The Internal Revenue Service released for public comment a draft of its annual form for not-for-profit organizations, the Form 990. The proposed change, the most comprehensive since 1979, includes supplemental forms for hospitals, executive compensation and tax-exempt bond holders.
Lois Lerner, director of the agencys exempt organizations division, said the redesigned form is an effort to improve transparency and compliance among tax-exempt organizations and simplify IRS reporting. The form has not kept pace with an evolving tax-exempt sector and fails to capture the growth and increasingly complex operations among not-for-profits, Lerner said.
The agency will take public comment on the draft until Sept. 14, and IRS officials expect to use the revised form for fiscal 2008 returns.
Under the proposal, hospitals would be required to report on a separate form community benefits using criteria drafted by the Catholic Health Association, which excludes bad debt, or losses from patients who do not pay, and shortfalls from Medicare payments. However, Lerner stressed the agency is seeking comment on criteria for community benefits and is open to alternative standards.
Hospitals would also be required to disclose billing and collection policies and certain joint-venture information, including joint-venture ownership details.
While the healthcare sector has changed dramatically over the last 40 years, the general tax rules governing this sector have not, the agency said. The proposed schedule is designed to combat the lack of transparency surrounding the activities of tax-exempt organizations that provide hospital or medical care.
A new supplemental form for executive compensation targets tax-exempt organizations with highly paid executives, key employees or governing board members. The new tax-exempt bond schedule would expand information already collected by the IRS for borrowers with issues of more than $100,000. -- by Melanie Evans