . . . . . . . . . . . . . . 12 Sales of inventory ........ 19, 20 Section 6033(e) notice and Tax-exempt organization, public

Rebuttable presumption . . . . . . . 12 Savings . . . . . . . . . . . . . . . . . 39 reporting requirements inspection rules ........... 8

Receivable, accounts . . . . . . . . . 24 Schedule A (Form 990 or Taxable subsidiaries and proxy tax ......... 28, 41 . . . . . . . . . 32

Receivable, grants . . . . . . . . . . . 24 990-EZ) . . . . . . . . . . 2, 3, 17, 36 Securities ........... 19, 25, 37 Taxes, excise . . . . . . . . . . . . . . 12

Receivable, notes and loans . . . . . 24 Schedule B (Form SFAS 116 ........... 21, 22, 36 Taxes, payroll . . . . . . . . . . . . . . 23

Receivable, pledges . . . . . . . . . . 24 990, 990-EZ, SFAS 117 ............. 25, 26 Taxes, reimbursement of . . . . . . . 42

Receivables ............ 25, 42 or 990-PF) . . . 3, 6, 17, 18, 35, 37 Shipping expense ........ 23, 39 TE/GE Customer Account

Receivables from officers, Schedule B (Form 990, Signature . . . . . . . . . . . . . . . . 14 Services Office . . . . . . . . . . 2-2

directors, trustees, and key 990-EZ, or 990-PF) Solicitations of contributions . . . . . 28 Telephone expense . . . . . . . . . . 23 guidelines ............ 17, 35 employees . . . . . . . . . . . . . . 24 Solicitations of nondeductible Telephone number ........ 16, 35 Schedule of Reconciliation statements . . . . . . 26 contributions ............. 6 Termination ............ 27, 41 contributors . . . . . 6, 17, 18, 35, 37 Recordkeeping . . . . . . . . . . . . . 14 Special events . . . 17, 18, 20, 36, 38 Test, facts and circumstances . . . . 11 Section 4911, 4912, or Relationship of Activities to the Specific instructions for Form 990 Travel expense . . . . . . . . . . . . . 23 4955 ............... 31, 42 Accomplishment of Exempt (See also Table of Contents Trust fund recovery penalty ..... 3 Purposes . . . . . . . . . . . . . . . 32 Section 4947(a)(1) trusts . . . 2, 31, 42 for these specific instructions.) . . 16 Trust principal account . . . . . . . . 26 Rent expense ........... 19, 39 Section 4958 ....... 11-13, 31, 42 Specific Instructions for Form Trusts, section Rental income (loss) Section 4958, churches . . . . . . . . 13 990-EZ (See also Table of . . . . . . . . . 32 4947(a)(1) . . . . . . . . . . 2, 31, 42 Section 4958, excise taxes: Contents for these specific Rents, gross ........... 19, 37 Disqualified persons . . . . . . . . 12 instructions.) . . . . . . . . . . . . . 35 Requirements for a properly

completed Form 990 or Form Organization managers . . . . . . 12 State, reporting to . . . . . . . . 4, 5, 23 U

990-EZ . . . . . . . . . . . . . . . . 14 Section 501(a), (e), (f), (k), and (n) Statement of Functional Unrelated business income . . 27, 41 organizations ............. 2 Expenses . . . . . . . . . . . . . . . 21 Retained earnings . . . . . . . . . . . 26 Unrelated trade or business

Return, final . . . . . . 6, 16, 27, 35, 41 Section 501(c)(12) Statement of Position 98-2 . . . . . . 23 activities ............. 19, 37

Return, group ......... 13-14, 16 organizations . . . . . . . . . . . . . 31 Statement of program service Utilities expense . . . . . . . . . . . . 39 Section 501(c)(3) accomplishments ....... 24, 39 Return, initial (first) ........ 16, 35 organizations ...... 17, 28, 36, 42 States, list of ........... 31, 42 Returns, amended . . . . . 5, 6, 16, 35 Applicable organization . . . . . . 11 Subsidiaries, taxable . . . . . . . . . 32 W Revenue ............ 20, 25, 32 Section 501(c)(3) Substantial influence . . . . . . . . . 11 Web site address ........ 16, 36 Revenue, Expenses, and organizations, disclosure Substantiation ............. 7 When to file . . . . . . . . . . . . . . 6-6 Changes in Net Assets or of transactions and relationships . . Substantiation and disclosure Where to file . . . . . . . . . . . . . 6-6 Fund Balances ......... 17, 36 ................... 10-11 requirements for charitable Who must file .............. 2 Revenue, program Section 501(c)(4) organizations: contributions ............. 7 Withholding, backup . . . . . . . . . . 13 service ............ 18, 32, 37 Applicable organization . . . . . . 11 Substitute forms for Form 990 or Revenue, special Section 501(c)(4), (5), or (6)

events .......... 17, 20, 36, 38 organizations .......... 28, 41 Form 990-EZ ............. 5 ■

Supplies . . . . . . . . . . . . . . . . . 23 Rounding off to whole dollars . . . . 14 Section 501(c)(7) Support, direct public . . . . . . . . . 18 organizations .......... 31, 42 Sweepstakes, raffles, and Section 501(c)(9) lotteries ............. 20, 38 organizations .......... 16, 35

Index -45-