July 20, 2006 | Read Time: 1 minute
In an effort to speed up a long-awaited update of Form 990, the federal informational tax return charities are required to file, an Internal Revenue Service advisory committee has proposed seven principles for the tax agency to follow in making changes.
The advisory committee said that, more important than anything else, the form needs to do a better job of helping the IRS enforce the law. Questions have been added to the form over the years that have nothing to do with enforcement, largely at the request of lawmakers and state and federal agencies, the committee said.
The agency should incorporate questions from state agencies, such as how fund-raising costs are allocated between program and administration expenses, as long as doing so doesn’t make the form too complicated, the committee said.
Overall, the form, which has grown from two to 15 pages in the 50 years since it was created, is confusing and asks some unnecessary questions, the committee said.
Among other changes, the committee recommended that the revenue service try to make Form 990 as easy to understand as possible, even for those who are unfamiliar with the laws governing tax- exempt organizations.
Internal Revenue Service officials have said that they plan to issue a proposal to revise the form by next spring.
A copy of the advisory committee’s report may be obtained at http://www.irs.gov/pub/irs-tege/tege_act_rpt5.pdf.
