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2014 Federal Forms 990 Changes Affecting Supporting Organizations

Nonprofit organizations with a December 31, 2014 year-end are now in the process of reviewing their Forms 990 for the upcoming May 15th due date.  In advance of the filing deadline, AAFCPAs would like to advise nonprofits and their Board members of the significant revisions that specifically affect supporting organizations. In 2014, the IRS revised the Federal Form 990 Schedule A, adding two new sections to enhance the reporting for supporting organizations under IRS Code Section 509(a)(3).

What has changed?

2014 revisions to the Schedule A: Public Charity Status and Public Support are significant, expanding the form from four pages to eight.  Parts IV and V are entirely new, Part I, line 11 has been modified, and all are designed to demonstrate compliance with the detailed rules applicable to supporting organization.

All supporting organizations must now complete Part IV of Schedule A, which outlines a number of questions related to compliance with the IRS’s supporting organization regulations.  Part IV of Schedule A now contains five sections (Sections A-E).  Section A must be completed by all supporting organizations, while Sections B-E may be required based on the type of supporting organization.

Part V of Schedule A is only required for Non-Functionally Integrated Supporting Organizations and requires financial data to indicate that the Supporting Organization has met distribution requirements as described in Treasury Regulation Section 1.509(a)-4(i)(5)(ii).  A Non-Functionally Integrated Supporting Organization must also satisfy an attentiveness test as described in Treasury Regulation Section 1.509(a)-4(i)(5)(iii).

It is important that you review the new Schedule A Parts IV and V if you are a supporting organization as any failure to meet the required tests and appropriately answer the questions could result in the IRS questioning your tax-exempt status.

If you have any questions about supporting organizations or changes to the 2014 Federal Form 990 Schedule A, please contact your AAFCPA partner, or Jeanie Gorlovsky-Schepp, CPA, at 774.512.4029, jgorlovsky-schepp@nullaafcpa.com.

About the Author

Jeanie Gorlovsky-Schepp CPA
Jeanie has extensive experience providing assurance, tax and consulting solutions for regional, national and international nonprofits, including: arts and cultural organizations, charter schools and Charter Management Organizations (CMOs), and multi-service human & social service providers. Jeanie is a leader in AAFCPAs’ Nonprofit Tax practice, and her advice helps clients navigate complex issues such as unrelated business income tax (UBIT), state filing requirements, related-party transactions and executive compensation disclosures. She leads training programs for internal team members, clients, and regional & national industry associations on various topics, including: strategic budgeting, Form 990 reporting and tax-exempt status. Most recently, she has happily shared her expertise as a guest speaker of the Massachusetts Nonprofit Network, and the Massachusetts Council of Human Service Providers, Inc. (The Providers' Council).

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