2014 Changes to Form 990 and Required Schedules

Instructions and changes to Form 990 and schedules for the 2014 tax year have been released. Though there were no significant changes made to the core form or most of its required schedules, tax-exempt organizations should be aware of several important changes to the revised forms and schedule instructions. In advance of the upcoming filing season, let’s look at each schedule and what’s changed.

Schedule A: Public Charity Status and Public Support

Schedule A has been significantly revised, primarily with respect to supporting organizations. The new schedule now includes two additional parts (IV and V) that reflect the implementation of final regulations for Type III supporting organizations.

All supporting organizations must now complete part IV, which includes a list of questions related to compliance with the detailed rules pertinent to supporting organizations, including the new regulations. Part IV contains five sections (A through E). Section A must be completed by all supporting organizations; the other sections are required depending on the type of supporting organization.

Part V is only required for Type III, non–functionally integrated supporting organizations. Part V also contains five sections (A through E), which show whether the organization has satisfied the distribution and attentiveness requirements for the tax year.

The instructions for Schedule A were also revised to clarify that an organization that claims a public charity status other than under Section 170(b)(1)(A)(vi) can also demonstrate that it qualifies under that section by completing Part II, the mechanical 33⅓ percent support test for donor-driven tax-exempt organizations. This may be beneficial for purposes such as qualifying for the first special rule in Schedule B (see below).

Schedule B: Schedule of Contributors

The instructions for Schedule B clarify that an organization that claims the benefit of the special rule must do one of the following on Schedule A (Form 990 or 990-EZ):

  • Establish in Part II that it met the 33⅓ percent support test for the current year or prior year
  • Check the box on Part I, line 7 or 8, and the box on Part II, line 13, to indicate that the organization is in its first five years

Schedule H: Hospitals

Changes to Schedule H were primarily made to Part V. Section A now asks for the name and employer identification number of subordinate hospitals for a group return. Its Section B includes additional questions and check boxes that reflect some of the final 501(r) regulations released in late December.

Schedule L: Transactions with Interested Persons

Changes to the instructions for Schedule L were made to increase consistency and decrease the confusion and burden associated with the schedule.

  • The definition of interested person for purposes of Parts II–IV was harmonized and now is provided in the introduction to the specific instructions rather than separately for each part, though certain special definitions continue to apply to Part III only.
  • The instructions provide a more uniform definition of reasonable efforts in the specific instructions. This definition now applies to all parts, not just Parts III and IV.
  • The instructions also clarify that business transactions that occur in the ordinary course of an exempt organization’s business between the exempt organization and a publicly traded company on the same terms the company generally offers to the public aren’t required to be reported in Part IV.

Schedule R: Related Organizations

The instructions for Schedule R clarify that voluntary employees’ beneficiary associations (VEBAs) must report a contributing employer as a related organization only if the VEBA is related to the contributing employer in some other capacity. VEBAs are mutual associations of employees that provide certain specified benefits to their members or their designated beneficiaries; they may be funded by the employees or their employer.

The instructions also clarify that transactions with disregarded entities listed in Part I don’t need to be reported on Part V, line 1.

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For help navigating the changes to Form 990 and related schedules, or to learn how your organization may be impacted by them, contact your Moss Adams not-for-profit professional.