ISSUE

For those institutions who are required to file Form 990, have you checked out this year’s changes to the Form?

 

SITUATION

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

The CFO at DCC calls us to ask about any changes to Form 990 for their tax year ending June 30, 2019.  She says she knows about the “GAAP vs. Form 990” issues from listening to our webcasts over the past few months, but wonders if there any changes to the actual form?

Actually, although the instructions have some changes and guidelines, there are very few actual changes to Form 990.  On Part V, two Yes/No questions (Line 15 and 16) have been added to ask about new Internal Revenue Code Sections 4960 and 4968, respectively

The instructions for Part V, Line 16 include an interesting “Threshold Tests for Section 4968” worksheet – with separate instructions for this worksheet.  Also, as to Line 16, the IRS admits (on their website) that it’s estimated that “40 or fewer institutions are affected” by the rules under I.R.C. Section 4968.

Also, Schedule B – for reporting of donor information – is altered based upon Rev. Proc. 2018-38, whereby a tax-exempt organization, other than a section 501(c)(3) organization (including a section 4947(a)(1) nonexempt charitable trust) or a section 527 political organization, is no longer required to report the names and addresses of its contributors on the Schedule B (Schedule of Contributors) attached to its Form 990 or Form 990-EZ for tax years ending on or after December 31, 2018.

 

RULES

From 2018 Form 990, Part V instructions:

Line 15. See the instructions for Form 4720, Schedule N, to determine if you paid to any covered employee more than $1 million in remuneration or paid an excess parachute payment during the year. Remuneration paid to a covered employee includes any remuneration paid by a related organization.

Line 16. Line 16 applies to private colleges and universities subject to the excise tax on net investment income under section 4968. All other organizations, including state colleges and universities described in the first sentence of section 511(a)(2) (B) are not subject to this tax, and therefore check the “No” box on Line 16, and go to Part VI. A private college or university will be subject to the excise tax on net investment income under section 4968 only if four threshold tests are met.

 

BOTTOM LINE

  • The 2018 Form 990 features only a few actual changes.
  • The Form 990 instructions have some new guidelines, cautions, and updates that you should read before preparing or reviewing the form.
  • I.R.C. Section 4960 on the excess executive compensation excise tax is covered on Part V, Line 15.
  • I.R.C. Section 4968 “private college or university excise tax” is covered on Part V, Line 16.

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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