Write-Offs

The Internal Revenue Service has released the latest version of its Form 990-EZ — the short version of its informational tax form that is used by small charities — and its instructions. The updated form takes effect for the 2008 tax year. The tax agency said the revised Form 990-EZ is similar to previous versions, although the new form includes certain schedules from the IRS’s recently revamped Form 990. Groups with receipts of less than $1-million are eligible to file the Form 990-EZ for the 2008 tax year. The threshold drops to $500,000 for the 2009 tax year.

The IRS is changing the way many new groups apply for status as charities. Until now, groups first had to get an “advance ruling” from the IRS by filing a statement that they expected to get broad support from the public or government and thus avoid being classified as a private foundation. After five years, they had to prove they met this so-called public-support test and apply for a final ruling on their status. Under new rules, the IRS will no longer require the five-year review. The agency says its recently revised Form 990 tax return will give it enough information to determine if a group is a charity or a private foundation.

Senator Grassley has called on the IRS and the Treasury Department to develop an additional schedule for the Form 990 that would be specifically geared to colleges and universities. The new schedule would require institutions to report information about their student bodies and costs, Mr. Grassley told a Capitol Hill briefing on college costs and endowment spending. The senator said the schedule should be similar to one the IRS devised for nonprofit hospitals in its new Form 990 for the 2008 tax year.