US Internal Revenue Service: i990-ez--1996

8/14/2019 US Internal Revenue Service: i990-ez--1996

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96Department of the TreasuryInternal Revenue Service

Instructions for Form 990 andForm 990-EZReturn of Organization Exempt From Income Tax andShort Form Return of Organization Exempt from

Income TaxUnder Section 501(c) of the Internal Revenue Code (except black lung benefittrust or private foundation) or section 4947(a)(1) nonexempt charitable trustNote: Form 990-EZ is for use by organizations with gross receipts of less than$100,000andtotal assets of less than $250,000 at the end of the year. Sectionreferences are to the Internal Revenue Code unless otherwise noted.

Paperwork Reduction Act NoticeWe ask for the information on this form to carry out the Internal Revenue laws of the United States.You are required to give us the information. We need it to ensure that you are complying withthese laws.

The organization is not required to provide the information requested on a form that is subjectto the Paperwork Reduction Act unless the form displays a valid OMB control number. Books orrecords relating to a form or its instructions must be retained as long as their contents maybecome material in the administration of any Internal Revenue law. The rules governing the

confidentiality of the Form 990, and Form 990-EZ, are covered in Code section 6104.The time needed to complete and file this form and related schedules will vary depending onindividual circumstances. The estimated average times are:

If you have comments concerning the accuracy of these time estimates or suggestions formaking these forms simpler, we would be happy to hear from you. You can write to the Tax FormsCommittee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. DO NOT sendthe form to this address. Instead, see When and Where to File.

4912 (disqualifying lobbying expenditures), or4955 (political expenditures).q Both section 501(c)(3) and section 501(c)(4)organizations must report on their returns theamount of excise taxes paid during the year bythe organization managers or disqualifiedpersons under section 4958 (excess benefittransactions), as well as any other informationthe Secretary may require concerning thosetransactions. These amendments were addedby the Taxpayer Bill of Rights 2 (TBOR2),effective for taxable years beginning after July30, 1996. See General Instruction P and theinstructions for line 89 of Form 990 and line 40of Form 990-EZ.q The Small Business Job Protection Act of1996 added charitable risk pools (section501(n)) to the list of exempt organizations.These organizations must also file a ScheduleA (Form 990).q Church-affiliated organizations that areexclusively engaged in managing funds ormaintaining retirement programs need not fileForm 990 or Form 990-EZ (Rev. Proc. 96-10,1996-2 I.R.B. 17).q TBOR2 increased the penalties against theorganization for failure to file complete andtimely annual returns. See General InstructionK.q The Small Business Job Protection Act of1996 modified the penalties for not complyingwith the public inspection requirements forannual returns and exemption applications.See General Instruction M.q TBOR2 modified prospectively the section6685 penalty and the rules for the publicinspection of returns and exemptionapplications. These new public inspectionprovisions generally apply to requests madeno earlier than 60 days after the date on whichthe Treasury Department publishes theregulations required under the provisions of theAct. See General Instruction M.q Political expenditures for which the section527 tax has been paid (on Form 1120-POL,U.S. Income Tax Return for Certain PoliticalOrganizations) are disregarded for thepurposes of the section 6033(e) proxy tax. Seethe instructions for Line 85dLobbying andpolitical expenditures. (Small Business JobProtection Act of 1996).q Annual dues, not exceeding $100, (subjectto inflation) paid to a section 501(c)(5)agricultural or horticultural organization are nottreated as unrelated business taxable income.Exclusion Code 40 is amended. (Section512(d), Small Business Job Protection Act of1996).

Form RecordkeepingLearning about the

law or the form

Preparingthe

form

Copying,assembling, andsending the form

to the IRS

990 94 hr., 28 min. 19 hr., 52 min. 25 hr., 5 min. 48 min.

990-EZ 28 hr., 28 min. 9 hr., 12 min. 11 hr., 1 min. 16 min.

Schedule A (Form 990) 49 hr., 59 min. 9 hr., 14 min. 10 hr., 28 min. 0

Contents Page

Changes To Note........................................ 1 General Instructions.................................... 2

Changes To Noteq Section 501(c)(3) organizations mustdisclose on their Form 990, or Form 990-EZ,any excise tax paid during the year undersections 4911 (excess lobbying expenditures),

N Disclosures Regarding Certain Informationand Services Furnished.............................. 7A Who Must File............................................. 2

B Organizations Not Required To File........... 2 O Disclosures Regarding CertainTransactions and Relationships.................. 7C Exempt Organization Reference Chart....... 3

P Excess Benefit Transactions....................... 7D Forms and Publications To File or Use...... 3Q Erroneous Backup Withholding................... 8E Use of Form 990, or Form 990-EZ, To

Satisfy State Reporting Requirements........ 4 R Group Return .............................................. 8

F Other Forms as Partial Substitutes forForm 990 or Form 990-EZ.......................... 4

S Organizations in Foreign Countries andU.S. Possessions........................................ 8

G Accounting Periods and Methods............... 5 T Public Interest Law Firms ........................... 8

H When and Where To File............................ 5 U Requirements for a Properly CompletedForm 990 or Form 990-EZ.......................... 8I Extension of Time To File........................... 5

Public InspectionJ Amended Return/Final Return.................... 5 Signature

RecordkeepingK Penalties ...................................................... 5Rounding Off to Whole Dollars

L ContributionsSolicitations ofNondeductible Contributions, KeepingFundraising Records, NoncashContributions, and Substantiation andDisclosure Requirements............................ 6

Completing All LinesAssembling Form 990 or Form 990-EZ

Specific Instructions for Form 990.............. 9

Specific Instructions for Form 990-EZ........ 25

M Public Inspection of Completed ExemptOrganization Returns and ApprovedExemption Applications............................... 6

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General InstructionsNote: The General Instructions apply toboth Form 990 and Form 990-EZ. See alsothe Specific Instructions for each of theseforms.

An organization's completed Form 990, orForm 990-EZ, (except for the schedule ofcontributors) is available for public inspectionas required by section 6104.

Some members of the public rely on Form990, or Form 990-EZ, as the primary or solesource of information about a particularorganization. How the public perceives anorganization in such cases may be determinedby the information presented on its return.Therefore, please make sure the return iscomplete and accurate and fully describes theorganization's programs and accomplishments.

Purpose of FormForm 990 and Form 990-EZ are used bytax-exempt organizations and nonexemptcharitable trusts to provide the IRS with theinformation required by section 6033.

The Form 990, or Form 990-EZ, may alsobe used to transmit elections that are requiredto be submitted to the IRS, such as the electionto capitalize costs under section 266.

A. Who Must File

Filing testsIf the organization does not meet any of theexceptions listed in General Instruction B andits annual gross receipts are normally morethan $25,000 (see the gross receiptsdiscussion in General Instruction B), it must fileForm 990 or Form 990-EZ. If the organization'sgross receipts during the year are less than$100,000 and its total assets at the end of theyear are less than $250,000, it may file Form990-EZ, Short Form Return of OrganizationExempt From Income Tax, instead of Form990. Even if the organization meets this test, itcan still file Form 990.

Combined Federal Campaign.BySmaller organizations applying to participate inthe Combined Federal Campaign may submita completed Form 990-EZ (instead of Form

990) to the Office of Personnel Management(OPM).

However, these organizations must alsosubmit to OPM, attached to the Form 990-EZ,pages 1 and 2 of Form 990 with the followingcompleted: Part I, lines 1a-1d and 13-15; PartII, all lines. These organizations should notsend this Form 990 attachment to the IRS.

Section 501(a), (e), (f), (k), and (n)organizationsExcept for those types of organizations listedin General Instruction B, an annual return onForm 990, or Form 990-EZ, is required fromevery organization exempt from tax undersection 501(a), including foreign organizationsand cooperative service organizationsdescribed in sections 501(e) and (f), child careorganizations described in section 501(k) andcharitable risk pools described in section501(n). Section 501(c)(3), 501(e), (f), (k), and(n) organizations must also attach a completedSchedule A (Form 990), Organization ExemptUnder Section 501(c)(3), to their Form 990 orForm 990-EZ.

Section 4947(a)(1) nonexemptcharitable trustsAny nonexempt charitable trust (described insection 4947(a)(1)) not treated as a privatefoundation is also required to file Form 990, orForm 990-EZ, along with a completedSchedule A (Form 990). See the discussion inGeneral Instruction D for exceptions to filing

Form 1041, U.S. Income Tax Return forEstates and Trusts.

If an organization's exemptionapplication is pendingIf the organization's application for exemptionis pending, check the Application pending boxin the heading of the return and complete thereturn.

If the organization received a Form 990PackageIf the organization received a Form 990Package with a preaddressed label, we ask

that the organization file a return even if it isnot required to do so. Attach the label to thename and address space on the return (seeSpecific Instructions, Item C). Check the box inthe heading of the Form 990, or Form 990-EZ,to indicate that the organization's grossreceipts are normally not more than $25,000;sign the return; and send it to the OgdenService Center. (See General Instruction H.)The organization does not have to completeParts I through IX of the Form 990, or Parts Ithrough V of the Form 990-EZ. Following thisinstruction will help us to update our records,and we will not have to contact the organizationlater to ask why no return was filed. If theorganization files a return this way, it will notbe mailed a Form 990 Package in later yearsand does not have to file Form 990, or Form990-EZ, again until its gross receipts are

normally more than $25,000, or it terminatesor undergoes a substantial contraction asdescribed in the instructions for line 79 of Form990, or line 36 of Form 990-EZ.

Exempt organizations that filed Form 990,or Form 990-EZ, but are no longer required tofile because they meet a specific exemption(other than exemption 14 in General InstructionB) should advise their key District office so theirfiling status can be updated. Exemptorganizations that are not sure of their keyDistrict office may call the IRS at1-800-829-1040. Exempt organizations thatstop filing Form 990, or Form 990-EZ, withoutnotifying their key District office may receiveservice center correspondence inquiring abouttheir returns. These organizations should referto the specific reason for having stopped filingwhen responding to these inquiries.

Failure to file and its effect oncontributionsOrganizations that are eligible to receive taxdeductible contributions are listed inPublication 78, Cumulative List ofOrganizations described in Section 170(c) ofthe Internal Revenue Code of 1986. Anorganization may be removed from this listingif our records show that it is required to fileForm 990, or Form 990-EZ, but it does not filea return or advise us that it is no longerrequired to file. However, contributions to suchan organization may continue to be deductibleby the general public until the IRS publishes anotice to the contrary in the Internal RevenueBulletin.

B. Organizations Not Required To

FileNote: Organizations not required to file thisform with the IRS may wish to use it to satisfystate reporting requirements. For details, seeGeneral Instruction E.

The following types of organizations exemptfrom tax under section 501(a) do not have tofile Form 990, or Form 990-EZ, with the IRS:1. A church, an interchurch organization oflocal units of a church, a convention orassociation of churches, an integrated auxiliaryof a church (such as a men's or women'sorganization, religious school, mission society,or youth group).2. Church-affiliated organizations that areexclusively engaged in managing funds or

maintaining retirement programs and aredescribed in Rev. Proc. 96-10, 1996-2 I.R.B.17.3. A school below college level affiliated witha church or operated by a religious order.4. A mission society sponsored by, oraffiliated with, one or more churches or churchdenominations, if more than half of thesociety's activities are conducted in, or directedat persons in, foreign countries.5. An exclusively religious activity of anyreligious order.6. A state institution whose income isexcluded from gross income under section 115.

7. An organization described in section501(c)(1). Section 501(c)(1) organizations arecorporations organized under an Act ofCongress that are:q Instrumentalities of the United States, andq Exempt from Federal income taxes.8. A private foundation exempt under section501(c)(3) and described in section 509(a).(Required to file Form 990-PF, Return ofPrivate Foundation.)9. A black lung benefit trust described insection 501(c)(21). (Required to file Form990-BL, Information and Initial Excise TaxReturn for Black Lung Benefit Trusts andCertain Related Persons.)10. A stock bonus, pension, or profit-sharingtrust that qualifies under section 401. (SeeForm 5500, Annual Return/Report ofEmployee Benefit Plan.)11. A religious or apostolic organizationdescribed in section 501(d). (Required to fileForm 1065, U.S. Partnership Return ofIncome.)12. A foreign organization whose annualgross receipts from sources within the U.S. arenormally $25,000 or less (Rev. Proc. 94-17,1994-1 C.B. 579). See the $25,000 grossreceipts test in 16c. See also GeneralInstruction A if the organization received aForm 990 Package.13. A governmental unit or affiliate of agovernmental unit described in Rev. Proc.95-48, 1995-2 C.B. 418.14. An organization whose annual grossreceipts are normally $25,000 or less (but seeGeneral Instruction A if the organizationreceived a Form 990 Package).

a. Calculating gross receipts.1) Form 990.Gross receipts are the sumof lines 1d, 2, 3, 4, 5, 6a, 7, 8a (both columns),9a, 10a, and 11 of Part I. The organization'sgross receipts are the total amount it receivedfrom all sources during its annual accountingperiod, without subtracting any costs orexpenses.2) Form 990-EZ.Gross receipts are thetotal amount received from all sources duringan annual accounting period, withoutsubtracting any costs or expenses. Grossreceipts are the sum of lines 1, 2, 3, 4, 5a, 6a,7a, and 8 of Part I. Gross receipts can also becalculated by adding back the amounts on lines5b, 6b, and 7b to the total revenue reported online 9.

Example. On line 9 of its Form 990-EZ for1996, Organization M reported $50,000 as total

revenue. M added back the costs andexpenses it had deducted on lines 5b ($2,000);6b ($1,500); and 7b ($500) to its total revenueof $50,000 and determined that its grossreceipts for the tax year were $54,000.b. Gross receipts when acting as agent.If a local chapter of a section 501(c)(8) fraternalorganization collects insurance premiums forits parent lodge and merely sends thosepremiums to the parent without asserting anyright to use the funds or otherwise deriving anybenefit from collecting them, the local chaptershould not include the premiums in its grossreceipts. The parent lodge should report theminstead. The same treatment applies in othersituations in which one organization collectsfunds merely as an agent for another.

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c. $25,000 gross receipts test. Anorganization's gross receipts are considerednormally to be $25,000 or less if theorganization is:1) Up to a year old and has received, ordonors have pledged to give, $37,500 or lessduring its first tax year;2) Between 1 and 3 years old and averaged$30,000 or less in gross receipts during eachof its first 2 tax years; or3) Three (3) years old or more and averaged$25,000 or less in gross receipts for theimmediately preceding 3 tax years (includingthe year for which the return would be filed).

C. Exempt Organization ReferenceChart

D. Forms and Publications To Fileor UseThese forms and publications are available atmany IRS offices or by calling1-800-TAX-FORM (1-800-829-3676).By personal computer and modem. If yousubscribe to an on-line service, ask if IRSinformation is available and, if so, how toaccess it. Tax forms, instructions, publications,and other IRS information are available throughIRIS, the Internal Revenue Information

Services, on FedWorld, a government bulletinboard. The IRIS menus offer information onavailable file formats and software needed toread and print files. You must print the formsto use them; the forms are not designed to befilled out on-screen.

IRIS is directly accessible by modem at703-321-8020. On the Internet, telnet toiris.irs.ustreas.gov or, for file transfer protocolservices, connect to ftp.irs.ustreas.gov. If youare using the World Wide Web, connect tohttp://www.irs.ustreas.gov. FedWorld's helpdesk offers technical assistance on accessingIRIS (not tax help) during regular business

hours at 703-487-4608.Tax forms, instructions, and publications arealso available on CD-ROM, including prior-yearforms starting with the 1991 tax year. Forordering information and softwarerequirements, contact the Government PrintingOffice's Superintendent of Documents(202-512-1800) or Federal Bulletin Board(202-512-1387).Schedule A (Form 990). OrganizationExempt Under Section 501(c)(3) (ExceptPrivate Foundation), 501(e), 501(f), 501(k),501(n), or Section 4947(a)(1) NonexemptCharitable Trust. Filed with Form 990, or Form990-EZ, for a section 501(c)(3) organizationthat is not a private foundation (and includingan organization described in section 501(e),501(f), 501(k), or 501(n)). Also filed with Form990, or Form 990-EZ, for a section 4947(a)(1)

nonexempt charitable trust that is not treatedas a private foundation. An organization is notrequired to file Schedule A (Form 990) if itsgross receipts are normally $25,000 or less(see the gross receipts discussion in GeneralInstruction B).Forms W-2 and W-3. Wage and TaxStatement, and Transmittal of Wage and TaxStatements.Form 940. Employer's Annual FederalUnemployment (FUTA) Tax Return.Form 941. Employer's Quarterly Federal TaxReturn. Used to report social security,Medicare, and income taxes withheld by anemployer and social security and Medicaretaxes paid by an employer.

If certain excise, income, social security, andMedicare taxes that must be collected orwithheld are not collected or withheld, or these

taxes are not paid to the IRS, a trust fundrecovery penalty may apply. The trust fundrecovery penalty may be imposed on allpersons (including volunteers) who the IRSdetermines were responsible for collecting,accounting for, and paying over these taxes,and who acted willfully in not doing so.

This penalty does not apply to volunteer,unpaid members of any board of trustees ordirectors of a tax-exempt organization, if thesemembers are solely serving in an honorarycapacity, do not participate in the day-to-dayor financial activities of the organization, anddo not have actual knowledge of the failure tocollect, account for, and pay over these taxes.However, the preceding sentence does notapply if it results in no person being liable forthe penalty.

The penalty is equal to the unpaid trust fund

tax. See the instructions for Pub. 15 (CircularE), Employer's Tax Guide, for more details,including the definition of responsible persons.Form 990-T. Exempt Organization BusinessIncome Tax Return. Filed separately fororganizations with gross income of $1,000 ormore from business unrelated to theorganization's exempt purpose. The Form990-T is also filed to pay the section 6033(e)(2)proxy tax. For Form 990, see line 85 and itsinstructions; for Form 990-EZ, see line 35 andits instructions.Form 990-W. Estimated Tax on UnrelatedBusiness Taxable Income for Tax-ExemptOrganizations.

Form 1041. U.S. Income Tax Return forEstates and Trusts. Required of section4947(a)(1) nonexempt charitable trusts thatalso file Form 990 or Form 990-EZ. However,if such a trust does not have any taxableincome under Subtitle A of the Code, it can fileForm 990, or Form 990-EZ, and does not haveto file Form 1041 to meet its section 6012 filingrequirement. If this condition is met, completeForm 990, or Form 990-EZ, and do not fileForm 1041. A section 4947(a)(1) nonexemptcharitable trust that normally has gross receiptsof not more than $25,000 (see the grossreceipts discussion in General Instruction B)and has no taxable income under Subtitle Amust complete line 92 and the signature blockon page 6 of the Form 990. On the Form990-EZ, complete line 43 and the signatureblock on page 2 of the return. In addition,complete only the following items in theheading of Form 990 or Form 990-EZ:

Form 1096. Annual Summary andTransmittal of U.S. Information Returns.Form 1099 Series. Information returns forreporting payments such as dividends, interest,miscellaneous income (including medical and

health care payments and nonemployeecompensation), original issue discount,patronage dividends, real estate transactions,acquisition or abandonment of securedproperty, discharge of indebtedness, anddistributions from annuities, pensions, andprofit-sharing and retirement plans.Form 1120-POL. U.S. Income Tax Returnfor Certain Political Organizations.Form 1128. Application To Adopt, Change,or Retain a Tax Year.Form 2758. Application for Extension ofTime To File Certain Excise, Income,Information, and Other Returns.Form 4506-A. Request for Public Inspectionor Copy of Exempt Organization Tax Form.Form 4720. Return of Certain Excise Taxeson Charities and Other Persons Under

Chapters 41 and 42 of the Internal RevenueCode. Section 501(c)(3) organizations that fileForm 990, or Form 990-EZ, as well as themanagers of these organizations, use this formto report their tax on political expenditures,certain lobbying expenditures, and excessbenefit transactions.Form 5500, 5500-C/R. Employers whomaintain pension, profit-sharing, or otherfunded deferred compensation plans aregenerally required to file one of the 5500 seriesforms specified below. This requirementapplies whether or not the plan is qualifiedunder the Internal Revenue Code and whetheror not a deduction is claimed for the current taxyear.

Plans with 100 or more participants must fileForm 5500, Annual Return/Report ofEmployee Benefit Plan.

Plans with fewer than 100 participants mustfile Form 5500-C/R, Return/Report ofEmployee Benefit Plan.Form 5768. Election/Revocation of Electionby an Eligible Section 501(c)(3) OrganizationTo Make Expenditures To InfluenceLegislation.Form 8282. Donee Information Return.Required of the donee of charitable deductionproperty who sells, exchanges, or otherwisedisposes of the property within 2 years afterreceiving the property.

Also, the form is required of any successordonee who disposes of charitable deductionproperty within 2 years after the date that thedonor gave the property to the original donee.

Type ofOrganization

I.R.C.Section

Corporations Organized Under ItemAct of Congress...................................... 501(c)(1) A Tax year (fiscal year or short period, if

applicable)Title Holding Corporations ........................ 501(c)(2)B Applicable checkboxes

Charitable, Religious, Educational, C Name and addressScientific, etc., Organizations................. 501(c)(3) D Employer identification number (EIN)

G Section 4947(a)(1) nonexempt charitable trustbox. (Item I in Form 990-EZ)

Civic Leagues and Social WelfareOrganizations ......................................... 501(c)(4)

Labor, Agricultural, andHorticultural Organizations ..................... 501(c)(5)

Business Leagues, etc.............................. 501(c)(6)Social and Recreation Clubs .................... 501(c)(7)

Fraternal Beneficiary and Domestic 501(c)(8)

Fraternal Societies and Associations..... & (10)Voluntary Employees' Beneficiary

Associations ........................................... 501(c)(9)

Teachers' Retirement Fund Associations . 501(c)(11)

Benevolent Life Insurance Associations,Mutual Ditch or Irrigation Companies,Mutual or Cooperative TelephoneCompanies, etc. ..................................... 501(c)(12)

Cemetery Companies ............................... 501(c)(13)

State Chartered Credit Unions,Mutual Reserve Funds........................... 501(c)(14)

Mutual Insurance Companies orAssociations ........................................... 501(c)(15)

Cooperative Organizations ToFinance Crop Operations ....................... 501(c)(16)

Supplemental UnemploymentBenefit Trusts ......................................... 501(c)(17)

Employee Funded Pension Trusts(created before 6/25/59)......................... 501(c)(18)

Organizations of Past or Present 501(c)(19)Members of the Armed Forces.............. & (23)

Black Lung Benefit Trusts......................... 501(c)(21)

Withdrawal Liability Payment Funds......... 501(c)(22)

Title Holding Corporations or Trusts......... 501(c)(25)

State-Sponsored Organizations ProvidingHealth Coverage for High-RiskIndividuals ............................................... 501(c)(26)

State-Sponsored Workmen'sCompensation ReinsuranceOrganizations ......................................... 501(c)(27)

Religious and Apostolic Associations....... 501(d)

Cooperative Hospital ServiceOrganizations ......................................... 501(e)

Cooperative Service Organizations ofOperating Educational Organizations .... 501(f)

Child Care Organizations.......................... 501(k)Charitable Risk Pools ............................... 501(n)

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It does not matter who gave the property to thesuccessor donee. It may have been the originaldonee or another successor donee.Form 8300. Report of Cash Payments Over$10,000 Received in a Trade or Business.Used to report cash amounts in excess of$10,000 that were received in a singletransaction (or in two or more relatedtransactions) in the course of a trade orbusiness (as defined in section 162).

However, if the organization receives acharitable cash contribution in excess of$10,000, it is not subject to the reportingrequirement since the funds were not received

in the course of a trade or business.Form 8822. Change of Address. Used tonotify the IRS of a change in mailing addressthat occurs after the return is filed.Forms 8038, 8038-G, and 8038-GC.Information Return for Tax-Exempt PrivateActivity Bond Issues; Information Return forTax-Exempt Governmental Obligations; andInformation Return for Small Tax-ExemptGovernmental Bond Issues, Leases, andInstallment Sales, respectively.Publication 525. Taxable and NontaxableIncome.Publication 598. Tax on Unrelated BusinessIncome of Exempt Organizations.Publication 910. Guide to Free TaxServices.Publication 1391. Deductibility of Payments

Made to Charities Conducting Fund-RaisingEvents.Publication 1771. CharitableContributionsSubstantiation and DisclosureRequirements.

E. Use of Form 990, or Form990-EZ, To Satisfy State ReportingRequirementsSome states and local government units willaccept a copy of Form 990, or Form 990-EZ,and Schedule A (Form 990) in place of all orpart of their own financial report forms. Thesubstitution applies primarily to section501(c)(3) organizations, but some of the othertypes of section 501(c) organizations are alsoaffected.

If you use Form 990, or Form 990-EZ, to

satisfy state or local filing requirements, suchas those under state charitable solicitation acts,note the following:

Determine state filing requirementsYou should consult the appropriate officials ofall states and other jurisdictions in which theorganization does business to determine theirspecific filing requirements. Doing business ina jurisdiction may include any of the following:(a) soliciting contributions or grants by mail orotherwise from individuals, businesses, orother charitable organizations; (b) conductingprograms; (c) having employees within that

jurisdiction; (d) maintaining a checkingaccount; or (e) owning or renting propertythere.

Monetary tests may differ

Some or all of the dollar limitations applicableto Form 990, or Form 990-EZ, when filed withthe IRS may not apply when using Form 990,or Form 990-EZ, in place of state or local reportforms. Examples of the IRS dollar limitationsthat do not meet some state requirements arethe $25,000 gross receipts minimum thatcreates an obligation to file with the IRS (seethe gross receipts discussion in GeneralInstruction B) and the $50,000 minimum forlisting professional fees in Part II of ScheduleA (Form 990).

Additional information may be requiredState or local filing requirements may requireyou to attach to Form 990, or Form 990-EZ,one or more of the following: (a) additionalfinancial statements, such as a completeanalysis of functional expenses or a statementof changes in net assets; (b) notes to financialstatements; (c) additional financial schedules;(d) a report on the financial statements by anindependent accountant; and (e) answers toadditional questions and other information.Each jurisdiction may require the additionalmaterial to be presented on forms they provide.The additional information does not have to be

submitted with the Form 990, or Form 990-EZ,filed with the IRS.Even if the Form 990, or Form 990-EZ, the

organization files with the IRS is accepted bythe IRS as complete, a copy of the same returnfiled with a state will not fully satisfy that state'sfiling requirement if required information is notprovided, including any of the additionalinformation discussed above, or if the statedetermines that the form was not completedby following the applicable Form 990, or Form990-EZ, instructions or supplemental stateinstructions. If so, the organization may beasked to provide the missing information or tosubmit an amended return.

Use of audit guides may be requiredTo ensure that all organizations report similartransactions uniformly, many states require that

contributions, gifts, grants, etc., and functionalexpenses be reported according to the AICPAindustry audit guide, Not-For-ProfitOrganizations(New York, NY, AICPA, 1996),as supplemented by Standards of Accountingand Financial Reporting for Voluntary Healthand Welfare Organizations(Washington, DC,National Health Council, Inc., 1988, 3rdedition), and by Accounting and FinancialReportingA Guide for United Ways andNot-for-Profit Human Service Organizations(Alexandria, VA, United Way Institute, 1989).

Donated services and facilitiesEven though reporting donated services andfacilities as items of revenue and expense iscalled for in certain circumstances by the threepublications named above, many states andthe IRS do not permit the inclusion of those

amounts in Parts I and II of Form 990 or Part Iof Form 990-EZ. The optional reporting ofdonated services and facilities is discussed inthe instructions for Part III for both Form 990and Form 990-EZ.

Amended returnsIf the organization submits supplementalinformation or files an amended Form 990, orForm 990-EZ, with the IRS, it must also senda copy of the information or amended return toany state with which it filed a copy of Form 990,or Form 990-EZ, originally to meet that state'sfiling requirement.

If a state requires the organization to file anamended Form 990, or Form 990-EZ, to correctconflicts with Form 990, or Form 990-EZ,instructions, it must also file an amended returnwith the IRS.

Method of accountingMost states require that all amounts bereported based on the accrual method ofaccounting. (See also General Instruction G.)

Time for filing may differThe deadline for filing Form 990, or Form990-EZ, with the IRS differs from the time forfiling reports with some states.

Public inspectionThe Form 990, or Form 990-EZ, informationmade available for public inspection by the IRSmay differ from that made available by the

states. See the Caution in the instructions forline 1d of Form 990. For Form 990-EZ, see theCaution for line 1, instruction D.

State registration numberEnter the applicable state or local jurisdictionregistration or identification number in item E(in the heading of the Form 990 or Form990-EZ) for each jurisdiction in which theorganization files Form 990, or Form 990-EZ,in place of the state or local form. If filing inseveral jurisdictions, prepare as many copiesas needed with item E blank. Then enter theapplicable registration number on the copy to

be filed with each jurisdiction.An organization need not put any state orlocal jurisdiction registration or identificationnumber on the Form 990, or Form 990-EZ, filedwith the IRS.

F. Other Forms as PartialSubstitutes for Form 990 or Form990-EZExcept as provided below, the InternalRevenue Service will not accept any form as asubstitute for one or more parts of Form 990or Form 990-EZ.

Labor organizations (section 501(c)(5))A labor organization that files Form LM-2,Labor Organization Annual Report, or theshorter Form LM-3, Labor Organization Annual

Report, with the U.S. Department of Labor(DOL) can attach a copy of the completed DOLform to Form 990, or Form 990-EZ, to providesome of the information required by Form 990or Form 990-EZ. This substitution is notpermitted if the organization files a DOL reportthat consolidates its financial statements withthose of one or more separate subsidiaryorganizations.

Employee benefit plans (section501(c)(9), (17), or (18))An employee benefit plan may be able tosubstitute Form 5500, or Form 5500-C/R, forpart of Form 990 or Form 990-EZ. Thesubstitution can be made if the organizationfiling Form 990, or Form 990-EZ, and the planfiling Form 5500, or 5500-C/R, meet all thefollowing tests:

1. The Form 990, or Form 990-EZ, filer isorganized under section 501(c)(9), (17), or(18);2. The Form 990, or Form 990-EZ, filer andForm 5500 filer are identical for financialreporting purposes and have identical receipts,disbursements, assets, liabilities, and equityaccounts;3. The employee benefit plan does notinclude more than one section 501(c)organization, and the section 501(c)organization is not a part of more than oneemployee benefit plan; and4. The organization's accounting year andthe employee plan year are the same. If theyare not, you may want to change theorganization's accounting year, as explained inGeneral Instruction G, so it will coincide withthe plan year.

Allowable substitution areasWhether an organization files Form 990, orForm 990-EZ, for a labor organization or for anemployee benefit plan, the areas of Form 990,or Form 990-EZ, for which other forms can besubstituted are the same. These areas are:

Form 990q Lines 13 through 15 of Part I (but completelines 16 through 21);q Part II; andq Part IV (but complete lines 59, 66, and 74,columns (A) and (B)).



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Form 990-EZq Lines 10 through 16 of Part I (but completelines 17 through 21).q Part II (but complete lines 25 through 27,columns (A) and (B)).

If an organization substitutes Form LM-2 orLM-3 for any of the Form 990, or Form 990-EZ,Parts or line items mentioned above, it mustattach a reconciliation sheet to show therelationship between the amounts on the DOLforms and the amounts on Form 990 or Form990-EZ. This is particularly true of therelationship of disbursements shown on theDOL forms and the total expenses on line 17,

Part I, of both Form 990 and Form 990-EZ.The organization must make this reconciliationbecause the cash disbursements section of theDOL forms includes nonexpense items. If theorganization substitutes Form LM-2, be sure tocomplete its separate schedule of expenses.

G. Accounting Periods andMethodsUse the 1996 Form 990, or Form 990-EZ, toreport on the 1996 calendar year accountingperiod. A calendar year accounting periodbegins on January 1 and ends on December31.

If the organization has established a fiscalyear accounting period, use the 1996 Form990, or Form 990-EZ, to report on theorganization's fiscal year that began in 1996

and ended 12 months later. A fiscal yearaccounting period should normally coincidewith the natural operating cycle of theorganization. Be certain to indicate in theheading of Form 990, or Form 990-EZ, the datethe organization's fiscal year began in 1996and the date the fiscal year ended in 1997.

When affiliated organizations authorize theircentral organization to file a group return forthem, the accounting period of the affiliatedorganizations and the central organization mustbe the same. See General Instruction R.

Use the 1996 Form 990, or Form 990-EZ, toreport on a short accounting period (less than12 months) that began in 1996 and endedNovember 30, 1997, or earlier.

If the organization changes its accountingperiod, it must file a return on Form 990, orForm 990-EZ, for the short period resulting

from the change. Write Change of AccountingPeriod at the top of this short-period return.If the organization changed its accounting

period within the 10-calendar-year period thatincludes the beginning of the short period, andit had a Form 990, or Form 990-EZ, filingrequirement at any time during that 10-yearperiod, it must also attach a Form 1128 to theshort-period return. See Rev. Proc. 85-58,1985-2 C.B. 740.

Unless instructed otherwise, theorganization should generally use the sameaccounting method on the return to figurerevenue and expenses that it regularly uses tokeep its books and records. To be acceptablefor Form 990, or Form 990-EZ, reportingpurposes, however, the method of accountingused must clearly reflect income.

Any not-for-profit organization described in

section 501(c) that changes its method ofaccounting to comply with (SFAS 116),Accounting for Contributions Received andContributions Made, does not need to file Form3115, Application for Change in AccountingMethod, unless the change affects taxableincome. Notice 96-30, 1996-20 I.R.B. 11,provides relief from filing Form 3115 to section501(c) organizations that change their methodsof accounting to comply with the provisions ofSFAS 116. In SFAS 116 the FinancialAccounting Standards Board revised certaingenerally accepted accounting principlesrelating to contributions received andcontributions awarded by not-for-profitorganizations.

Not-for-profit organizations described insection 501(c) may change to the methodsprovided in SFAS 116 for Federal income taxpurposes for any tax year beginning afterDecember 15, 1994, by properly reflecting theeffect of the change, in the manner describedbelow, on a timely filed (including extensions)Form 990-series return for the tax year of thechange.

A not-for-profit organization that changes itsmethods of accounting for Federal income taxpurposes to conform to the methods providedin SFAS 116 should report any adjustmentrequired by section 481(a) on line 20 of Form

990, or Form 990-EZ, as a net assetadjustment made during the year the changeis made. The adjustment should be identifiedas the effect of changing to the methodsprovided in SFAS 116. The beginning of yearstatement of financial position (balance sheet)should not be restated to reflect any priorperiod adjustments. If the adjustment reflectscontributions not reported under the oldmethods for year(s) preceding the year ofchange and not reported under the newmethods in the year of change or anysubsequent year, any contributor of an amountincluded in the adjustment who meets thecriteria described in the instructions to line 1of Form 990, or Form 990-EZ, should beincluded in the list of contributors required tobe attached to Form 990, or Form 990-EZ, forthe year of the change.

If the organization prepares Form 990, orForm 990-EZ, for state reporting purposes, itmay file an identical return with the IRS eventhough the return does not agree with thebooks of account, unless the way one or moreitems are reported on the state return conflictswith the instructions for preparing Form 990,or Form 990-EZ, for filing with the IRS.

Example 1. The organization maintains itsbooks on the cash receipts and disbursementsmethod of accounting but prepares a statereturn based on the accrual method. It coulduse that return for reporting to the IRS.

Example 2. A state reporting requirementrequires the organization to report certainrevenue, expense, or balance sheet itemsdifferently from the way it normally accounts forthem on its books. A Form 990, or Form990-EZ, prepared for that state is acceptable

for the IRS reporting purposes if the statereporting requirement does not conflict with theForm 990, or Form 990-EZ, instructions.

An organization should keep a reconciliationof any differences between its books of accountand the Form 990, or Form 990-EZ, that isfiled.

Most states that accept Form 990, or Form990-EZ, in place of their own forms require thatall amounts be reported based on the accrualmethod of accounting. See General InstructionE.

H. When and Where To FileFile Form 990, or Form 990-EZ, by the 15thday of the 5th month after the organization'saccounting period ends. If the regular due datefalls on a Saturday, Sunday, or legal holiday,file on the next business day. A business day

is any day that is not a Saturday, Sunday, orlegal holiday.If the organization is liquidated, dissolved,

or terminated, file the return by the 15th dayof the 5th month after the liquidation,dissolution, or termination.

If the return is not filed by the due date(including any extension granted), attach astatement giving the reasons for not filing ontime.

Send the return to the Internal RevenueService, Ogden, UT 84201-0027.

I. Extension of Time To FileUse Form 2758 to request an extension of timeto file Form 990 or Form 990-EZ. Generally, theIRS will not grant an extension of time for morethan 90 days unless sufficient need for anextended period is clearly shown. In no eventwill an extension of more than 6 months begranted to any domestic organization.

J. Amended Return/Final ReturnTo change the organization's return for anyyear, file a new return including any requiredattachments. Use the revision of Form 990, orForm 990-EZ, applicable to the year beingamended. The amended return must provideall the information called for by the form andinstructions, not just the new or correctedinformation. Check the Amended Return boxin the heading of either return, or, if the versionof the form being used does not have such abox, write Amended Return at the top of thereturn.

The organization may file an amendedreturn at any time to change or add to theinformation reported on a previously filed returnfor the same period. It must make the amendedreturn available for public inspection for 3 yearsfrom the date of filing or 3 years from the datethe original return was due, whichever is later.

The organization must also send a copy ofthe information or amended return to any statewith which it filed a copy of Form 990, or Form990-EZ, originally to meet that state's filingrequirement.

Use Form 4506-A to obtain a copy of apreviously filed return. You can obtain blankforms for prior years by calling1-800-TAX-FORM (1-800-829-3676).

If the return is a final return, see the specificinstructions for Form 990 for line 79, Part VI,Other Information. See the specific instructionsfor Form 990-EZ for line 36, Part V, OtherInformation.

K. Penalties

Against the OrganizationUnder section 6652(c)(1)(A), a penalty of $20a day, not to exceed the smaller of $10,000 or5% of the gross receipts of the organization forthe year, may be charged when a return is filed

late, unless the organization can show that thelate filing was due to reasonable cause.Organizations with annual gross receiptsexceeding $1 million are subject to a penaltyunder section 6652(c)(1)(A) of $100 for eachday the failure continues (with a maximumpenalty with respect to any one return of$50,000). The penalty begins on the due datefor filing the Form 990 or Form 990-EZ. Thepenalty may also be charged if the organizationfiles an incomplete return or furnishes incorrectinformation. To avoid having to supply missinginformation later, be sure to complete allapplicable line items; answer Yes, No, orN/A (not applicable) to each question on thereturn; make an entry (including a zero whenappropriate) on all total lines; and enterNone or N/A if an entire part does not apply.

Against Responsible Person(s)If the organization does not file a completereturn or does not furnish correct information,the IRS will send the organization a letter thatincludes a fixed time to fulfill theserequirements. After that period expires, theperson failing to comply will be charged apenalty of $10 a day, not to exceed $5,000,unless he or she shows that not complying wasdue to reasonable cause. If more than oneperson is responsible, they are jointly andindividually liable for the penalty.

There are also penaltiesfines andimprisonmentfor willfully not filing returns andfor filing fraudulent returns and statements withthe IRS (sections 7203, 7206, and 7207).



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There are also penalties for failure to complywith public disclosure requirements asdiscussed in General Instruction M. States mayimpose additional penalties for failure to meettheir separate filing requirements. See also thediscussion of the trust fund recovery penaltyunder Form 941, General Instruction D.

L. ContributionsSolicitations ofNondeductible Contributions,Keeping Fundraising Records,Noncash Contributions, andSubstantiation and Disclosure

RequirementsSolicitations of nondeductiblecontributionsAny fundraising solicitation by or on behalf ofany section 501(c) organization that is noteligible to receive contributions deductible ascharitable contributions for Federal income taxpurposes must include an explicit statementthat contributions or gifts to it are not deductibleas charitable contributions. The statement mustbe in an easily recognizable format whether thesolicitation is made in written or printed form,by television or radio, or by telephone. Thisprovision applies only to those organizationswhose annual gross receipts are normally morethan $100,000 (section 6113).

Failure to disclose that contributions are notdeductible could result in a penalty of $1,000for each day on which a failure occurs. Themaximum penalty for failures by anyorganization, during any calendar year, shallnot exceed $10,000. In cases where the failureto make the disclosure is due to intentionaldisregard of the law, the $10,000 limitationdoes not apply and more severe penaltiesapply. No penalty will be imposed if the failureis due to reasonable cause.

Keeping fundraising recordsSection 501(c) organizations that are eligible toreceive tax-deductible contributions undersection 170(c) of the Code must keep samplecopies of their fundraising materials, such asdues statements or other fundraisingsolicitations, tickets, receipts, or other evidenceof payments received in connection withfundraising activities. If organizations advertisetheir fundraising events, they must keepsamples of the advertising copy. If they useradio or television to make their solicitations,they must keep samples of scripts, transcripts,or other evidence of on-air solicitations. Iforganizations use outside fundraisers, theymust keep samples of the fundraising materialsused by the outside fundraisers. For eachfundraising event, organizations must keeprecords to show that portion of any paymentreceived from patrons that is not deductible;that is, the retail value of the goods or servicesreceived by the patrons. See Disclosurerequirements for quid pro quo contributionsbelow.

Noncash contributionsTo report contributions received in a form otherthan cash, use the market value as of the dateof the contribution. For marketable securitiesregistered and listed on a recognized securitiesexchange, measure market value by theaverage of the highest and lowest quotedselling prices (or the average between the bonafide bid and asked prices) on the contributiondate. See section 20.2031-2 of the Estate TaxRegulations for rules to determine the value ofcontributed stocks and bonds. When marketvalue cannot be readily determined, use anappraised or estimated value.

To determine the amount of any noncashcontribution that is subject to an outstandingdebt, subtract the debt from the property's fairmarket value. Record the asset at its full valueand record the debt as a liability in the books

of account. See the Note in the instructions forline 1d (line 1, instruction D for Form 990-EZ).

Substantiation requirements forcertain contributionsA donor that makes a charitable contributionof $250 or more will not be allowed a Federalincome tax deduction under section 170 unlessthe donor obtains, contemporaneously withgiving the charitable contribution, a writtenacknowledgment (receipt) from the doneeorganization (section 170(f)(8)). Taxpayers(donors) may not rely solely on a cancelledcheck as substantiation for a donation of $250

or more to a donee organization. Anacknowledgment is considered to becontemporaneous with a donor's contributionif it is obtained by the earlier of the date onwhich the donor files a tax return for the taxyear in which the contribution was made or thedue date, including extensions, for filing thatreturn.

The acknowledgment the donee gives to thedonor does not have to be in any particularform but it must show (a) the amount of cashcontributed and (b) a description (but not value)of any property contributed, other than cash.Further, the acknowledgment must (c) describeand show the value, estimated in good faith bythe donee, of any goods or services the doneegave in return for the contribution. A falsesubstantiation acknowledgment may subjectthe donee organization to section 6701

penalties for aiding and abetting anunderstatement of tax liability.If the donor did not receive any goods or

services from the donee organization in returnfor its contribution, the donee's writtenacknowledgment must state that fact. If thedonor received only goods and services ofinsubstantial value in return for its contribution,the donee's written acknowledgment need notstate a value for such goods and services. SeeRev. Procs. 90-12, 1990-1 C.B. 471, and95-53, 1995-2 C.B. 445 (and any successordocuments) and Line 1 instructions for bothForm 990 and Form 990-EZ for a discussionof benefits of nominal value.

If the donee organization provided goods orservices consisting solely of intangible religiousbenefits, the donee must make a statement tothat effect instead of providing an estimated

valuation. An intangible religious benefit mustbe (a) provided by an organization organizedexclusively for religious purposes and (b) notgenerally sold in a commercial transaction.

The donee organization may either provideseparate statements for each contribution of$250 or more from a donor, or furnish periodicstatements substantiating contributions of $250or more.

Separate payments are regarded asindependent contributions and are notaggregated for purposes of measuring the$250 threshold. If donations are made throughpayroll deductions, the deduction from eachpaycheck is regarded as a separate payment.

If the donation is made by means ofwithholding from a taxpayer's wages andpayment by the taxpayer's employer to a doneeorganization, it may be substantiated by both

1. A pay stub, Form W-2, or other documentfurnished by the employer that sets forth theamount withheld by the employer for thepurpose of payment to a donee organization;and2. A pledge card or other document preparedby or at the direction of the donee organizationthat includes a statement to the effect that theorganization does not provide goods orservices in whole or partial consideration forany contributions made to the organization bypayroll deduction.

An organization described in section 170(c),or an organization that is a Principal CombinedFund Organization for purposes of theCombined Federal Campaign and acting in that

capacity, that receives a payment made as acontribution is treated as the doneeorganization for purposes of section 170(f)(8),even if the organization distributes the amountreceived to one or more organizationsdescribed in section 170(c).

See also Publication 1771 and Regulationssection 1.170A-13 that discuss the provisionsof the law.

It is the responsibility of the donor to obtain,and keep as part of its records, a writtenacknowledgment substantiating its contribution.However, future regulations will provideguidance to organizations on how they can

provide substantiation information directly tothe IRS. If the donee organizations do so,donors will not have to substantiate theircontributions separately.

Donors must continue to file Form 8283,Noncash Charitable Contributions, if theirdeduction for all noncash gifts is more than$500.Disclosure requirements for quid pro quocontributions. If a charitable organizationsolicits or receives a contribution of more than$75 for which the organization gives the donorsomething in return (a quid pro quocontribution) the organization must inform thedonor, by written statement, that the amountof the contribution deductible for Federalincome tax purposes is limited to the excessover the value of the goods or servicesreceived by the donor.

The written statement must also provide thedonor with a good-faith estimate of goods orservices given in return for the contribution. Awritten statement is not required if anorganization gave the donor goods or servicesof insubstantial value. See the Form 990, line1 In General instructions that discussbenefits of nominal value. See Form 990-EZinstructions for line 1, A2.

A quid pro quo contribution is a paymentthat is given both as a contribution and as apayment for goods or services provided by thedonee organization. A quid pro quo contributiondoes not include any payment to anorganization, organized exclusively for religiouspurposes, solely for intangible religious benefitsnot generally sold in a commercial transaction(section 6115).

An organization that fails to make the

required disclosure for each quid pro quocontribution will incur a penalty of $10 for eachsuch failure, not to exceed $5,000 for aparticular fundraising event or mailing, unlessit can show reasonable cause for not providingsuch disclosure (section 6714).

M. Public Inspection of CompletedExempt Organization Returns andApproved Exemption Applications

Through the IRSForms 990, 990-EZ, and certain othercompleted exempt organization returns areavailable for public inspection and copyingupon request. Approved applications forexemption from Federal income tax are alsoavailable. However, the IRS may not disclose

portions of an application relating to any tradesecrets, etc., nor can the IRS disclose theschedule of contributors required as anattachment for line 1 of Form 990 and Form990-EZ (section 6104).

A request for inspection must be in writingand must include the name and address (cityand state) of the organization that filed thereturn or application. A request to inspect areturn should indicate the type (number) of thereturn and the year(s) involved. The requestshould be sent to the District Director(Attention: Disclosure Officer) of the district inwhich the requester desires to inspect thereturn or application. If inspection at the IRSNational Office is desired, the request shouldbe sent to the Commissioner of Internal



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Revenue, Attention: Freedom of InformationReading Room, 1111 Constitution Avenue,NW, Washington, DC 20224.

Use Form 4506-A to request a copy or toinspect an exempt organization return throughthe IRS. There is a fee for photocopying.

Through the OrganizationAnnual returnAn organization must, during the 3-year periodbeginning with the due date (includingextensions, if any), of the Form 990, or Form990-EZ, make its return available for public

inspection upon request. All parts of the returnand all required schedules and attachments,other than the schedule of contributors to theorganization, must be made available.Inspection must be permitted during regularbusiness hours at the organization's principaloffice and at each of its regional or districtoffices having three or more employees.

This provision applies to any organizationthat files Form 990, or Form 990-EZ,regardless of the size of the organization andwhether or not it has any paid employees.

If an organization furnishes additionalinformation to the IRS to be made part of itsreturn, as a result of an examination orcorrespondence from the service center, itmust also make that information part of thereturn it provides for public inspection.

If the organization does not maintain a

permanent office, it must provide a reasonablelocation for a requester to inspect theorganization's annual returns. The organizationmay mail the information to a requester.However, the organization can charge forcopying and postage only if the requester givesup the right to a free inspection (Notice 88-120,1988-2 C.B. 454).

Any person who does not comply with thepublic inspection requirement will be assesseda penalty of $20 for each day that inspectionwas not permitted, up to a maximum of$10,000 for each return. No penalty will beimposed if the failure is due to reasonablecause. Any person who willfully fails to complywill be subject to an additional penalty of$1,000 (sections 6652(c) and 6685).

Exemption application

Any section 501(c) organization that submittedan application for recognition of exemption tothe Internal Revenue Service after July 15,1987, must make available for public inspectiona copy of its application (together with a copyof any papers submitted in support of itsapplication) and any letter or other documentissued by the Internal Revenue Service inresponse to the application. An organizationthat submitted its exemption application on orbefore July 15, 1987, must also comply withthis requirement if it had a copy of itsapplication on July 15, 1987. As in the case ofannual returns, the copy of the application andrelated documents must be made available forinspection during regular business hours at theorganization's principal office and at each of itsregional or district offices having at least threeemployees.

If the organization does not have apermanent office, it must provide a reasonablelocation for the inspection of both its annualreturns and exemption application. Theinformation may be mailed. See the referenceto Notice 88-120 above under Annual return.The organization need not disclose any portionof an application relating to trade secrets, etc.,that would not also be disclosable by the IRS.

The penalties for failure to comply with thisprovision are the same as those under Annualreturn above, except that the $10,000limitation does not apply.

Furnishing copies of documents underTBOR2. An organization must furnish a copyof its Form 990, Form 990-EZ, or exemptionapplication, and certain related documents, ifa request is made in writing or in person. Fora request made in person, the organizationmust make an immediate response. For aresponse to a written request, the organizationmust provide the requested copies within 30days. The organization must furnish copies ofits Forms 990, or Forms 990-EZ, for any of its3 most recent taxable years. No charge is tobe made other than charging a reasonable feefor reproduction and mailing costs. Anorganization need not provide copies if (1) theorganization has made the requesteddocuments widely available in a mannerprovided in Treasury regulations or (2) theSecretary of the Treasury determined, uponapplication by the organization, that theorganization was subject to a harassmentcampaign such that a waiver of the obligationto provide copies would be in the publicinterest.Penalty for failure to allow public inspectionor provide copies. The section 6685 penaltyfor willful failure to allow public inspections orprovide copies is increased from thepresent-law level of $1,000 to $5,000 byTBOR2.Effective date of TBOR2. These publicinspection provisions governing tax-exemptorganizations under TBOR2 generally apply to

requests made no earlier than 60 days after thedate on which the Treasury Departmentpublishes the regulations required under theprovisions. However, Congress, in thelegislative history of TBOR2, indicated thatorganizations would comply voluntarily with thepublic inspection provisions prior to theissuance of such regulations.

N. Disclosures Regarding CertainInformation and ServicesFurnishedA section 501(c) organization that offers to sellor solicits money for specific information or aroutine service for any individual that could beobtained by such individual from a Federalgovernment agency free or for a nominalcharge must disclose that fact conspicuouslywhen making such offer or solicitation. Anyorganization that intentionally disregards thisrequirement will be subject to a penalty foreach day on which the offers or solicitations aremade. The penalty imposed for a particular dayis the greater of $1,000 or 50% of the total costof the offers and solicitations made on that daywhich lacked the required disclosure.

O. Disclosures Regarding CertainTransactions and RelationshipsIn their annual returns on Schedule A (Form990), section 501(c)(3) organizations mustdisclose information regarding their direct orindirect transfers to, and other direct or indirectrelationships with, other section 501(c)organizations (except other section 501(c)(3)organizations) or section 527 politicalorganizations. This provision helps prevent the

diversion or expenditure of a section 501(c)(3)organization's funds for purposes not intendedby section 501(c)(3). All section 501(c)(3)organizations must maintain records regardingall such transfers, transactions, andrelationships. See also General Instruction Kregarding penalties.

P. Excess Benefit TransactionsThe Taxpayer Bill of Rights (TBOR2), P.L.

104-168, was enacted July 30, 1996. Itimposes section 4958 excise taxes on excessbenefit transactions. These new excise taxesare to be paid by certain individuals who areclosely connected with organizations described

in section 501(c)(3) (except privatefoundations) and section 501(c)(4).

Excess benefit transactions includetransactions in which a disqualified personreceives the benefit of a non-fair-market-valuetransaction with an organization or receivesunreasonable compensation, as well asfinancial arrangements under which adisqualified person receives payment based onthe organization's income in a transaction thatviolates the prohibition against privateinurement under section 501(c)(3) or section501(c)(4).

Existing tax-law standards (see section 162)

apply to determine reasonableness ofcompensation and fair market value. The totalcompensation package, including the amountof any reimbursement, must be reasonable.There is a rebuttable presumption that acompensation arrangement with a disqualifiedperson is reasonable if the board of directorsor trustees approving the compensation are (1)individuals unrelated to and not subject to thecontrol of the disqualified person(s), and who(2) relied upon comparative data (e.g.,compensation paid by similar organizations,etc., and (3) documented the basis for theirdetermination.

In determining whether such payments ortransactions are, in fact, compensation, therelevant factors include whether theappropriate decision-making body approvedthe transfer as compensation in accordance

with established procedures and whether theorganization and the recipient reported thetransfer (except in the case of nontaxablefringe benefits) as compensation on therelevant forms (i.e., the organization's Form990, or Form 990-EZ, the Form W-2 or Form1099 provided by the organization to therecipient, the recipient's income tax return, andother required returns).

For purposes of determining reasonablecompensation, the payment of personalexpenses and benefits to or for the benefit ofdisqualified persons and non-fair-market- valuetransactions benefiting such persons aretreated as compensation only if it is clear thatthe organization intended the payments ascompensation for services.

If an organization does not treat taxablebenefits received by a disqualified person as

compensation, these amounts could be treatedas an excess benefit with the requirement thatthey be repaid even if the unreported benefitplus reported compensation was less than thefair market value of the services provided. Anyreimbursement of the excise tax liability of adisqualified person or organization managerwill be treated as an excess benefit unless (1)the organization treats the reimbursement ascompensation during the year thereimbursement is made, and (2) the totalcompensation to that person, including thereimbursement, is reasonable.

Disqualified person means any individualin a position to exercise substantial influenceover the affairs of the organization, whether asan organization manager or otherwise.

In addition, disqualified persons includecertain family members and 35%-owned

entities of a disqualified person, as well as anyperson who was a disqualified person at anytime during the 5-year period prior to thetransaction at issue.

Family members are determined undersection 4946(d), except that such membersalso would include siblings (whether by wholeor half blood) of the individual and spouses ofsuch siblings.

35%-owned entities mean corporations inwhich disqualified persons own stockpossessing more than 35% of the combinedvoting power as well as partnerships and trustsor estates in which disqualified persons ownmore than 35% of the profits interest orbeneficial interest.



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Combined voting power includes votingpower represented by holdings of voting stock,actual or constructive, but does not includevoting rights held only as a director or trustee.See Regulations section 53.4946-1(a)(5).

A disqualified person who benefits from anexcess benefit transaction is subject to afirst-tier penalty tax equal to 25% of the amountof the excess benefit (i.e., the amount by whicha transaction differs from fair market value, theamount of compensation exceeding reasonablecompensation, or the amount of a prohibitedtransaction based on the organization's grossor net income). Organization managers whoparticipate in an excess benefit transactionknowing that it is an improper transaction aresubject to a first-tier penalty tax of 10% of theamount of the excess benefit (subject to amaximum penalty of $10,000). Second-tiertaxes may be imposed on a disqualified personif there is no correction of the excess benefittransaction within a specified time period. Insuch cases, the disqualified person is subjectto a penalty tax equal to 200% of the amountof excess benefit. For this purpose, the termcorrection means undoing the excess benefitto the extent possible and taking any additionalmeasures necessary to place the organizationin a financial position not worse than that inwhich it would be if the disqualified personwere dealing under the highest fiduciarystandards.

The intermediate sanctions for excessbenefit transactions may be imposed by theIRS in lieu of (or in addition to) revocation ofan organization's tax-exempt status. If morethan one disqualified person or manager isliable for a penalty excise tax, then all suchpersons are jointly and severally liable for suchtax.

The new section 4958 excise taxes apply toexcess benefit transactions occurring on orafter September 14, 1995. They do not apply,however, to any benefit arising from atransaction pursuant to any written contract thatwas binding on September 13, 1995, andcontinued in force through the time of thetransaction.

Persons liable for the section 4958 tax mustfile Form 4720 to report and pay the tax. Seethe instructions for lines 89b - 89d of Form 990(lines 40b - 40d of Form 990-EZ) which discussthe required reporting of both the excessbenefit transactions and the excise taxes paid.

Q. Erroneous Backup WithholdingRecipients of dividend or interest paymentsgenerally must certify their correct taxpayeridentification number to the bank or other payeron Form W-9, Request for TaxpayerIdentification Number and Certification. If thepayer does not get this information, it mustwithhold part of the payments as backupwithholding. If the organization was subject toerroneous backup withholding because thepayer did not realize it was an exemptorganization and not subject to this withholding,it can claim credit on Form 990-T for theamount withheld. See the Instructions for Form990-T. Claims for refund must be filed within 3years after the date the original return was due;

3 years after the date the organization filed it;or 2 years after the date the tax was paid,whichever is later.

R. Group ReturnIf a parent organization wants to file a groupreturn for two or more of its subsidiaries, it mustuse Form 990. The parent organization cannotuse a Form 990-EZ for the group return.

A central, parent, or like organization canfile a group return on Form 990 for two or morelocal organizations that are:1. Affiliated with the central organization atthe time its annual accounting period ends,

2. Subject to the central organization'sgeneral supervision or control,3. Exempt from tax under a group exemptionletter that is still in effect, and4. Have the same accounting period as thecentral organization.

If the parent organization is required to filea return for itself, it must file a separate returnand may not be included in the group return.See General Instruction B for a list oforganizations not required to file.

Every year, each local organization mustauthorize the central organization in writing toinclude it in the group return and must declare,

under penalty of perjury, that the authorizationand the information it submits to be included inthe group return are true and complete.

If the central organization prepares a groupreturn for its affiliated organizations, check theYes box in item H(a), in the heading of Form990, and indicate the number of organizationsfor which the group return is filed in item H(b).Attach either (1) a schedule showing the name,address, and employer identification number(EIN) of each affiliated organization included,or (2) a statement indicating that the groupreturn includes all affiliated organizationscovered by the group ruling. In item I, indicatethe group exemption number (GEN). Whenpreparing the return, be sure not to confuse thefour-digit group exemption number (GEN) initem I with the nine-digit employer identificationnumber in item D of the form's heading.

The central organization should send theannual information required to maintain a groupexemption letter to: Ogden Service Center, MailStop 6271, 1000 South 1200 West, Ogden, UT84404-4749. See Rev. Proc. 96-40, 199632I.R.B. 8.

An affiliated organization covered by a groupruling may file a separate return instead ofbeing included in the group return. In suchcase, check the Yes box in item H(c), in theheading of Form 990, and enter the groupexemption number in item I.

Parts IV-A and IV-B of Form 990 do not haveto be completed on group returns.

S. Organizations in ForeignCountries and U.S. PossessionsRefer to General Instruction B for filing

exemption for foreign organizations with$25,000 or less in gross receipts from U.S.sources.

Report amounts in U.S. dollars and statewhat conversion rate you use. Combineamounts from within and outside the UnitedStates and report the total for each item. Allinformation must be written in English.

T. Public Interest Law FirmsA public interest law firm exempt under section501(c)(3) or 501(c)(4) must attach a statementthat lists the cases in litigation, or that havebeen litigated during the year. For each case,describe the matter in dispute and explain howthe litigation will benefit the public generally.Also attach a report of all fees sought andrecovered in each case. See Rev. Proc. 92-59,1992-2 C.B. 411.

U. Requirements for a ProperlyCompleted Form 990 or Form990-EZPublic Inspection. All information theorganization reports on or with its Form 990,or Form 990-EZ, including attachments, will beavailable for public inspection, except theschedule of contributors required for line 1, PartI, of either form. Please make sure the formsand attachments are clear enough tophotocopy legibly.

Signature. To make the return complete, anofficer of the organization authorized to sign itmust sign in the space provided. For acorporation, or association, this officer may bethe president, vice president, treasurer,assistant treasurer, chief accounting officer, orother corporate, or association officer, such asa tax officer. A receiver, trustee, or assigneemust sign any return he or she files for acorporation or association. For a trust, theauthorized trustee(s) must sign.

Generally, anyone who is paid to preparethe return must sign it in the Paid Preparer'sUse Only area.

The paid preparer must:q Sign the return, by hand, in the spaceprovided for the preparer's signature (signaturestamps and labels are not acceptable).q Enter the preparer's social security numberor employer identification number only if theForm 990, or Form 990-EZ, is for a section4947(a)(1) nonexempt charitable trust that isnot filing Form 1041.q Complete the required preparer information.q Give a copy of the return to the organization.

Leave the paid preparer's space blank if thereturn was prepared by a regular employee ofthe filing organization.Recordkeeping. The organization's recordsshould be kept for as long as they may beneeded for the administration of any provisionof the Internal Revenue Code. Usually, recordsthat support an item of income, deduction, orcredit must be kept for 3 years from the datethe return is due or filed, whichever is later.Keep records that verify the organization'sbasis in property for as long as they areneeded to figure the basis of the original orreplacement property.

The organization should also keep copiesof any returns it has filed. They help inpreparing future returns and in makingcomputations when filing an amended return.Rounding Off to Whole Dollars. You mayshow money items as whole-dollar amounts.Drop any amount less than 50 cents andincrease any amount from 50 through 99 centsto the next higher dollar.Completing All Lines. Unless theorganization is permitted to use certain DOLforms or Form 5500 series returns as partial

substitutes for Form 990, or Form 990-EZ, (seeGeneral Instruction F), do not leave anyapplicable lines blank or attach any other formsor schedules instead of entering the requiredinformation on the appropriate line on Form990 or Form 990-EZ.Assembling Form 990 or Form 990-EZ.Before filing the Form 990, or Form 990-EZ,assemble the package of forms andattachments in the following order:q Form 990 or Form 990-EZq Schedule A (Form 990). The requirement toattach Schedule A (Form 990) applies to ALLsection 501(c)(3) organizations and ALLsection 4947(a)(1) nonexempt charitable truststhat file Form 990 or Form 990-EZ.q Attachments to Form 990 or Form 990-EZq Attachments to Schedule A (Form 990)Attachments. Use the schedules on the

official form unless you need more space. Ifyou use attachments, they must:1. Show the form number and tax year;2. Show the organization's name andemployer identification number;3. Identify clearly the Part or line(s) to whichthe attachments relate;4. Include the information required by theform and use the same format as the form;5. Follow the same Part and line sequenceas the form; and6. Be on the same size paper as the form.



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Specific Instructions forForm 990Note: See also the General Instructions thatapply to both the Form 990 and Form 990-EZ.

Completing the Heading of Form990The instructions that follow are keyed to items

in the heading for Form 990.

Item AAccounting periodUse the 1996 Form 990 to report on a calendaryear accounting period beginning January 1,1996, and ending December 31, 1996.

Also, use the 1996 Form 990 to report onan accounting period other than a calendaryear (either a fiscal year that began in 1996 ora short period (less than 12 months) that beganin 1996). You must show the month and day in1996 that your fiscal year began or the shortperiod began. You must also show the day,month, and year your fiscal year or short periodended. See General Instruction G.

Item BCheckboxes

Change of address. If the organizationchanged its address since it filed its previousreturn, check this box.Initial return. If this is the organization'sinitial return, check this box.Final return. If this is a final return, checkthis box. See also the instructions for line 79,Part VI, Other Information.Amended return. If this is an amendedreturn, check this box. See General InstructionJ for more details on amending a return.

Item CName and addressIf we mailed the organization a Form 990Package with a preaddressed mailing label,please attach the label in the name andaddress space on the return. Using the labelhelps us avoid errors in processing the return.If any information on the label is wrong, drawa line through that part and correct it.

Include the suite, room, or other unit numberafter the street address. If the Post Office doesnot deliver mail to the street address and theorganization has a P.O. box, show the boxnumber instead of the street address.

Item DEmployer identificationnumberThe organization should have only one Federalemployer identification number. If it has morethan one and has not been advised which touse, notify the Internal Revenue Service,Ogden, UT 84201-0027. State what numbersthe organization has, the name and address towhich each number was assigned, and the

address of its principal office. The IRS willadvise the organization which number to use.

Section 501(c)(9) voluntary employees'beneficiary associations must use their ownemployer identification number and not thenumber of their sponsor.

Item EState registration numberSee General Instruction E.

Item FApplication pendingIf the organization's application for exemptionis pending, check this box and complete thereturn.

Item GType of organizationIf the organization is exempt under section501(c), check the applicable box and insert,within the parentheses, the number thatidentifies the type of section 501(c)organization the filer is. See the chart inGeneral Instruction C. If the organization is asection 4947(a)(1) nonexempt charitable trust,check the applicable box and note thediscussion regarding Schedule A (Form 990)and Form 1041 in General Instruction D andthe instructions to line 92 of Form 990.

Item HGroup return, etc.See General Instruction R.

Item IGroup exemption number

Enter the four-digit group exemption number(GEN) if you checked a Yes box in item H.Contact the central/parent organization if youare unsure of the GEN assigned.

Item JAccounting methodAn organization must indicate the method ofaccounting used in preparing this return. SeeGeneral Instruction G.

Item KGross receipts of $25,000 orlessCheck this box if the organization's grossreceipts are normally not more than $25,000.However, see General Instruction A, if youreceived a Form 990 Package, and note thediscussion on gross receipts in GeneralInstruction B.

Part IRevenue, Expenses, andChanges in Net Assets or FundBalancesAll organizations filing Form 990 with the IRSor any state must complete Part I. Some statesthat accept Form 990 in place of their ownforms require additional information.

Line 1In GeneralContributions, gifts, grants, and similaramounts receivedReporting for line 1, in accordance with SFAS116, is acceptable for Form 990 purposes, butnot required by IRS. However, see GeneralInstruction E.

An organization that receives a grant to be

paid in future years should, according to SFAS116, report the grant's present value on line 1.Accruals of present value increments to theunpaid grant should also be reported on line 1in future years.

On lines 1a through 1c, report amountsreceived as voluntary contributions; that is,payments, or the part of any payment, forwhich the payer (donor) does not receive fullretail value (fair market value) from therecipient (donee) organization. (For grants, seeGrants that are equivalent to contributions,below.) Report all expenses of raisingcontributions in Fundraising, column (D), PartII, and on line 15 of Part I.

Contributions can arise from specialevents when an excess payment isreceived for items offeredSpecial fundraising activities such as dinners,door-to-door sales of merchandise, carnivals,and bingo games can produce bothcontributions and revenue. If a buyer, at suchan event, pays more for goods or services thantheir retail value, report, as a contribution, bothon line 1a and on line 9a (within theparentheses), any amount paid in excess of theretail value. This situation usually occurs whenorganizations seek public support throughsolicitation programs that are both special

events or activities and solicitations forcontributions.

Example. An organization announces thatanyone who contributes at least $40 to theorganization can choose to receive a bookworth $16 retail value. A person who gives $40,and who chooses the book, is really purchasingthe book for $16 and also making a contributionof $24. The contribution of $24, which is thedifference between the buyer's payment andthe $16 retail value of the book, would bereported on line 1a and again on thedescription line of 9a (within the parentheses).The revenue received ($16 retail value of thebook) would be reported in the amount columnon line 9a.

If a contributor gives more than $40, thatperson would be making a larger contribution,the difference between the book's retail valueof $16 and the amount actually given. Rev. Rul.67-246, 1967-2 C.B. 104, explains this principlein detail. See also the line 9 instructions andPublication 1391.

The expenses directly relating to the sale ofthe book would be reported on line 9b.However, the expenses of raising contributions(that were entered within the parentheses ofline 9a and on line 1a) would be reported inFundraising, column (D), Part II, and on l ine 15of Part I.Note: At the time of any solicitation orpayment, organizations that are eligible toreceive tax-deductible contributions shouldadvise patrons of the amount deductible forFederal tax purposes. See General InstructionL.

Contributions can arise from special

events when items of only nominalvalue are given or offeredIf an organization offers goods or services ofonly nominal value through a special event ordistributes free, unordered, low-cost items topatrons, report the entire amount received forsuch benefits as a contribution on line 1a(direct public support). Report all relatedexpenses in Fundraising, column (D), Part II.Benefits have a nominal value when:1. The benefit's fair market value is not morethan 2% of the payment, or $67, whichever isless; or2. The payment is $33.50 or more; the onlybenefits received are token items bearing theorganization's name or symbol; and theorganization's cost (as opposed to fair marketvalue) is $6.70 or less for all benefits received

by a donor during the calendar year. Theseamounts are adjusted annually for inflation.See Rev. Proc. 95-53 cited also in GeneralInstruction L.

Section 501(c)(3) organizationsCorrectly dividing gross receipts from specialevents into revenue and contributions isespecially important for a section 501(c)(3)organization that claims public support asdescribed in section 170(b)(1)(A)(vi) or section509(a)(2). In the public support computationsof these Code sections, the revenue portion ofgross receipts may be (a) excluded entirely, (b)treated as public support, or (c) if the revenue

Contents Page

Completing the Heading of Form 990............... 9

Part IRevenue, Expenses, and Changes inNet Assets............................................................ 9

Part IIStatement of Functional Expenses........ 13

Part IIIStatement of Program ServiceAccomplishments ................................................. 16

Part IVBalance Sheets..................................... 16

Parts IV-A and IV-BReconciliation Statements. 18

Part VList of Officers, Directors, Trustees, andKey Employees.................................................... 18

Part VIOther Information.................................. 19

Part VIIAnalysis of Income-ProducingActivities ............................................................... 22

Part VIIIRelationship of Activities to theAccomplishment of Exempt Purposes................. 23

Exclusion Codes.................................................. 24

Specific Instructions for Form 990 Page 9


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represents unrelated trade or business income,treated as nonpublic support.

Section 501(c)(3) organizations mustseparate gross receipts from special eventsinto revenue and contributions when preparingthe Support Schedule in Part IV-A of ScheduleA (Form 990).

Section 501(c)(9), (17), and (18)organizationsThese organizations provide participants withlife, sickness, accident, welfare, andunemployment insurance, pensions, or similarbenefits, or a combination of these benefits.

When such an organization receives paymentsfrom participants or their employers to providethese benefits, report the payments on line 2as program service revenue, rather than on line1 as contributions.

Donations of services are notcontributionsIn Part I, do not include the value of servicesdonated to the organization, or items such asthe free use of materials, equipment, orfacilities as contributions on line 1. See theinstructions for Part III and for Part VI, line 82,for the optional reporting of such amounts inParts III and VI.

Grants that are equivalent tocontributionsGrants that encourage an organizationreceiving the grant to carry on programs oractivities that further its exempt purposes aregrants that are equivalent to contributions.Report them on line 1. The grantor may requirethat the programs of the grant recipient(grantee) conform to the grantor's own policiesand may specify the use of the grant, such asuse for the restoration of a historic building ora voter registration drive.

A grant is still equivalent to a contribution ifthe grant recipient provides a service or makesa product that benefits the grantor incidentally.(See examples in the line 1c instructions.)However, a grant is a payment for services,and not a contribution, if the grant requires thegrant recipient to provide that