SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

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The Internal Revenue Service (IRS) has completed its revision of the Form Instructions for its newly redesigned Form 990 and posted them, along with various background materials explaining the new 990 and its revisions, here.  The IRS extensively revised the format and content of the 990 based on three guiding principles: enhancing transparency, promoting tax compliance, and minimizing burden on the filing organization.  While transparency and compliance are likely outcomes of the new 990, the extent to which the extensive, detail probing document will minimize an organization's burden remains to be seen.

Some of the major features of the new form include a new summary of activities and finances page, a new governance section, enhanced reporting of executive and key employee compensation, and an organization's relationship with insiders and other organizations.  Of significance to tax-exempt hospitals is the new Schedule H to the 990, which requires substantial detail with regard regarding the community benefit the hospital provides and the facilities it operates.  For tax year 2008, however, hospitals will only have to complete the portion of the Schedule H relating to their facilities.  Thereafter, all portions of Schedule H will have to be completed.

To prepare for completing the new 990 for the 2008 tax year, the IRS recommends the following: (i) identifying "related" organizations required to be listed on Schedule R; (ii) identifying key employees and the organization's five highest compensated employees; (iii) reviewing the new governance questions on the 990, which must be answered based on policies and practices in place on or before the last day of the 2008 tax year; and (iv) identifying the schedules the organization will be required to complete.