We’ve posted about the Form 990 (the annual tax returns that federally tax-exempt organizations are required to file to maintain their status) in a previous blog post, but once you know what the form is, do you know where you come into the picture as a board member?
If you’re new to your Club or Association board, or if you’re wondering whether you’ve done all you need to do in your organization’s annual Form 990 review process, check out Emily Chan’s post at Nonprofit Law Blog on What Board Members Should Know About Reviewing a Form 990.
What’s the most important thing to know? While the IRS does not require board members to actually review the 990, it does ask if a copy of the final version of the form was provided to each board member – signaling that a “no” answer is an indicator of less-than-ideal board governance. The form also asks the organization to describe the process used to review the form. Again, while the IRS does not describe a specific process or require one at all, the inclusion of any process description is a signal to the public that the organization is promoting best governance practices while receiving public benefits in the form of tax-exemption.
Bottom line: the IRS is looking for your organization to answer affirmatively to both questions and to take the actions necessary to do so. If your board hasn’t documented a Form 990 review process, now is a great time to work on this policy so you can be ready for next year.
Looking for more nonprofit legal information and resources? Emily Chan is an associate attorney and a great nonprofit law resource – follow her on Twitter @emilychan or look for her posts on Nonprofit Law Blog.