Tax Tips Logo ImageISSUE:

One change in the 2019 Form 990 instructions has not received much fanfare – the re-ordering of the people listed at Part VII, Section A.

 

 

 

SITUATION:

Saltwater Christian College (SCC) 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.

As we begin work and planning SCC’s Accounting Team on their 2019 Form 990 (for their year ended 6/30/20), we note to them that the “ordering” of names listed at Form 990, Part VII, Section A has been changed.  The new “hierarchy” is based upon highest paid person rather than the historical ordering which flowed by “position.”

“Hold on.  Wha-what?  We’re looking at the instructions for Part VII, Section A, Column A and it is the same as it’s always been.  What are you talking about?” they ask.

“Well, that appears to be a mistake – the IRS just left the old ‘Column (A)’ narrative in the instructions.  However, prior to that in the instructions (2019 Form 990 instructions, page 26) – just above “Fiscal year filers,” check out the new narrative on ‘Order of Reporting.’”

“Whoa,” they reply.

 

RULES:                                                                        .

From 2019 Form 990 Instructions:

Order of Reporting. List the persons required to be included in Part VII, Section A, in order from highest to lowest compensation based on the sum of columns (D), (E), and (F) for each person. [When the amount of total compensation is the same, list the person in the following order: individual trustees or directors, institutional trustees, officers, key employees, highest compensated employees, and former such persons.

From 2018 (and prior) Form 990 Instructions:

Column (A). For each person required to be listed, enter the name in the top of each row and the person’s title or position with the organization in the bottom of the row. If more than one title or position, list all. List persons in the following order: individual trustees or directors, institutional trustees, officers, key employees, highest compensated employees, and former such persons. List each person on only one line.  [Underline added.]

 

BOTTOM LINE:

  • The Form 990 instructions should be carefully followed when completing the return.
  • There is a new “Order of Reporting” narrative in the 2019 Form 990 instructions for Part VII, Section A.
  • It is always good to ensure that – when reviewing Form 990s prepared using software – the completed return complies with the Form 990 instructions for the given year.
  • Sometimes, we all make mistakes…

 

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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