Reporting Loans: What the IRS Says
February 5, 2004 | Read Time: 1 minute
The Internal Revenue Service’s instructions for the federal Form 990 informational tax return tell charities they must report — and provide details of — loans made to directors, officers, and other key employees.
Charitable organizations with revenue of $25,000 or more are required to fill out the Form 990.
Failure to fully fill out the form may result in penalties for filing an incomplete tax return, the tax agency says. Charities must provide total dollar figures for all debts due from such officials, including all secured and unsecured loans to them, on Line 50 of the form.
The IRS also requires that groups provide additional information about loans in a schedule attached to the form. The information that the IRS requires for each outstanding loan is:
2. Original amount.
3. Balance due.
4. Date issued.
5. Maturity date.
6. Repayment terms.
7. Interest rate.
8. Collateral provided by the borrower.
9. Description and fair market value of the cash, stock, or other items provided to the borrower by the charity.
The potential penalty for charities with annual gross receipts of $1-million or less that fail to provide any of this information is $20 a day until the incomplete return is corrected, but may not exceed $10,000 or 5 percent of the organization’s annual gross receipts (whichever is the smaller sum).
Charities with gross receipts of more than $1-million face a penalty of $100 a day, with a maximum penalty of $50,000.
