The new IRS Form 990 that will be implemented for the 2008 tax year asks the following questions regarding IRS Forms 1023 and 990 and public disclosure. Here's some guidance in answering these questions. The form asks:

Part VI, Section A, #10: Was a copy of the Form 990 provided to the organization's governing body before it was filed? All organizations must describe in Schedule O the process, if any, the organization uses to review the Form 990.

The answer should be YES. The Board of the Directors has the fiduciary duty of care to make sure that the organization is following all laws and best practices. Therefore, the Board should review the annual informational return, Form 990, prior to it being filed with the IRS. Each voting member of the board should be provided a copy, either electronically or in paper form prior to its filing. Preferably, the Form 990 should be discussed at a board meeting where the Treasurer or tax preparer could make a presentation and answer questions.

Part VI, Section C, #18: IRS Section 6104 requires an organization to make its Form 1023 (or 1024 if applicable) 990 and 990-T (501c(3)s only) available for public inspection. Indicate how you make these available. Check all that apply.
own website    another's website    upon request

Form 1023: Exempt organizations must make publicly available their Form 1023 application for recognition of exemption, its attachments and the exemption-ruling letter issued by the IRS. If the 1023 application was filed before July 15, 1987 and you cannot find a copy, then you are excused from this requirement. If you filed after July 15, 1987 and cannot find a copy of the 1023, you can contact the IRS to see if they have a copy that they can send to you. The telephone number for the IRS is (877) 829-5500.

Annual Form 990: Exempt organizations must make publicly available their annual information return (Form 990 series) with schedules, attachments and supporting documents filed with the IRS. The returns must be available for three years beginning on the date the return is required to be filed or was actually filed, whichever is later. All information is considered public except the names and addresses of contributors on Schedule B. You should white out the names and addresses of your contributors on Schedule B prior to releasing your return to the public.

These public documents must be made available for inspection to anyone upon request during regular business hours at the organization's principal business office and also at the organization's regional or district offices having three or more employees. You may not ask for identification as a condition of allowing inspection. You cannot tell them to come back tomorrow, although you can set up reasonable restrictions on the time, place and manner of in-person inspection and copying. If a copy is requested, you must provide a copy without charge, other than a reasonable fee for reproduction (no more than $1.00 per page) and actual postage costs.

If an exempt organization makes the 1023 and 990s "widely available" by posting them on a Web page, then you can refer a requestor to the Web page. You can also refer them to www.Guidestar.com, an organization that manages a searchable database of more than 1.7 million IRS-recognized nonprofit organizations, if your return is available on that website.

The penalty for failure to allow public inspection is $20 per day up to $10,000 and if the failure to comply is willful, an additional penalty of $5,000 can be imposed.

Part VI, Section C, #19: Describe in Schedule O whether (and if so, how) the organization makes its governing documents, conflict of interest policy and financial statements available to the public.

Federal law does not require that a tax exempt organization's governing documents or policies be made publicly available except when they are part of a form that is required to be publicly available, such as an attachment to Form 1023 or Form 990. Your State law might have additional requirements. Articles of Incorporation filed with the state could be considered public documents. Generally, internal documents such as bylaws, minutes, financials and policies and procedures are not made available to the public unless there is a business reason to do so.

Sample Policies:

BOARD REVIEW OF FORM 990
Policy:  The Board of Directors must review the annual Form 990 information tax return prior to filing.

Procedure:  A qualified and authorized person shall complete the annual Form 990 informational return under the direction of the Treasurer. The return shall be reviewed by the Executive Director and Treasurer and then presented to all board members either via e-mail or by paper copy prior to its filing with the IRS. At the next board meeting, the Treasurer may review the return with the Board.

PUBLIC DISCLOSURE OF CORPORATE DOCUMENTS
Policy:  The PRC's Form 1023 (Application for Tax-Exempt Status) and Forms 990 (Informational Tax Returns) must be made available for public inspection and copying upon request.

Procedure:  The Form 1023 application to the IRS and Form 990 for the previous three years shall be available for inspection by the public during normal office hours. The names and addresses of contributors on Schedule B shall be redacted in the form that is made available to the public. If someone from the public requests a copy of Form 990, they shall be referred to www.guidestar.com where the center's Treasurer has confirmed it to be widely distributed. Otherwise, copies will be provided for a fee of $1.00 per page plus postage, if any. Other corporate documents, such as bylaws, minutes, financials and policies and procedures shall be maintained as internal documents and shall not be made available to the general public, unless for a business reason as determined by the Executive Director and approved by the Board of Directors.

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