IRS Warns Nonprofits to
Complete Form 990 Accurately

Owens said that the visibility of the form will increase with widespread use of the Internet and the efforts of the IRS to put all forms 990 on CD-ROM. As a result organizations that put vague and general information on their returns could provide fodder to their critics, competitors, and investigative reports, he warned. These forms are important documents to a number of donors, researchers, and watchdog agencies.

The Philanthropic Research Institute in Williamsburg, Va., recently noted six types of errors observed in a sample of 1,794 Form 990s:

• Arithmetic errors were found in about 20%.
• About 30% of Nonprofits failed to note their primary exempt mission as required in Part III, Statement of Program Accomplishments.
• Many organizations reported only net data, even though the data upon which the net was calculated was also required for the form.
• Part VII, Analysis of Income-Producing Activities, frequently was inconsistent with the data appearing in other parts of the form.
• Many nonprofits incorrectly reported individual compensation amounts. Form 990 requires nonprofits to report the compensation of key employees without regard to the amount paid. But is also requires the identification of people-not necessarily key employees-who are compensated $50,000 or more.
• Some organizations failed to attach required supporting schedules.