MRS. IRS, WE HAVE BEEN WELL INSTRUCTED

DATELINE: April 14, 2008, Chicago

Our personal income tax returns were completed late Friday afternoon. That means we were busy reading the Form 990 instructions all weekend. We also had the good fortune to fly American Airlines last week. Knowing that flying these days always poses the possibility of endless delays, we took the instructions with us. As it turned out, we had plenty of reading time.

At this point, we are about...

The Desktop Guide is Quickly Becoming the Must Have Guide for Nonprofit Executives Jack Siegel's new book, A Desktop Guide for Nonprofit Directors, Officers, and Advisors: Avoiding Trouble While Doing Good, has quickly become the go-to guide for nonprofit executives and advisors. So what are people saying about the Guide?  In the October 2007 edition of the The Federal Lawyer, New York lawyer George W. Gowen and nonprofit authority, wrote: Jack Siegel knows his way around this backwater...Best of all, he doesn't write like an accountant (in deference to my brothers and sisters a the bar, I avoid adding lawyers to the assessment).  His guide is to the point, practical, and readable....Even though the subtitle of this worthy book is Avoiding Trouble Whild Doing Good, doing good well is the book's operative theme. Some of our readers have followed the link to the Amazon.com Web site, but apparently have not bought the Guide.  If they were turned off by the price, they should reconsider.  One prominent attorney in the exempt organization field grabbed a review copy of the Guide and couldn't put it down.  She has instructed a number of her clients to buy it, pointing out to them that for less than 1/2 hour of her billable time, they receive a lesson (and resource) that tells it like she would like it told.  If you are starting a new charity, the Guide could save you thousands of dollars in legal fees by teaching you how to better utilize your legal counsel and framing the issues so you don't spin your wheels at $400 an hour. Buy your copy today at Amazon.com, Barnes & Noble, or John Wiley (the publisher).

two-thirds of the way through what someone told us is a 311-page packet. Our verdict: Overall, the Service has done a superb job in crafting the instructions. Virtually all of the repetition that was in the instructions proposed in June 2007 has been eliminated. The strategic use of appendices results in information that is of limited interest being removed from the main text, producing better information flow. The Glossary is great. It should probably be published as a separate publication because it is so useful. The Service adopted a line-by-line approach, which will permit users to quickly find answers to their questions as they march through the Core Form and the applicable schedules.

There are a number of technical issues, which we are detailing in a comment letter. Undoubtedly, there will be comments on each schedule, section, and part from people with specialized knowledge. We assume that the Service will take those comments into account when finalizing the instructions. We do not see any glaring errors or gaffes.

As our introduction suggests, we were overwhelmed by the length of the instructions. An IRS spokesperson indicated last week that the final instructions would consume far less paper because they would appear in the traditional three-column format. 

If the Service takes our formatting suggestions, the length of the instructions should become a virtue. It is hard to argue with a detailed set of instructions that spells out what it wants from taxpayers. But usability will depend on formatting decisions. We were told by the IRS official that the IRS is open to suggestions. Here are our initial ones:

• The instructions should use headers that list the schedule (both by letter and subject matter) and the lines addressed on the page.
• Every time a term found in the Glossary is used it should be italicized or placed in bold.
• Glossary definitions should not be repeated in the main text of the instructions.
• There should be a detailed index.
• Pages should be labeled as CF-1 and Sch. J-2. The entire publication also should employ a consecutive numbering scheme, ignoring the separate parts (1 through 500).
• All forms and schedules should be located on a Web page accessible from the Charities and Non-profits Web page on the IRS Web site.
• The forms and instructions should be downloadable as one package, as well as in discrete segments.

Internal Revenue Service - Circular 230 Disclosure: As provided for in Treasury regulations, any advice (but none is intended) relating to federal taxes that is contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NONPROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL. If you liked this post, please visit http://www.charitygovernance.com for a description of our training and consulting services.  You will also want to acquire a copy of Jack Siegel's book, A Desktop Guide for Nonprofit Directors, Officers, and Advisors: Avoiding Trouble While Doing Good." Copyright 2008, Charity Governance Consulting LLC. All Rights Reserved. You may not copy any portion of this post to a computer "clipboard" for re-posting anywhere or e-mailing, or otherwise reproduce this post. If you want others to review this post, you may provide them with a link to this web blog. Any use of the material or ideas in this post by reporters or other publishers shall make reference to Jack Siegel, author of "A Guide for Non-Profit Directors, Officers and Advisors: Avoiding Trouble While Doing Good" and this web blog.  For additional information call 773-325-2124