Now that 2017 has come to a close, you may be thinking about how you survived another holiday season, or maybe about your goals for the new year both personally and for your organization. The last thing on your mind is probably the Form 990 tax return that will be due in the next couple of months. When you do think about that Form 990 tax return, you also probably think about and dread the amount of information your accountant asks you to provide. But the truth is, all of the information accountants ask for is vitally important to present your organization in the best light for both the public and to the Internal Revenue Service. Here are a few reasons why all that information is important:
The Form 990 is Important for Organizations to Provide to Members and the Public
The Form 990 tax return is not only meant to be filed to stay compliant with the Internal Revenue Service, it is also a way for potential members and donors to consider your organization to see if they want to be future members or make charitable donations. Your Form 990 return tells your organization’s story both financially and functionally. While some outside viewers of the Form 990 may be looking at the financial side, many will be looking to the narratives on the program accomplishments for the year and best practices disclosures to see if they want to be a part of the organization. When accountants ask for program accomplishments, they want you to tell your story and to put you in the best light for the public. If your organization is successful, share those accomplishments for all to see. Be as detailed and descriptive as possible to capture the full accomplishments for the year. So, when providing narratives to your accountant, remember that potential members and donors may also be looking to the Form 990 to make their final decisions about membership and charitable donations.
The Information is Required by the Internal Revenue Service
Form 990 tax preparers ask for a lot information because it is required by the Internal Revenue Service. The program accomplishments and best practices are reviewed by the IRS to make sure the organization is functioning within its programs, as applied for on the tax-exempt application. The best practices disclosures about member responsibilities, board and committee record keeping, conflict of interest policies and compensation review are all examined by the IRS and therefore it is important to provide the correct answers and narrative descriptions of those activities. Good narratives of activities will not prevent additional examination by the IRS, but are needed to present the best information to the IRS. The IRS is not looking for “correct” answers but rather complete answers with good descriptions of the activities to show the organization is functioning to the best of its ability to carry out its mission. Therefore, accountants ask for detailed information on these questions to provide the best picture of the organization to the IRS.
Accountants are Passionate about the Organizations they Work With
Accountants don’t just prepare the Form 990 to comply with the IRS, accountants are also passionate to complete the best return possible because CPAs need to sign the Form 990 acknowledging to the IRS that the return is “true, correct and complete”.
When tax preparers are asking for so much information, it is because they are required to and need it to file a true, correct and complete return. In addition, accountants want the organizations they work with to present the best return possible for the public and its members to help them continue to grow and accomplish their missions.
While it may be frustrating gathering all the required information to file the Form 990, it is very important information for the public as well as the IRS. Accountants have your best interests in mind in gathering all this information and filing the most complete return possible to be compliant with the IRS, but also to help the organization grow through additional public support and membership because you were transparent and complete on your organization’s Form 990. So, spending a little more time putting together detailed answers to your accountant’s questions will go a long way with helping your organization put out the best Form 990 possible. Contact Tax Manager, Ryan Vettrus, CPA, at 651-483-4521 or firstname.lastname@example.org with questions.