On June 14, 2007, the Internal Revenue Service released a discussion draft of a redesigned Form 990, which is the annual information return filed by tax-exempt organizations, including hospitals and other health care providers. A copy of the draft Form 990 can be found at www.irs.gov/charities/article/0,,id=171216,00.html . In an information release accompanying the draft, the IRS indicated that the redesigned Form 990 was based on three guiding principles: Enhancing transparency; promoting compliance; and minimizing the compliance burden on filing organizations.
The draft Form 990 includes a "core" form with 15 schedules which must be completed based on responses to questions in the core form. The core form includes a summary page with a "snapshot" of information regarding the organization's mission and activities, governance and financial information. The core form also includes eight additional sections gathering information on compensation, governance and financial reporting, revenue, functional expenses, balance sheet, general activities, other IRS filings and program service accomplishments.
Various new or redesigned schedules will be of interest to hospitals and other health care providers. For example, Schedule H must be completed by organizations that operate a facility that provides hospital or medical care and is designed to provide information on community benefit, collection and billing practices, management and joint ventures and descriptions of how the facility furthers the exempt purposes of the organization, including assessing the health needs of the community, educating patients about charity care or public assistance, and establishing emergency room policies. The draft uses the Catholic Health Association model for reporting community benefit, but requests comments on alternative models. Similarly, there are new schedules and information disclosures regarding compensation, related organizations, significant disposition of assets, supplemental financial information and tax-exempt bonds.
The IRS anticipates having the redesigned Form 990 ready for use in the 2008 filing year, which means that the new Form will not be used until such forms are filed in 2009. The IRS is accepting comments on the draft Form 990 until September 14, 2007. We will provide practice pointers and discuss issues and concerns with the redesigned Form 990 in subsequent issues of the Health Law Update.