IRS releases revised Form 990 for 2008

The Internal Revenue Service has released a final updated version of Form 990, the return that charities and other tax-exempt organizations are required to file annually.

The new form, Return of Organizations Exempt from Income Tax, will need to be filed in 2009 to report on results of 2008. The federal agency said it plans to release instructions for filling out the form in the near future.

The form, introduced earlier this year, is expected to put more pressure on not-for-profit healthcare organizations to demonstrate why they merit special tax treatment. More critics are asking these organizations to to justify their tax-exempt status by showing that they provide "an appropriate" level of charity care or community benefit.

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Organizations are worrying that, should an audit reveal that they aren't demonstrating enough community benefit, their tax-exempt status could be questioned or revoked.

There is no consistency in the way not-for-profit hospitals measure and report their charitable services, said Francine Machisko, senior principal at the Falls Church, Va.-based Noblis Center for Health Innovation.


"They are literally all over the map," she said. "Some base their reports on cost, some on charges and some point to other services, like community newsletters, education and research."

The new forms provide a way to measure apples-to-apples comparisons of how healthcare organizations meet their obligations, said Sen. Charles Grassley (R-Iowa), ranking member of the Senate Finance Committee, which has conducted oversight of tax-exempt policy for the past five years.

"This means more consistent transparency from tax-exempt groups. Under the current set-up, some groups are very transparent and others are secretive or lackadaisical about what they file," he said. "For the most part, this form is the only document tax-exempt groups have to file with the IRS in exchange for their billions of dollars in tax breaks," Grassley said.

"More transparency and accountability will help keep the charitable sector going strong," Grassley said. "The IRS has done a good job of bringing about more reporting across the board and recognizing that the tax-exempt sector is a growing part of the economy."