Dateline: October 1, 2007
At this past week's ABA Tax Section meeting in Vancouver, Ronald J. Schultz, one of the IRS officials working on the revision to the the Form 990, announced that the IRS has decided to drop the efficiency ratios from the Core Form, according to a report by Fred Stokeld appearing in today's edition of Tax Notes Today. These ratios included compensation, fundraising, and expense ratios. The IRS is replacing the ratios with questions that highlight an organization's activities and accomplishments. Those questions had appeared toward the back of the Core Form.
The IRS still plans to include a section that asks for information pertaining to governance practices. Many have argued that the existing questions carry inappropriate judgments which could actually mislead Form 990 users. No doubt those draft questions will be revised. The devil will be in the details that emerge.
Stokeld also reports that Schedule H generated the most comment. That's the schedule applicable to hospitals. One issue the IRS is grappling with is how to define a hospital. Schultz told the ABA Tax Section that the IRS will likely look to state licensing or certification as the basis for defining a hospital.
