Draft 2018 Form 990 Released by IRS

The IRS has released a draft version of Form 990 for 2018 which offers new insight into how certain portions of the Tax Cuts and Jobs Act of 2017 (TCJA) which impact exempt organizations will be implemented.

Part V of Form 990, Statements Regarding Other IRS Filings and Tax Compliance, has been expanded to include two new questions regarding tax liabilities under Section 4960 (tax on executive compensation in excess of $1,000,000 or excess parachute payments) and Section 4968 (excise tax on investment income for certain educational institutions holding large endowments). Organizations incurring these liabilities, which were newly-created by the TCJA, are directed to complete Form 4720, Return of Certain Excise Taxes, Schedule N and Schedule O.

A draft version of Form 4720 for 2018 is not yet available. The new draft Form 990 offers the first look into how the new excise taxes will be reported administratively. It has previously been unclear whether organizations would use Form 990-T, Exempt Organization Business Income Tax Return, Form 4720, or an altogether new Form to report and pay tax liabilities under the new Internal Revenue Code sections.

The remainder of Form 990 is substantially unchanged from the 2017 version. Form 990 received a major redesign in 2008, and has seen very little change to its overall form or substance since that time.

Meanwhile, exempt organizations still await guidance on other portions of the TCJA, including the tax on certain commuter benefits and the separate reporting of unrelated trades or businesses. No new guidance has been issued since the IRS released an updated Publication 15-B, Employer’s Tax Guide to Fringe Benefits, which clarified that commuter benefits directly provided by an employer and benefits which are provided through a pre-tax elective salary reduction arrangement would both be subject to tax to exempt employers.

If you have any questions regarding the Tax Cuts and Jobs Act’s impact on your organization, please contact us.