(WASHINGTON, June 2 , 2008) -- Independent Sector today filed detailed comments with the Internal Revenue Service on draft instructions for the redesigned Form 990, the primary annual information return for many tax-exempt organizations. IS’s letter introducing the comments commends the IRS for its effort to bring greater clarity to the revised Form 990 and to address concerns expressed by the nonprofit community in response to the initial draft Form.

In its comments, IS raises concerns regarding the reporting of indirect political activities, proposing that the IRS permit organizations a reasonable period to make necessary adjustments to a joint venture partnership that could jeopardize their 501(c)(3) tax-exempt status. IS also recommends allowing a committee of a charitable organization’s board, rather than the entire board, to review the Form 990 prior to filing in order to expedite public access to the document.

“Independent Sector is pleased by the efforts of the Internal Revenue Service to provide the nonprofit community a better understanding of the redesigned Form 990 through these draft instructions,” said Diana Aviv, president and CEO of Independent Sector. “Comments will help strengthen the instructions to ensure accurate, complete, and consistent reporting.”

The IS comments offer suggestions for clarifying definitions and highlight opportunities where the IRS can use the instructions to continue its commitment to educating the nonprofit sector. IS proposes redefining “key employees” by position, such as chief operating officer and chief administrative officer, rather than using the overly broad definition in the current version. IS also challenges the application of unrelated business activity codes to exempt programs, recommending that the IRS instead use codes from the National Taxonomy of Exempt Entities.

The IRS released the draft instructions to the revised Form 990 on April 7 and requested comments from the nonprofit community by June 1. The Service will study all comments it receives and incorporate changes into the final instructions that will be released later this year. Tax-exempt organizations with over $1 million in annual receipts, supporting organizations, and tax-exempt organizations that engage in particular activities will be required to file the new Form 990 for fiscal years ending on December 31, 2008 or later.

A copy of the comments is available here.

Learn more on the Form 990.

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Independent Sector is a nonprofit, nonpartisan coalition of approximately 550 charities, foundations, and corporate giving programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to advance the common good by leading, strengthening, and mobilizing the nonprofit and philanthropic community.