2019 Form 990 and 990-EZ Significant Changes and Reminders

The IRS continues to make progress towards paperless filings.  The latest change impacts both Forms 990 and 990-EZ.  If a Form 990 or 990-EZ is being filed for a tax year beginning on or after July 2, 2019, it must be filed electronically (with limited exceptions).  The IRS encourages all organizations to file electronically; however, they will continue to accept paper filings for tax years beginning before July 2, 2019.

There are also several important reminders related to the 2019 Forms 990 and 990-EZ:

Internal Revenue Code (“IRC”) Section 4960 imposes an excise tax on an organization that pays, to any covered employee, more than $1 million in remuneration or pays an excess parachute payment during the year. This tax was first imposed in 2018 and was captured on the 2018 Form 990. On the 2019 Form 990, there is a question regarding this in Part V, line 15. (More information on this topic can be found in IRC Sec. 4960 and Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, and IRS Notice 2019-09.)  New proposed regulations under IRC Sec. 4960 were released in June 2020, with a public comment period expiring on August 10, 2020. EisnerAmper has provided a deeper dive analysis of the proposed regulations in New Rules on Excise Tax on Highly Compensated Employees.

IRC Sec. 4968 imposes an excise tax on the net investment income of certain private colleges and universities.   This was applicable on the 2018 Form 990 as well. On the 2019 Form 990, there is a question regarding this in Part V, line 16. (More information can be located in IRC Sec. 4968 and Form 4720, Return of Certain Excise Taxes under Chapters 41 and 42 of the Internal Revenue Code and the interim guidance listed in IRS Notice 2018-55.)

Additionally, in Part X of the 2019 Form 990, lines 27 and 28 were updated to reflect the financial statement reporting changes adopted by all not-for-profit entities under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update 2016-14, which changed the way that not-for-profit organizations classify net assets.  The categories of net assets have been reduced from the three previous categories of “unrestricted,” “temporarily restricted,” and “permanently restricted” down to the two categories of “with donor restrictions” or “without donor restrictions.”

The complete 2019 Form 990 and 990-EZ instructions can be located at the following links:

https://www.irs.gov/pub/irs-pdf/i990.pdf

https://www.irs.gov/pub/irs-pdf/i990ez.pdf