October 16, 2003 | Read Time: 1 minute
By Elizabeth Schwinn
As the IRS proceeds with plans to accept electronic filings of Form 990 returns early next year, the agency is considering, among other changes, how it could revise the form to make it easier to fill out and understand.
The agency has created a new “compliance unit” in Ogden, Utah, that will open in January to help identify problems in the way Forms 990 are filled out and to work with charities to fix mistakes. Over the years, investigators have discovered that charities’ filings are often riddled with mistakes or misinformation.
The IRS has identified 16 typical errors made on Forms 990, and it plans to group charities based on the kinds of errors they have made. The new office’s first focus will be contacting the more than 2,000 charities that report what the IRS considers to be “substantial” contributions but list no fund-raising expenses. The IRS suspects that most of those nonprofit organizations spend money on fund raising without reporting it. A Chronicle investigation three years ago found many organizations whose fund raisers had reported to state attorneys general that they had held fund-raising campaigns but then did not claim fund-raising expenses on their 990s (The Chronicle, May 18, 2000).
Other projects will include making sure that tax-exempt organizations that conduct gambling activities are properly reporting their actions to the IRS, and that charities are abiding by the law in reporting excessive pay or benefits earned by their top officials.
Organizations that do not correct their mistakes in the year after they have been contacted by the IRS would be subject to audit, according to the IRS.
