Issue

Colleges, Seminaries, and Universities should be careful that they properly executed the signatures and required information in Form 990, Part II, Signature Block. This can be an overlooked section of the return, potentially to the peril of the institution.

Situation

Marathon Bible College (MBC) is a public charity and a school under I.R.C. sections 501(c)(3) and 170(b)(1)(A)(ii). Their Controller call to ask us how to determine who may sign their Form 990 (in Part II, Signature Block).

We tell them that the “Signature of officer” in Part II refers to MBC’s current president, vice president, treasurer, assistant treasurer, chief accounting officer, or other corporate officer (such as a tax officer) who is authorized to sign as of the date this return is filed. In rare instances, a receiver, trustee, or assignee must sign any return he or she files for a corporation or association. It is important to note that the “officer” required to sign in Part II carries a different definition from “officer” in other places on the Form 990. In addition, MBC should review to ensure that their “Paid preparer” signs the return and properly completes the information required of that firm in Part II.

Further, MBC should carefully consider their answer to the “checkbox question” in Part II that asks, “May the IRS discuss this return with the preparer shown above?” (Yes/No).

Rules

From the Form 990 instructions:
Part II: The return must be signed by the current president, vice president, treasurer, assistant treasurer, chief accounting officer, or other corporate officer (such as a tax officer) who is authorized to sign as of the date this return is filed… The definition of “officer” for purposes of Part II is different from the definition of officer (see Glossary) used to determine which officers to report elsewhere on the form and schedules, and from the definition of principal officer for purposes of the Form 990 Heading (see Glossary).

On the last line of Part II, check “Yes” if the IRS can contact the paid preparer who signed the return to discuss the return. This authorization applies only to the individual whose signature appears in the Paid Preparer Use Only section of Form 990. It does not apply to the firm, if any, shown in that section. By checking “Yes,” to this box, the organization is authorizing the IRS to contact the paid preparer to answer any questions that arise during the processing of the return.

The organization is also authorizing the paid preparer to:
Give the IRS any information missing from the return,
Call the IRS for information about processing the return, and
Respond to certain IRS notices about math errors, offsets, and return preparation.

The organization is not authorizing the paid preparer to bind the organization to anything or otherwise represent the organization before the IRS.

The authorization will automatically end no later than the due date (excluding extensions) for filing of the organization’s 2016 Form 990. If the organization wants to expand the paid preparer’s authorization or revoke it before it ends, see Pub. 947, Practice Before the IRS and Power of Attorney.

Check “No” if the IRS should contact the organization or its principal officer listed in Item F of the Heading rather than the paid preparer.

Bottom Line

Higher education institutions should exercise care and diligence in completing Form 990, Part II. A misstep there could result in substantial penalties for late filing. You should touch base with your skilled, knowledgable, and experienced not-for-profit tax professional. They will be able to help you navigate these potentially treacherous waters.

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.