us internal revenue service: i990-ez--1997

8/14/2019 US Internal Revenue Service: i990-ez--1997

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97Department of the TreasuryInternal Revenue Service

Instructions for Form 990and Form 990-EZReturn of Organization Exempt From Income Tax andShort Form Return of Organization Exempt FromIncome TaxUnder Section 501(c) of the Internal Revenue Code (except black lung benefittrust or private foundation) or section 4947(a)(1) nonexempt charitable trustNote: Form 990-EZ is for use by organizations with gross receipts of less than$100,000andtotal assets of less than $250,000 at the end of the year.Section references are to the Internal Revenue Code unless otherwise noted.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out theInternal Revenue laws of the United States. You are required to give us the information. We needit to ensure that you are complying with these laws.

The organization is not required to provide the information requested on a form that is subjectto the Paperwork Reduction Act unless the form displays a valid OMB control number. Books orrecords relating to a form or its instructions must be retained as long as their contents maybecome material in the administration of any Internal Revenue law. The rules governing theconfidentiality of the Form 990, and Form 990-EZ, are covered in Code section 6104.

The time needed to complete and file this form and related schedules will vary depending onindividual circumstances. The estimated average times are:

If you have comments concerning the accuracy of these time estimates or suggestions formaking these forms simpler, we would be happy to hear from you. You can write to the Tax FormsCommittee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. DO NOT sendthe form to this address. Instead, see When and Where To File.

Changes To Noteq On Form 990, enter on line 90b, the numberof employees on your payroll during the payperiod that includes March 12, 1997. See the

Specific Instructions for Form 990, Part VI, line90b.q On Form 990, Part II, Statement ofFunctional Expenses, line 30, allocateprofessional fundraising fees into the 3functions: Program services, Management andgeneral, and Fundraising.

Purpose of Formq Form 990 and Form 990-EZ are used bytax-exempt organizations and nonexemptcharitable trusts to provide the IRS with theinformation required by section 6033.

q An organization's completed Form 990, orForm 990-EZ, (except for the schedule of

contributors) is available for public inspectionas required by section 6104.

q Some members of the public rely on Form990, or Form 990-EZ, as the primary or solesource of information about a particularorganization. How the public perceives anorganization in such cases may be determinedby the information presented on its return.Therefore, please make sure the return iscomplete and accurate and fully describes theorganization's programs and accomplishments.

q Use the Form 990, and Form 990-EZ, tosend a required election to the IRS, such as theelection to capitalize costs under section 266.

Form RecordkeepingLearning about the

law or the form

Preparingthe

form

Copying,assembling, andsending the form

to the IRS

990 96 hr., 23 min. 15 hr., 48 min. 20 hr., 52 min. 48 min.

990-EZ 28 hr., 28 min. 9 hr., 12 min. 11 hr., 1 min. 16 min.

Schedule A (Form 990) 49 hr., 59 min. 9 hr., 14 min. 10 hr., 28 min. 0

M Public Inspection of CompletedExempt Organization Returns andApproved Exemption Applications.... 8

Contents Page

Changes To Note ............................. 1

General Instructions.......................... 2 N Disclosures Regarding CertainInformation and Services Furnished. 9A Who Must File................................... 2

O Disclosures Regarding CertainTransactions and Relationships ....... 9

B Organizations Not Required To File. 2

C Exempt Organization ReferenceChart ................................................. 3 P Excess Benefit Transactions............ 9

Q Erroneous Backup Withholding........ 9D Forms and Publications To File orUse .................................................... 3 R Group Return.................................... 9

E Use of Form 990, or Form 990-EZ,To Satisfy State ReportingRequirements .................................... 4

S Organizations in Foreign Countriesand U.S. Possessions ...................... 10

T Public Interest Law Firms................. 10F Other Forms as Partial Substitutes

for Form 990 or Form 990-EZ.......... 4 U Requirements for a Properly

Completed Form 990 or Form990-EZ .............................................. 10G Accounting Periods and Methods..... 5

Public InspectionH When and Where To File................. 5Signature

I Extension of Time To File ................ 5 RecordkeepingRounding Off to Whole DollarsJ Amended Return/Final Return.......... 5Completing All Lines

K Penalties ........................................... 6Assembling Form 990 or Form990-EZL Contributions ................................. 6

Schedule of Contributors Specific Instructions for Form 990.... 11

Solicitations of NondeductibleContributions Specific Instructions for Form

990-EZ .............................................. 28Keeping Fundraising RecordsNoncash ContributionsSubstantiation and DisclosureRequirements

Cat. No. 22386X


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General Instructions

Note: The General Instructions apply toboth Form 990 and Form 990-EZ, ShortForm Return of Organization Exempt FromIncome Tax. See also the SpecificInstructions for each of these forms.

A. Who Must File

Filing tests

If the organization does not meet any of the

exceptions listed in General Instruction B, andits annual gross receipts are normally morethan $25,000, it must file Form 990 or Form990-EZ. See the gross receipts discussion inGeneral Instruction B.

If the organization's gross receipts during theyear are less than $100,000 and its total assetsat the end of the year are less than $250,000,it may file Form 990-EZ, instead of Form 990.Even if the organization meets this test, it canstill file Form 990.

Combined Federal Campaign.Smallerorganizations applying to participate in theCombined Federal Campaign may submit acompleted Form 990-EZ (instead of Form 990)to the Office of Personnel Management (OPM).

However, these organizations must alsosubmit to OPM, attached to the Form 990-EZ,

pages 1 and 2 of Form 990 with the followingcompleted: Part I, lines 1a-1d and 13-15; PartII, all lines. These organizations should notsend this Form 990 attachment to the IRS.

Section 501(a), (e), (f), (k), and (n)organizations

Except for those types of organizations listedin General Instruction B, an annual return onForm 990, or Form 990-EZ, is required fromevery organization exempt from tax undersection 501(a), including foreign organizationsand cooperative service organizationsdescribed in sections 501(e) and (f); child careorganizations described in section 501(k); andcharitable risk pools described in section501(n).

Section 501(c)(3), 501(e), (f), (k), and (n)

organizations must also attach a completedSchedule A (Form 990), Organization ExemptUnder Section 501(c)(3), to their Form 990 orForm 990-EZ.

Section 4947(a)(1) nonexempt charitabletrusts

Any nonexempt charitable trust (described insection 4947(a)(1)) not treated as a privatefoundation is also required to file Form 990, orForm 990-EZ, along with a completedSchedule A (Form 990). See the discussion inGeneral Instruction D for exceptions to filingForm 1041, U.S. Income Tax Return forEstates and Trusts.

If an organization's exemption applicationis pending

If the organization's application for exemptionis pending, check the Application pending boxin the heading of the return and complete thereturn.

If the organization received a Form 990Package but is not required to file

If the organization received a Form 990Package with a preaddressed label, we askthat the organization file a return even if it isnot required to do so.q Attach the label to the name and addressspace on the return. See the SpecificInstructions for both Form 990, or Form990-EZ, Item C.

q Check the box in the heading of the Form990, or Form 990-EZ, to indicate that theorganization's gross receipts are normally notmore than $25,000;q Sign the return; andq Send it to the Ogden Service Center. SeeGeneral Instruction H.q The organization does not have to completeParts I through IX of the Form 990, or Parts Ithrough V of the Form 990-EZ.

Following the above instructions will help usto update our records, and we will not have tocontact the organization later to ask why no

return was filed.If the organization files a return this way, itwill not be mailed a Form 990 Package in lateryears and does not have to file Form 990, orForm 990-EZ, again until its gross receipts arenormally more than $25,000. If theorganization terminates or undergoes asubstantial contraction, see the instructions forline 79 of Form 990, or line 36 of Form 990-EZ.

Exempt organizations that filed Form 990,or Form 990-EZ, but are no longer required tofile because they meet a specific exemption(other than exemption 14 in General InstructionB) should advise their key District office so theirfiling status can be updated.

Exempt organizations that are not sure oftheir key District office may call the IRS at1-800-829-1040. Exempt organizations that

stop filing Form 990, or Form 990-EZ, withoutnotifying their key District office may receiveservice center correspondence inquiring abouttheir returns. When responding to theseinquiries, these organizations should give thespecific reason for not filing.

Failure to file and its effect on contributions

Organizations that are eligible to receive taxdeductible contributions are listed inPublication 78, Cumulative List ofOrganizations described in Section 170(c) ofthe Internal Revenue Code of 1986. Anorganization may be removed from this listingif our records show that it is required to fileForm 990, or Form 990-EZ, but it does not filea return or advise us that it is no longerrequired to file. However, contributions to suchan organization may continue to be deductibleby the general public until the IRS publishes anotice to the contrary in the Internal RevenueBulletin.

B. Organizations Not Required To File

Note: Organizations not required to file thisform with the IRS may wish to use it to satisfystate reporting requirements. For details, seeGeneral Instruction E.

The following types of organizations exemptfrom tax under section 501(a) do not have tofile Form 990, or Form 990-EZ, with the IRS: 1. A church, an interchurch organization oflocal units of a church, a convention orassociation of churches, an integrated auxiliaryof a church (such as a men's or women'sorganization, religious school, mission society,

or youth group). 2. Church-affiliated organizations that areexclusively engaged in managing funds ormaintaining retirement programs and aredescribed in Rev. Proc. 96-10, 1996-1 C.B.577. 3. A school below college level affiliatedwith a church or operated by a religious order. 4. A mission society sponsored by, oraffiliated with, one or more churches or churchdenominations, if more than half of thesociety's activities are conducted in, or directedat, persons in foreign countries. 5. An exclusively religious activity of anyreligious order.

6. A state institution whose income isexcluded from gross income under section 115. 7. An organization described in section501(c)(1). Section 501(c)(1) organizations arecorporations organized under an Act ofCongress that are:q Instrumentalities of the United States, andq Exempt from Federal income taxes. 8. A private foundation exempt undersection 501(c)(3) and described in section509(a). Use Form 990-PF, Return of PrivateFoundation. 9. A black lung benefit trust described in

section 501(c)(21). Use Form 990-BL,Information and Initial Excise Tax Return forBlack Lung Benefit Trusts and Certain RelatedPersons.10. A stock bonus, pension, or profit-sharingtrust that qualifies under section 401. UseForm 5500, Annual Return/Report ofEmployee Benefit Plan.11. A religious or apostolic organizationdescribed in section 501(d). Use Form 1065,U.S. Partnership Return of Income.12. A foreign organization whose annualgross receipts from sources within the U.S. arenormally $25,000 or less (Rev. Proc. 94-17,1994-1 C.B. 579). See the $25,000 grossreceipts test in 14c. See also GeneralInstruction A, if the organization received aForm 990 Package.

13. A governmental unit or affiliate of agovernmental unit described in Rev. Proc.95-48, 1995-2 C.B. 418.14. An organization whose annual grossreceipts are normally $25,000 or less (but seeGeneral Instruction A, if the organizationreceived a Form 990 Package).

a. Calculating gross receipts. Theorganization's gross receipts are the totalamount it received from all sources during itsannual accounting period, without subtractingany costs or expenses. 1) Form 990.Gross receipts are the sumof lines 1d, 2, 3, 4, 5, 6a, 7, 8a (both columns),9a, 10a, and 11 of Part I. 2) Form 990-EZ.Gross receipts are thesum of lines 1, 2, 3, 4, 5a, 6a, 7a, and 8 of PartI. Gross receipts can also be calculated byadding back the amounts on lines 5b, 6b, and7b to the total revenue reported on line 9.

Example. On line 9 of its Form 990-EZ for1997, Organization M reported $50,000 as totalrevenue. M added back the costs andexpenses it had deducted on lines 5b ($2,000);6b ($1,500); and 7b ($500) to its total revenueof $50,000 and determined that its grossreceipts for the tax year were $54,000.

b. Gross receipts when acting asagent. If a local chapter of a section501(c)(8) fraternal organization collectsinsurance premiums for its parent lodge andmerely sends those premiums to the parentwithout asserting any right to use the funds orotherwise deriving any benefit from collectingthem, the local chapter should not include thepremiums in its gross receipts. The parentlodge should report them instead. The sametreatment applies in other situations in whichone organization collects funds merely as anagent for another. c. $25,000 gross receipts test. Anorganization's gross receipts are considerednormally to be $25,000 or less if theorganization is:

1) Up to a year old and has received, ordonors have pledged to give, $37,500 or lessduring its first tax year;

Page 2 General Instructions for Form 990 and Form 990-EZ


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2) Between 1 and 3 years old and averaged$30,000 or less in gross receipts during eachof its first 2 tax years; or 3) Three (3) years old or more andaveraged $25,000 or less in gross receipts forthe immediately preceding 3 tax years(including the year for which the return wouldbe filed).

C. Exempt Organization ReferenceChart

D. Forms and Publications To File orUse

You may obtain forms and publications by:Personal computer. Visit the IRS's InternetWeb Site at www.irs.ustreas.gov to get:q Forms and instructionsq Publicationsq IRS Press Releases and Fact Sheets

You can also reach us using:q Telnet at iris.irs.ustreas.govq File Transfer Protocol at ftp.ir.ustreas.govq Direct Dial (by modem). Dial direct to theInternal Revenue Information Services (IRIS)

by calling 703-321-8020 using your modem.IRIS is an on-line information service onFedWorld.CD-ROM. A CD-ROM containing over 2,000tax products (including prior year forms) canbe purchased from the Government PrintingOffice (GPO). To order the CD-ROM, call theSuperintendent of Documents at 202-512-1800(select Option 1), or go through GPO's InternetWeb Site www.access.gpo.gov/su_docs).By phone and in person. To order forms andpublications, call 1-800-TAX-FORM(1-800-829-3676). You can also get most formsand publications at your local IRS office.

Schedule A (Form 990). Organization ExemptUnder Section 501(c)(3) (Except PrivateFoundation), 501(e), 501(f), 501(k), 501(n), orSection 4947(a)(1) Nonexempt CharitableTrust. The Schedule A (Form 990) is filed withForm 990, or Form 990-EZ, for a section501(c)(3) organization that is not a privatefoundation (and including an organizationdescribed in section 501(e), 501(f), 501(k), or501(n)). It is also filed with Form 990, or Form990-EZ, for a section 4947(a)(1) nonexemptcharitable trust that is not treated as a privatefoundation. An organization is not required tofile Schedule A (Form 990) if its gross receiptsare normally $25,000 or less. See the grossreceipts discussion in General Instruction B.

Forms W-2 and W-3. Wage and TaxStatement, and Transmittal of Wage and TaxStatements.

Form 940. Employer's Annual FederalUnemployment (FUTA) Tax Return.

Form 941. Employer's Quarterly Federal TaxReturn. Used to report social security,Medicare, and income taxes withheld by anemployer and social security and Medicaretaxes paid by an employer.

Form 943. Employer's Annual Tax Return forAgricultural Employees.

Trust Fund Recovery Penalty.If certainexcise, income, social security, and Medicaretaxes that must be collected or withheld are notcollected or withheld, or these taxes are notpaid to the IRS, a Trust Fund Recovery Penaltymay apply. The Trust Fund Recovery Penaltymay be imposed on all persons (includingvolunteers) who the IRS determines wereresponsible for collecting, accounting for, andpaying over these taxes, and who acted willfullyin not doing so.

This penalty does not apply to volunteer,unpaid members of any board of trustees ordirectors of a tax-exempt organization, if thesemembers are solely serving in an honorarycapacity, do not participate in the day-to-dayor financial activities of the organization, anddo not have actual knowledge of the failure tocollect, account for, and pay over these taxes.However, the preceding sentence does notapply if it results in no person being liable forthe penalty.

The penalty is equal to the unpaid trust fundtax. See the instructions for Pub. 15 (CircularE), Employer's Tax Guide, for more details,including the definition of responsible persons.

Form 990-T. Exempt Organization BusinessIncome Tax Return. Filed separately fororganizations with gross income of $1,000 ormore from business unrelated to theorganization's exempt purpose. The Form990-T is also filed to pay the section 6033(e)(2)proxy tax. For Form 990, see line 85 and its

instructions; for Form 990-EZ, see line 35 andits instructions.

Form 990-W. Estimated Tax on UnrelatedBusiness Taxable Income for Tax-ExemptOrganizations.

Form 1041. U.S. Income Tax Return forEstates and Trusts. Required of section4947(a)(1) nonexempt charitable trusts thatalso file Form 990 or Form 990-EZ. However,if such a trust does not have any taxableincome under Subtitle A of the Code, it can file

Form 990, or Form 990-EZ, and does not haveto file Form 1041 to meet its section 6012 filingrequirement. If this condition is met, completeForm 990, or Form 990-EZ, and do not fileForm 1041.

A section 4947(a)(1) nonexempt charitabletrust that normally has gross receipts of notmore than $25,000 (see the gross receiptsdiscussion in General Instruction B) and hasno taxable income under Subtitle A mustcomplete line 92 and the signature block onpage 6 of the Form 990. On the Form 990-EZ,complete line 43 and the signature block onpage 2 of the return. In addition, complete onlythe following items in the heading of Form 990or Form 990-EZ:

Form 1096. Annual Summary and Transmittalof U.S. Information Returns.

Form 1099 series. Information returns toreport acquisitions or abandonments ofsecured property, proceeds from broker andbarter exchange transactions, interestpayments, payments of long-term care andaccelerated death benefits, miscellaneousincome payments, distributions from a medicalsavings accounts, original issue discount,distributions from pensions, annuities,

retirement or profit-sharing plans, IRAs,insurance contracts, etc., and proceeds fromreal estate transactions. Also, use certain ofthese returns to report amounts that werereceived as a nominee on behalf of anotherperson.

Form 1120-POL. U.S. Income Tax Return forCertain Political Organizations.

Form 1128. Application To Adopt, Change, orRetain a Tax Year.

Form 2758. Application for Extension of TimeTo File Certain Excise, Income, Information,and Other Returns.

Form 3115. Application for Change inAccounting Method.

Form 4506-A. Request for Public Inspectionor Copy of Exempt Organization IRS Form.

Form 4720. Return of Certain Excise Taxeson Charities and Other Persons UnderChapters 41 and 42 of the Internal RevenueCode. Section 501(c)(3) organizations that fileForm 990, or Form 990-EZ, as well as themanagers of these organizations, use this formto report their tax on political expenditures,certain lobbying expenditures, and excessbenefit transactions.

Type ofOrganization

I.R.C.Section

Corporations Organized UnderAct of Congress...................................... 501(c)(1)

Title Holding Corporations ........................ 501(c)(2)

Charitable, Religious, Educational,Scientific, etc., Organizations................. 501(c)(3)

Civic Leagues and Social WelfareOrganizations ......................................... 501(c)(4)

Labor, Agricultural, andHorticultural Organizations ..................... 501(c)(5)

Business Leagues, etc.............................. 501(c)(6)

Social and Recreation Clubs .................... 501(c)(7)

Fraternal Beneficiary and Domestic 501(c)(8)Fraternal Societies and Associations..... & (10)

Voluntary Employees' BeneficiaryItemAssociations ........................................... 501(c)(9)A Tax year (fiscal year or short period, if

applicable)Teachers' Retirement Fund Associations . 501(c)(11)

B Applicable checkboxesBenevolent Life Insurance Associations,C Name and addressMutual Ditch or Irrigation Companies,D Employer identification number (EIN)Mutual or Cooperative TelephoneG Section 4947(a)(1) nonexempt charitable trust

box. (Item I in Form 990-EZ)Companies, etc. ..................................... 501(c)(12)

Cemetery Companies ............................... 501(c)(13)

State Chartered Credit Unions,Mutual Reserve Funds........................... 501(c)(14)

Mutual Insurance Companies orAssociations ........................................... 501(c)(15)

Cooperative Organizations ToFinance Crop Operations ....................... 501(c)(16)

Supplemental UnemploymentBenefit Trusts ......................................... 501(c)(17)

Employee Funded Pension Trusts(created before 6/25/59)......................... 501(c)(18)

Organizations of Past or Present 501(c)(19)Members of the Armed Forces.............. & (23)

Black Lung Benefit Trusts......................... 501(c)(21)Withdrawal Liability Payment Funds......... 501(c)(22)

Title Holding Corporations or Trusts......... 501(c)(25)

State-Sponsored Organizations ProvidingHealth Coverage for High-RiskIndividuals ............................................... 501(c)(26)

State-Sponsored Workmen'sCompensation and ReinsuranceOrganizations ......................................... 501(c)(27)

Religious and Apostolic Associations....... 501(d)

Cooperative Hospital ServiceOrganizations ......................................... 501(e)

Cooperative Service Organizations ofOperating Educational Organizations .... 501(f)

Child Care Organizations.......................... 501(k)

Charitable Risk Pools ............................... 501(n)

General Instructions for Form 990 and Form 990-EZ Page 3


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Form 5500, 5500-C/R. Employers whomaintain pension, profit-sharing, or otherfunded deferred compensation plans aregenerally required to file one of the 5500 seriesforms specified below. This requirementapplies whether or not the plan is qualifiedunder the Internal Revenue Code and whetheror not a deduction is claimed for the current taxyear.

Plans with 100 or more participants must fileForm 5500, Annual Return/Report ofEmployee Benefit Plan.

Plans with fewer than 100 participants mustfile Form 5500-C/R, Return/Report ofEmployee Benefit Plan.

Form 5768. Election/Revocation of Electionby an Eligible Section 501(c)(3) OrganizationTo Make Expenditures To InfluenceLegislation.

Form 8282. Donee Information Return.Required of the donee of charitable deductionproperty who sells, exchanges, or otherwisedisposes of the property within 2 years afterreceiving the property.

The form is also required of any successordonee who disposes of charitable deductionproperty within 2 years after the date that thedonor gave the property to the original donee.

It does not matter who gave the property to thesuccessor donee. It may have been the originaldonee or another successor donee.

Form 8300. Report of Cash Payments Over$10,000 Received in a Trade or Business.Used to report cash amounts in excess of$10,000 that were received in a singletransaction (or in two or more relatedtransactions) in the course of a trade orbusiness (as defined in section 162).

However, if the organization receives acharitable cash contribution in excess of$10,000, it is not subject to the reportingrequirement since the funds were not receivedin the course of a trade or business.

Form 8822. Change of Address. Used to notifythe IRS of a change in mailing address thatoccurs after the return is filed.

Forms 8038, 8038-G, and 8038-GC.Information Return for Tax-Exempt PrivateActivity Bond Issues; Information Return forTax-Exempt Governmental Obligations; andInformation Return for Small Tax-ExemptGovernmental Bond Issues, Leases, andInstallment Sales, respectively.

Publication 525. Taxable and NontaxableIncome.

Publication 538. Accounting Periods andMethods.

Publication 598. Tax on Unrelated BusinessIncome of Exempt Organizations.

Publication 910. Guide to Free Tax Services.

Publication 1391. Deductibility of PaymentsMade to Charities Conducting Fund-RaisingEvents.

E. Use of Form 990, or Form 990-EZ,To Satisfy State ReportingRequirements

Some states and local government units willaccept a copy of Form 990, or Form 990-EZ,and Schedule A (Form 990) in place of all orpart of their own financial report forms. Thesubstitution applies primarily to section501(c)(3) organizations, but some of the othertypes of section 501(c) organizations are alsoaffected.

If you use Form 990, or Form 990-EZ, tosatisfy state or local filing requirements, such

as those under state charitable solicitation acts,note the following:

Determine state filing requirements

You should consult the appropriate officials ofall states and other jurisdictions in which theorganization does business to determine theirspecific filing requirements. Doing business ina jurisdiction may include any of the following:(a) soliciting contributions or grants by mail orotherwise from individuals, businesses, orother charitable organizations; (b) conductingprograms; (c) having employees within that

jurisdiction; (d) maintaining a checkingaccount; or (e) owning or renting propertythere.

Monetary tests may differ

Some or all of the dollar limitations applicableto Form 990, or Form 990-EZ, when filed withthe IRS may not apply when using Form 990,or Form 990-EZ, in place of state or local reportforms. Examples of the IRS dollar limitationsthat do not meet some state requirements arethe $25,000 gross receipts minimum thatcreates an obligation to file with the IRS (seethe gross receipts discussion in GeneralInstruction B) and the $50,000 minimum forlisting professional fees in Part II of ScheduleA (Form 990).

Additional information may be required

State or local filing requirements may requireyou to attach to Form 990, or Form 990-EZ,one or more of the following: (a) additionalfinancial statements, such as a completeanalysis of functional expenses or a statementof changes in net assets; (b) notes to financialstatements; (c) additional financial schedules;(d) a report on the financial statements by anindependent accountant; and (e) answers toadditional questions and other information.Each jurisdiction may require the additionalmaterial to be presented on forms they provide.The additional information does not have to besubmitted with the Form 990, or Form 990-EZ,filed with the IRS.

Even if the Form 990, or Form 990-EZ, theorganization files with the IRS is accepted bythe IRS as complete, a copy of the same returnfiled with a state will not fully satisfy that state'sfiling requirement if required information is notprovided, including any of the additionalinformation discussed above, or if the statedetermines that the form was not completed

by following the applicable Form 990, or Form990-EZ, instructions or supplemental stateinstructions. If so, the organization may beasked to provide the missing information or tosubmit an amended return.

Use of audit guides may be required

To ensure that all organizations report similartransactions uniformly, many states require thatcontributions, gifts, grants, etc., and functionalexpenses be reported according to the AICPAindustry audit guide, Not-For-ProfitOrganizations(New York, NY, AICPA, 1996),supplemented by Standards of Accounting andFinancial Reporting for Voluntary Health and

Welfare Organizations(Washington, DC,National Health Council, Inc., 1988, 3rdedition).

Donated services and facilities

Even though reporting donated services andfacilities as items of revenue and expense iscalled for in certain circumstances by thepublications named above, many states andthe IRS do not permit the inclusion of thoseamounts in Parts I and II of Form 990 or Part Iof Form 990-EZ. The optional reporting ofdonated services and facilities is discussed inthe instructions for Part III for both Form 990

and Form 990-EZ.

Amended returns

If the organization submits supplementalinformation or files an amended Form 990, orForm 990-EZ, with the IRS, it must also senda copy of the information or amended return toany state with which it filed a copy of Form 990,or Form 990-EZ, originally to meet that state'sfiling requirement.

If a state requires the organization to file anamended Form 990, or Form 990-EZ, to correctconflicts with Form 990, or Form 990-EZ,instructions, it must also file an amended returnwith the IRS.

Method of accounting

Most states require that all amounts be

reported based on the accrual method ofaccounting. See also General Instruction G.

Time for filing may differ

The deadline for filing Form 990, or Form990-EZ, with the IRS differs from the time forfiling reports with some states.

Public inspection

The Form 990, or Form 990-EZ, informationmade available for public inspection by the IRSmay differ from that made available by thestates. See the Caution in General InstructionL under Schedule of contributors.

State registration number

Enter the applicable state or local jurisdictionregistration or identification number in item E

(in the heading of the Form 990 or Form990-EZ) for each jurisdiction in which theorganization files Form 990, or Form 990-EZ,in place of the state or local form. If filing inseveral jurisdictions, prepare as many copiesas needed with item E blank. Then enter theapplicable registration number on the copy tobe filed with each jurisdiction.

An organization need not put any state orlocal jurisdiction registration or identificationnumber on the Form 990, or Form 990-EZ, filedwith the IRS.

F. Other Forms as Partial Substitutesfor Form 990 or Form 990-EZ

Except as provided below, the InternalRevenue Service will not accept any form as asubstitute for one or more parts of Form 990

or Form 990-EZ.

Labor organizations (section 501(c)(5))

A labor organization that files Form LM-2,Labor Organization Annual Report, or theshorter Form LM-3, Labor Organization AnnualReport, with the U.S. Department of Labor(DOL) can attach a copy of the completed DOLform to Form 990, or Form 990-EZ, to providesome of the information required by Form 990or Form 990-EZ. This substitution is notpermitted if the organization files a DOL reportthat consolidates its financial statements withthose of one or more separate subsidiaryorganizations.



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Employee benefit plans (section 501(c)(9),(17), or (18))

An employee benefit plan may be able tosubstitute Form 5500, or Form 5500-C/R, forpart of Form 990 or Form 990-EZ. Thesubstitution can be made if the organizationfiling Form 990, or Form 990-EZ, and the planfiling Form 5500, or 5500-C/R, meet all thefollowing tests: 1. The Form 990, or Form 990-EZ, filer isorganized under section 501(c)(9), (17), or(18); 2. The Form 990, or Form 990-EZ, filer and

Form 5500 filer are identical for financialreporting purposes and have identical receipts,disbursements, assets, liabilities, and equityaccounts; 3. The employee benefit plan does notinclude more than one section 501(c)organization, and the section 501(c)organization is not a part of more than oneemployee benefit plan; 4. The organization's accounting year andthe employee plan year are the same. If theyare not, you may want to change theorganization's accounting year, as explained inGeneral Instruction G, so it will coincide withthe plan year.

Allowable substitution areas

Whether an organization files Form 990, or

Form 990-EZ, for a labor organization or for anemployee benefit plan, the areas of Form 990,or Form 990-EZ, for which other forms can besubstituted are the same. These areas are:

Form 990

q Lines 13 through 15 of Part I (but completelines 16 through 21);q Part II; andq Part IV (but complete lines 59, 66, and 74,columns (A) and (B)).

Form 990-EZ

q Lines 10 through 16 of Part I (but completelines 17 through 21).q Part II (but complete lines 25 through 27,columns (A) and (B)).

If an organization substitutes Form LM-2 orLM-3 for any of the Form 990, or Form 990-EZ,Parts or line items mentioned above, it mustattach a reconciliation sheet to show therelationship between the amounts on the DOLforms and the amounts on Form 990 or Form990-EZ. This is particularly true of therelationship of disbursements shown on theDOL forms and the total expenses on line 17,Part I, of both Form 990 and Form 990-EZ.The organization must make this reconciliationbecause the cash disbursements section of theDOL forms includes nonexpense items. If theorganization substitutes Form LM-2, be sure tocomplete its separate schedule of expenses.

G. Accounting Periods and Methods

Note: For further information, see Pub. 538.

Accounting periodsCalendar year. Use the 1997 Form 990, orForm 990-EZ, to report on the 1997 calendaryear accounting period. A calendar yearaccounting period begins on January 1 andends on December 31.Fiscal year. If the organization hasestablished a fiscal year accounting period, usethe 1997 Form 990, or Form 990-EZ, to reporton the organization's fiscal year that began in1997 and ended 12 months later. A fiscal yearaccounting period should normally coincidewith the natural operating cycle of theorganization. Be certain to indicate in the

heading of Form 990, or Form 990-EZ, the datethe organization's fiscal year began in 1997and the date the fiscal year ended in 1998.Short period. Use the 1997 Form 990, orForm 990-EZ, to report on a short accountingperiod (less than 12 months) that began in1997 and ended November 30, 1998, or earlier.

If the organization changes its accountingperiod, it must file a return on Form 990, orForm 990-EZ, for the short period resultingfrom the change. Write Change of AccountingPeriod at the top of this short-period return.

If the organization changed its accounting

period within the 10-calendar-year period thatincludes the beginning of the short period, andit had a Form 990, or Form 990-EZ, filingrequirement at any time during that 10-yearperiod, it must also attach a Form 1128 to theshort-period return. See Rev. Proc. 85-58,1985-2 C.B. 740.Group return. When affiliated organizationsauthorize their central organization to file agroup return for them, the accounting periodof the affiliated organizations and the centralorganization must be the same. See GeneralInstruction R.

Accounting methods

Unless instructed otherwise, the organizationshould generally use the same accountingmethod on the return to figure revenue andexpenses as it regularly uses to keep its booksand records. To be acceptable for Form 990,or Form 990-EZ, reporting purposes, however,the method of accounting used must clearlyreflect income.

Generally, the organization must file Form3115 to change its accounting method. Notice96-30, 1996-1 C.B. 378, provides relief fromfiling Form 3115 to section 501(c) organizationsthat change their methods of accounting tocomply with the provisions of SFAS 116,Accounting for Contributions Received andContributions Made. In SFAS 116, theFinancial Accounting Standards Board revisedcertain generally accepted accountingprinciples relating to contributions received andcontributions awarded by not-for-profitorganizations.

A not-for-profit organization that changes itsmethod of accounting for Federal income taxpurposes to conform to the method provided inSFAS 116 should report any adjustmentrequired by section 481(a) on line 20 of Form990, or Form 990-EZ, as a net assetadjustment made during the year the changeis made. The adjustment should be identifiedas the effect of changing to the methodprovided in SFAS 116. The beginning of yearstatement of financial position (balance sheet)should not be restated to reflect any priorperiod adjustments.State reporting. If the organization preparesForm 990, or Form 990-EZ, for state reportingpurposes, it may file an identical return with theIRS even though the return does not agree withthe books of account, unless the way one ormore items are reported on the state return

conflicts with the instructions for preparingForm 990, or Form 990-EZ, for filing with theIRS.

Example 1. The organization maintains itsbooks on the cash receipts and disbursementsmethod of accounting but prepares a statereturn based on the accrual method. It coulduse that return for reporting to the IRS.

Example 2. A state reporting requirementrequires the organization to report certainrevenue, expense, or balance sheet itemsdifferently from the way it normally accounts forthem on its books. A Form 990, or Form990-EZ, prepared for that state is acceptable

for the IRS reporting purposes if the statereporting requirement does not conflict with theForm 990, or Form 990-EZ, instructions.

An organization should keep a reconciliationof any differences between its books of accountand the Form 990, or Form 990-EZ, that isfiled.

Most states that accept Form 990, or Form990-EZ, in place of their own forms require thatall amounts be reported based on the accrualmethod of accounting. For further information,see General Instruction E.

H. When and Where To File

File Form 990, or Form 990-EZ, by the 15thday of the 5th month after the organization'saccounting period ends. If the regular due datefalls on a Saturday, Sunday, or legal holiday,file on the next business day. A business dayis any day that is not a Saturday, Sunday, orlegal holiday.

If the organization is liquidated, dissolved,or terminated, file the return by the 15th dayof the 5th month after the liquidation,dissolution, or termination.

If the return is not filed by the due date(including any extension granted), attach astatement giving the reasons for not filing ontime.

Send the return to the Internal RevenueService, Ogden, UT 84201-0027.

Private delivery services. You can usecertain private delivery services designated bythe IRS to meet the timely filing as timelyfiling/paying rule for tax returns and payments.The IRS publishes a list of designated privatedelivery services in September of each year.The list published in September 1997 includesonly the following:q Airborne Express (Airborne): Overnight AirExpress Service, Next Afternoon Service,Second Day Service.q DHL Worldwide Express (DHL): DHL SameDay Service, DHL USA Overnight.q Federal Express (FedEx): FedEx PriorityOvernight, FedEx Standard Overnight, FedEx2Day.q United Parcel Service (UPS): UPS Next DayAir, UPS Next Day Air Saver, UPS 2nd Day

Air, UPS 2nd Day Air A.M.The private delivery service can tell you how

to get written proof of the mailing date.

I. Extension of Time To File

Use Form 2758 to request an extension of timeto file Form 990 or Form 990-EZ. Generally, theIRS will not grant an extension of time for morethan 90 days unless sufficient need for anextended period is clearly shown. In no eventwill an extension of more than 6 months begranted to any domestic organization.

J. Amended Return/Final Return

To change the organization's return for anyyear, file a new return including any requiredattachments. Use the revision of Form 990, orForm 990-EZ, applicable to the year being

amended. The amended return must provideall the information called for by the form andinstructions, not just the new or correctedinformation. Check the Amended Return boxin the heading of either return, or, if the versionof the form being used does not have such abox, write Amended Return at the top of thereturn.

The organization may file an amendedreturn at any time to change or add to theinformation reported on a previously filed returnfor the same period. It must make the amendedreturn available for public inspection for 3 yearsfrom the date of filing or 3 years from the datethe original return was due, whichever is later.



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The organization must also send a copy ofthe information or amended return to any statewith which it filed a copy of Form 990, or Form990-EZ, originally to meet that state's filingrequirement.

Use Form 4506-A to obtain a copy of apreviously filed return. You can obtain blankforms for prior years by calling1-800-TAX-FORM (1-800-829-3676).

If the return is a final return, see the specificinstructions for Form 990 for line 79, Part VI.For Form 990-EZ, see the specific instructionsfor line 36, Part V.

K. Penalties

Against the organization

Under section 6652(c)(1)(A), a penalty of $20a day, not to exceed the smaller of $10,000 or5% of the gross receipts of the organization forthe year, may be charged when a return is filedlate, unless the organization can show that thelate filing was due to reasonable cause.Organizations with annual gross receiptsexceeding $1 million are subject to a penaltyunder section 6652(c)(1)(A) of $100 for eachday the failure continues (with a maximumpenalty with respect to any one return of$50,000). The penalty begins on the due datefor filing the Form 990 or Form 990-EZ. Thepenalty may also be charged if the organizationfiles an incomplete return or furnishes incorrect

information. To avoid having to supply missinginformation later, be sure to complete allapplicable line items; answer Yes, No, orN/A (not applicable) to each question on thereturn; make an entry (including a zero whenappropriate) on all total lines; and enterNone or N/A if an entire part does not apply.

Against responsible person(s)

If the organization does not file a completereturn or does not furnish correct information,the IRS will send the organization a letter thatincludes a fixed time to fulfill theserequirements. After that period expires, theperson failing to comply will be charged apenalty of $10 a day, not to exceed $5,000,unless he or she shows that not complying wasdue to reasonable cause. If more than one

person is responsible, they are jointly andindividually liable for the penalty.There are also penaltiesfines and

imprisonmentfor willfully not filing returns andfor filing fraudulent returns and statements withthe IRS (sections 7203, 7206, and 7207).There are also penalties for failure to complywith public disclosure requirements asdiscussed in General Instruction M. States mayimpose additional penalties for failure to meettheir separate filing requirements. See also thediscussion of the Trust Fund Recovery Penalty,General Instruction D.

L. ContributionsSchedule of Contributors,Solicitations of NondeductibleContributions,

Keeping Fundraising Records,Noncash Contributions, andSubstantiation and DisclosureRequirements

Schedule of contributors

Note: Not open for public inspection. See theCaution below.

Attach a schedule listing each contributorwho gave the organization, directly or indirectly,money, securities, or other property worth$5,000 or more during the year. If no onecontributed $5,000 or more, the organizationdoes not need to attach a schedule. On theschedule:

1. Total a contributor's gifts of $1,000 ormore to determine if a contributor gave $5,000or more. Do not include smaller gifts. 2. Show the contributor's name, address,and the total of each contribution. 3. Describe a noncash contribution fully andshow the date received. 4. Report payroll contributions by listing the: a. Employer's name, b. Address, and c. Total amount given (unless the employeegave enough to be listed separately). 5. Report on property with readily

determinable market value; i.e., marketquotations for securities) by: a. Describing the property, and b. Listing its fair market valueestimate ifmarket value indeterminable.

Contributors include individuals, fiduciaries,partnerships, corporations, associations, trusts,or exempt organizations.

If the organization adjusted its accounts toconform to SFAS 116, and if the adjustmentreflected contributions unreported under the oldmethod of accounting for year(s) preceding theyear of change and not reported under the newmethod in the year of change or anysubsequent year, any contributor of an amountincluded in the adjustment who meets theabove criteria should be included in the

schedule of contributors for the year of thechange. See General Instruction G.If an organization meets either Exception 1

or 2 below, some information in its schedulewill vary from that described above.

Exception 1. An organization described insection 501(c)(3) that meets the 331/3% supporttest of the Regulations under sections509(a)(1)/170(b)(1)(A)(vi) (whether or not theorganization is otherwise described in section170(b)(1)(A)).

The schedule should give the aboveinformation only for contributors whose gifts of$5,000 or over are more than 2% of the amountreported on line 1d that the organizationreceived during the year.

Exception 2. An organization described insection 501(c)(7), (8), or (10) that received

contributions or bequests for use exclusively forreligious, charitable, scientific, literary, oreducational purposes, or the prevention ofcruelty to children or animals (sections170(c)(4), 2055(a)(3), or 2522(a)(3)).

The schedule should list each person whosegifts total more than $1,000 during the year andshow the: 1. Donor's name, 2. Amount given, 3. Specific purpose of the gift, and 4. Its specific use.

Show also the total gifts that were $1,000or less and were for a religious, charitable, etc.,purpose.

If an amount is set aside for a religious,charitable, etc., purpose described above,explain how the amount is held; e.g., whetherit is mingled with amounts held for otherpurposes. If the organization transferred the giftto another organization, name and describe therecipient and explain the relationship betweenthe two organizations.Caution: If the organization files a copy ofForm 990, or Form 990-EZ, and attachmentswith any state, do not include, in theattachments for the state, the schedule ofcontributors discussed above unless theschedule is specifically required by the statewith which the organization is filing the return.States that do not require the information mightnevertheless make it available for publicinspection along with the rest of the return.

Solicitations of nondeductible contributions

Any fundraising solicitation by or on behalf ofany section 501(c) organization that is noteligible to receive contributions deductible ascharitable contributions for Federal income taxpurposes must include an explicit statementthat contributions or gifts to it are not deductibleas charitable contributions. The statement mustbe in an easily recognizable format whether thesolicitation is made in written or printed form,by television or radio, or by telephone. Thisprovision applies only to those organizationswhose annual gross receipts are normally morethan $100,000 (section 6113).

Failure to disclose that contributions are notdeductible could result in a penalty of $1,000for each day on which a failure occurs. Themaximum penalty for failures by anyorganization, during any calendar year, shallnot exceed $10,000. In cases where the failureto make the disclosure is due to intentionaldisregard of the law, more severe penaltiesapply. No penalty will be imposed if the failureis due to reasonable cause (section 6710).

Keeping fundraising records

Section 501(c) organizations that are eligible toreceive tax-deductible contributions undersection 170(c) of the Code must keep samplecopies of their fundraising materials, such as:q Dues statements,q

Fundraising solicitations,q Tickets,q Receipts, orq Other evidence of payments received inconnection with fundraising activities.

For each fundraising event, organizationsmust keep records to show that portion of anypayment received from patrons that is notdeductible; that is, the retail value of the goodsor services received by the patrons. SeeDisclosure statement for quid pro quocontributions below.

Noncash contributions

To report contributions received in a form otherthan cash, use the market value as of the dateof the contribution. For marketable securitiesregistered and listed on a recognized securitiesexchange, measure market value by theaverage of the highest and lowest quotedselling prices (or the average between the bona

fide bid and asked prices) on the contributiondate. See section 20.2031-2 of the Estate TaxRegulations for rules to determine the value ofcontributed stocks and bonds. When marketvalue cannot be readily determined, use anappraised or estimated value.

To determine the amount of any noncashcontribution that is subject to an outstandingdebt, subtract the debt from the property's fairmarket value. Record the asset at its full valueand record the debt as a liability in the booksof account. If the organization received apartially completed Form 8283, NoncashCharitable Contributions, from a donor,complete it and return it so the donor can get

IF . . . THEN . . .

Organizations advertisetheir fundraising events,

They must keep samplesof the advertising copy.

Organizations use radioor television to make theirsolicitations,

They must keep samplesof:(a) Scripts,(b) Transcripts, or(c) Other evidence ofon-air solicitations.

Organizations use outsidefundraisers,

They must keep samplesof the fundraising

materials used by theoutside fundraisers.



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a charitable contribution deduction. Keep acopy for your records. See also the referenceto Form 8282 in General Instruction D.

Substantiation and disclosure requirements

Acknowledgment to substantiatecontributions. An organization (donee)should be aware that a donor of a charitablecontribution of $250 or more cannot take anincome tax deduction unless the donor obtainsthe organization's acknowledgment tosubstantiate the charitable contribution.

The organization's acknowledgment must: 1. Be written 2. Be contemporaneous 3. State the amount of any cash it received 4. State: a. Whether the organization gave the donorany intangible religious benefits (no valuationneeded) b. Whether or not the organization gave thedonor any goods or services in return for thedonor's contribution (a quid pro quocontribution) 5. Describe goods or services theorganization: a. Received (no valuation needed) b. Gave (good faith estimate needed)

Exception. An organization need not make agood faith estimate of a quid pro quo

contribution if the goods or services given to adonor are:q Insubstantial in valueq Certain membership benefits for $75 or lessper yearq Certain goods or services given to thedonor's employees or partnersDisclosure statement for quid pro quocontributions. If the organization receives aquid pro quo contribution of more than $75, anorganization must provide a disclosurestatement to the donor. The organization'sdisclosure statement must: 1. Be written 2. Estimate in good faith the organization'sgoods or services given in return for donor'scontribution 3. Describe, but need not value, certaingoods or services given donor's employees orpartners 4. Inform donor that a deductible charitablecontribution deduction is limited as follows:

Exception: No disclosure statement requiredif the organization gave: 1. Goods or services of insubstantial value 2. Certain membership benefits, or 3. An intangible religious benefit

See Regulations sections 1.170A-1,

1.170A-13, and 1.6115-1.Certain goods or services disregarded forsubstantiation and disclosure purposes.

Goods or services with insubstantialvalue.Generally, under section 170, thedeductible amount of a contribution isdetermined by taking into account the fairmarket value, not the cost to the charity, of anybenefits received in return. However, the costto the charity may be used in determiningwhether the benefits are insubstantial. Seebelow.

Cost basis.If a taxpayer makes apayment of $34.50 or more to a charity andreceives only token items in return, the itemshave insubstantial value if they:q Bear the charity's name or logo, andq Have an aggregate cost to the charity of$6.90 or less (low-cost article amount ofsection 513(h)(2)).

Fair market value basis.If a taxpayermakes a payment to a charitable organizationin a fundraising campaign and receivesbenefits with a fair market value of not morethan 2% of the amount of the payment, or $69,

whichever is less, the benefits received haveinsubstantial value in determining thetaxpayer's contribution.

The dollar amounts given above areapplicable to tax year 1997. They are adjustedannually for inflation.

When a donee organization provides adonor only with goods or services havinginsubstantial value under Rev. Proc. 96-59,1996-2 C.B. 392 (and any successordocuments), the contemporaneous writtenacknowledgment may indicate that no goodsor services were provided in exchange for thedonor's payment.

Certain membership benefits.Othergoods or services that are disregarded forsubstantiation and disclosure purposes areannual membership benefits offered to a

taxpayer in exchange for a payment of $75 orless per year that consist of: 1. Any rights or privileges that the taxpayercan exercise frequently during the membershipperiod such as: a. Free or discounted admission to theorganization's facilities or events, b. Free or discounted parking, 2. Admission to events that are: a. Open only to members, and are, perperson, b. Within the low cost article limitation.

Examples. 1. E offers a basic membership benefitspackage for $75. The package gives membersthe right to buy tickets in advance, free parking,and a gift shop discount of 10%. E's $150

preferred membership benefits package alsoincludes a $20 poster. Both the basic andpreferred membership packages are for a 12month-period and include about 50productions. F accepts the preferredmembership benefits package for $300. E'swritten acknowledgment satisfies thesubstantiation requirement if it describes theposter, gives a good faith estimate of its fairmarket value ($20), and disregards theremaining membership benefits. 2. If F received only the basic membershippackage for its $300 payment, E'sacknowledgment need state only that no goodsor services were provided. 3. G Theater Group performs four plays.Each play is performed twice. Non-memberscan purchase a ticket for $15. For a $60membership fee, however, members areoffered free admission to any of theperformances. H makes a payment of $350and accepts this membership benefit. Becauseof the limited number of performances, themembership privilege cannot be exercisedfrequently. Therefore, G's acknowledgmentmust describe the free admission benefit andestimate its value in good faith.

Certain goods or services provided todonor's employees or partners.Certaingoods or services provided to employees orpartners of donors may be disregarded forsubstantiation and disclosure purposes.Describe such goods or services. A good faith

estimate is not needed.Example. Museum J offers a basic

membership benefits package for $40. Itincludes free admission and a 10% gift shopdiscount. Corporation K makes a $50,000payment to J and in return, J offers K'semployees free admission, a tee shirt with J'slogo that costs J $4.50, and a 25% gift shopdiscount. Because the free admission is offeredin both benefit packages and the value of thetee shirts is insubstantial, K's writtenacknowledgment need not value the freeadmission benefit or the tee shirts. However,because the 25% gift shop discount to K's

employees differs from the 10% discountoffered in the basic membership benefitspackage, K's written acknowledgment mustdescribe the 25% discount, but need notestimate its value.Definitions.

Substantiation.It is the responsibility ofthe donor:q To value a donation, andq To obtain an organization's writtenacknowledgment substantiating the donation.

There is no prescribed format for theorganization's written acknowledgment of adonation. Letters, postcards orcomputer-generated forms may be acceptable.The acknowledgment must, however, providesufficient information to substantiate the

amount of the deductible contribution.The organization may either provide:q Separate statements for each contribution of$250 or more, orq Furnish periodic statements substantiatingcontributions of $250 or more.

Separate contributions of less than $250 arenot subject to the requirements of section170(f)(8), regardless of whether the sum of thecontributions made by a taxpayer to a doneeorganization during a taxable year equals $250or more.

Contemporaneous.A writtenacknowledgment is contemporaneous if thedonor obtains it on or before the earlier of:q The date the donor files the original return forthe taxable year in which the contribution wasmade; orq The due date (including extensions) for filingthe donor's original return for that year.

Substantiation of payroll contributions.An organization may substantiate a payrollcontribution by:q A pay stub, Form W-2, or other documentshowing a contribution to a donee organization;andq A pledge card or other document from thedonee organization stating that organizationprovides no goods or services for any payrollcontributions.

The amount withheld from each payment ofwages to a taxpayer is treated as a separatecontribution.

Substantiation of payments to a collegeor university for the right to purchase

tickets to athletic events.The right topurchase tickets for an athletic event is valuedat 20% of the payment.

Example. When a taxpayer pays $312.50for the right to purchase tickets for an athleticevent, the right is valued at $62.50. Theremaining $250 is a charitable contributionwhich the taxpayer must substantiate.

Substantiation of matched payments.If a taxpayer's payment to a donee organizationis matched by another payor, and the taxpayerreceives goods or services in consideration forits payment and some or all of the matchingpayment, those goods or services will betreated as provided in consideration for the

Donor's contribution

Less: Organization's money, and goodsor services given in return

Equals: Donor's deductible charitablecontribution



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taxpayer's payment and not in consideration forthe matching payment.

Disclosure statement.An organizationmust provide a written disclosure statement todonors who make a payment, described as a"quid pro quo contribution" in excess of $75(section 6115). This requirement is separatefrom the written substantiationacknowledgment a donor needs fordeductibility purposes. While, in certaincircumstances, an organization may be able tomeet both requirements with the same writtendocument, an organization must be careful tosatisfy the section 6115 written disclosure

statement requirement in a timely mannerbecause of the penalties involved.

Quid pro quo contribution.A "quid proquo contribution" is a payment that is givenboth as a contribution and as a payment forgoods or services provided by the doneeorganization.

Example. A donor gives a charity $100 inconsideration for a concert ticket valued at $40(a quid pro quo contribution). In this example,$60 would be deductible. Because the donor'spayment exceeds $75, the organization mustfurnish a disclosure statement even though thetaxpayer's deductible amount does not exceed$75. Separate payments of $75 or less madeat different times of the year for separatefundraising events will not be aggregated forpurposes of the $75 threshold.

Good faith estimate.An organizationmay use any reasonable method in making agood faith estimate of the value of goods orservices provided by an organization inconsideration for a taxpayer's payment to thatorganization. A good faith estimate of the valueof goods or services that are not generallyavailable in a commercial transaction may bedetermined by reference to the fair marketvalue of similar or comparable goods orservices. Goods or services may be similar orcomparable even though they do not have theunique qualities of the goods or services thatare being valued.

Goods or services.Goods or servicesmean:q Cash,q Property,q Services,q Benefits, andq Privileges.

In consideration for.A doneeorganization provides goods or services inconsideration for a taxpayer's payment if, at thetime the taxpayer makes the payment to thedonee organization, the taxpayer receives, orexpects to receive, goods or services inexchange for that payment.

Goods or services a donee organizationprovides in consideration for a payment by ataxpayer include goods or services provided ina year other than the year in which the donormakes the payment to the donee organization.

Intangible religious benefits.Intangiblereligious benefits must be provided by

organizations organized exclusively forreligious purposes.Examples include:q Admission to a religious ceremony, andq De minimis tangible benefits, such as wine,provided in connection with a religiousceremony.

Distributing organizations as donees.An organization described in section 170(c), oran organization described as a PrincipalCombined Fund Organization for purposes ofthe Combined Federal Campaign, that receivesa payment made as a contribution is treatedas a donee organization even if theorganization distributes the amount received to

one or more organizations described in section170(c).

Penalties.A charity that knowinglyprovides a false substantiationacknowledgment to a donor may be subject tothe penalties under section 6701 for aiding andabetting an understatement of tax liability.

Charities that fail to provide the requireddisclosure statement for a quid pro quocontribution of more than $75 will incur apenalty of $10 per contribution, not to exceed$5,000 per fundraising event or mailing. Thecharity may avoid the penalty if it can show thatthe failure was due to reasonable cause(section 6714).

M. Public Inspection of CompletedExempt Organization Returns andApproved Exemption Applications

Through the IRS

Forms 990, 990-EZ, and certain othercompleted exempt organization returns areavailable for public inspection and copyingupon request. Approved applications forexemption from Federal income tax are alsoavailable. However, the IRS may not discloseportions of an application relating to any tradesecrets, etc.; nor can the IRS disclose theschedule of contributors required as anattachment for line 1 of Form 990 and Form990-EZ (section 6104).

A request for inspection must:q Be in writing.q Include the name and address (city andstate) of the organization that filed the returnor application.q Indicate the type (number) of the return andthe year(s) involved.q Be sent to the District Director (Attention:Disclosure Officer) of the district in which therequester desires to inspect the return orapplication, or if inspection at the IRS NationalOffice is desired, the request should be sent to:

Commissioner of Internal RevenueAttention: Freedom of Information ReadingRoom1111 Constitution Avenue, NWWashington, DC 20224

Use Form 4506-A to request publicinspection or copy of an exempt organizationreturn through the IRS. There is a fee forphotocopying.

Through the organizationAnnual return

Caution:Note the discussion below for thepotential effect of the Taxpayer Bill of Rights 2(TBOR2) on these instructions.

An organization must, during the 3-yearperiod beginning with the due date (includingextensions, if any), of the Form 990, or Form990-EZ, make its return available for publicinspection upon request. All parts of the returnand all required schedules and attachments,

other than the schedule of contributors to theorganization, must be made available.Inspection must be permitted during regularbusiness hours at the organization's principaloffice and at each of its regional or districtoffices having 3 or more employees.

This provision applies to any organizationthat files Form 990, or Form 990-EZ,regardless of the size of the organization andwhether or not it has any paid employees.

If an organization furnishes additionalinformation to the IRS to be made part of itsreturn, as a result of an examination orcorrespondence from the service center, itmust also make that information part of thereturn it provides for public inspection.

If the organization does not maintain apermanent office, it must provide a reasonablelocation for a requester to inspect theorganization's annual returns. The organizationmay mail the information to a requester.However, the organization can charge forcopying and postage only if the requester givesup the right to a free inspection (Notice 88-120,1988-2 C.B. 454).

Any person who does not comply with thepublic inspection requirement will be assesseda penalty of $20 for each day that inspectionwas not permitted, up to a maximum of$10,000 for each return. No penalty will be

imposed if the failure is due to reasonablecause. Any person who willfully fails to complywill be subject to an additional penalty of$1,000 (sections 6652(c) and 6685).

Exemption application

Caution:Note the discussion below for thepotential effect of the Taxpayer Bill of Rights 2(TBOR2) on these instructions.

Any section 501(c) organization thatsubmitted an application for recognition ofexemption to the Internal Revenue Serviceafter July 15, 1987, must make available forpublic inspection a copy of its application(together with a copy of any papers submittedin support of its application) and any letter orother document issued by the Internal RevenueService in response to the application. An

organization that submitted its exemptionapplication on or before July 15, 1987, mustalso comply with this requirement if it had acopy of its application on July 15, 1987. As inthe case of annual returns, the copy of theapplication and related documents must bemade available for inspection during regularbusiness hours at the organization's principaloffice and at each of its regional or districtoffices having at least 3 employees.

If the organization does not have apermanent office, it must provide a reasonablelocation for the inspection of both its annualreturns and exemption application. Theinformation may be mailed. See the referenceto Notice 88-120 above, under Annual return.The organization need not disclose any portionof an application relating to trade secrets, etc.,

that would not also be disclosable by the IRS.The penalties for failure to comply with thisprovision are the same as those under Annualreturn above, except that the $10,000limitation does not apply.Furnishing copies of documents underTBOR2. An organization must furnish a copyof its Form 990, Form 990-EZ, or exemptionapplication, and certain related documents, ifa request is made in writing or in person. Fora request made in person, the organizationmust make an immediate response. For aresponse to a written request, the organizationmust provide the requested copies within 30days. The organization must furnish copies ofits Forms 990, or Forms 990-EZ, for any of its3 most recent taxable years. No charge is tobe made other than charging a reasonable fee

for reproduction and actual postage costs. Anorganization need not provide copies if (1) theorganization has made the requesteddocuments widely available in a mannerprovided in Treasury regulations, or (2) theSecretary of the Treasury determined, uponapplication by the organization, that theorganization was subject to a harassmentcampaign such that a waiver of the obligationto provide copies would be in the publicinterest.Penalty for failure to allow public inspectionor provide copies. The section 6685 penaltyfor willful failure to allow public inspections orprovide copies was increased from the



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present-law level of $1,000 to $5,000 byTBOR2.Effective date of TBOR2. These publicinspection provisions governing tax-exemptorganizations under TBOR2 generally apply torequests made no earlier than 60 days after thedate on which the Treasury Departmentpublishes the regulations required under theprovisions. However, Congress, in thelegislative history of TBOR2, indicated thatorganizations would comply voluntarily with thepublic inspection provisions prior to theissuance of such regulations.

N. Disclosures Regarding CertainInformation and Services Furnished

A section 501(c) organization that offers to sellor solicits money for specific information or aroutine service for any individual that could beobtained by such individual from a Federalgovernment agency free or for a nominalcharge must disclose that fact conspicuouslywhen making such offer or solicitation. Anyorganization that intentionally disregards thisrequirement will be subject to a penalty foreach day on which the offers or solicitations aremade. The penalty imposed for a particular dayis the greater of $1,000 or 50% of the total costof the offers and solicitations made on that daywhich lacked the required disclosure (section6711).

O. Disclosures Regarding CertainTransactions and Relationships

In their annual returns on Schedule A (Form990), section 501(c)(3) organizations mustdisclose information regarding their direct orindirect transfers to, and other direct or indirectrelationships with, other section 501(c)organizations (except other section 501(c)(3)organizations) or section 527 politicalorganizations (section 6033(b)(9)). Thisprovision helps prevent the diversion orexpenditure of a section 501(c)(3)organization's funds for purposes not intendedby section 501(c)(3). All section 501(c)(3)organizations must maintain records regardingall such transfers, transactions, andrelationships. See also General Instruction Kregarding penalties.

P. Excess Benefit Transactions

TBOR2 was enacted July 30, 1996, andamended by the Taxpayer Relief Act of 1997.TBOR2, as amended, imposes section 4958excise taxes on excess benefit transactions.These excise taxes are to be paid by certainindividuals who are closely connected withorganizations described in section 501(c)(3)(except private foundations) and section501(c)(4).

Excess benefit transactions includetransactions in which a disqualified personreceives the benefit of a non-fair-market-valuetransaction with an organization or receivesunreasonable compensation, as well asfinancial arrangements under which adisqualified person receives payment based on

the organization's income in a transaction thatviolates the prohibition against privateinurement under section 501(c)(3) or section501(c)(4).

Existing tax-law standards (see section 162)apply to determine reasonableness ofcompensation and fair market value. The totalcompensation package, including the amountof any reimbursement, must be reasonable.There is a rebuttable presumption that acompensation arrangement with a disqualifiedperson is reasonable if the board of directorsor trustees approving the compensation are (1)individuals unrelated to and not subject to thecontrol of the disqualified person(s), and who(2) relied upon comparative data (e.g.,

compensation paid by similar organizations,etc., and (3) documented the basis for theirdetermination.

In determining whether such payments ortransactions are, in fact, compensation, therelevant factors include whether theappropriate decision-making body approvedthe transfer as compensation in accordancewith established procedures and whether theorganization and the recipient reported thetransfer (except in the case of nontaxablefringe benefits) as compensation on therelevant forms (i.e., the organization's Form990, or Form 990-EZ; the Form W-2 or Form

1099 provided by the organization to therecipient; the recipient's income tax return; andother required returns).

For purposes of determining reasonablecompensation, the payment of personalexpenses and benefits to or for the benefit ofdisqualified persons and non-fair-market-valuetransactions benefiting such persons aretreated as compensation only if it is clear thatthe organization intended the payments ascompensation for services.

If an organization does not treat taxablebenefits received by a disqualified person ascompensation, these amounts could be treatedas an excess benefit with the requirement thatthey be repaid even if the unreported benefitplus reported compensation was less than thefair market value of the services provided. Any

reimbursement of the excise tax liability of adisqualified person or organization managerwill be treated as an excess benefit unless (1)the organization treats the reimbursement ascompensation during the year thereimbursement is made, and (2) the totalcompensation to that person, including thereimbursement, is reasonable.

Disqualified person means any individualin a position to exercise substantial influenceover the affairs of the organization, whether asan organization manager or otherwise.

In addition, disqualified persons includecertain family members and 35%-ownedentities of a disqualified person, as well as anyperson who was a disqualified person at anytime during the 5-year period prior to thetransaction at issue.

Family members are determined undersection 4946(d), except that such membersalso would include siblings (whether by wholeor half blood) of the individual and spouses ofsuch siblings.

35%-owned entities are corporations inwhich disqualified persons own stockpossessing more than 35% of the combinedvoting power as well as partnerships and trustsor estates in which disqualified persons ownmore than 35% of the profits interest orbeneficial interest.

Combined voting power includes votingpower represented by holdings of voting stock,actual or constructive, but does not includevoting rights held only as a director or trustee.See Regulations section 53.4946-1(a)(5).

A disqualified person who benefits from an

excess benefit transaction is subject to afirst-tier penalty tax equal to 25% of the amountof the excess benefit (i.e., the amount by whicha transaction differs from fair market value; theamount of compensation exceeding reasonablecompensation; or the amount of a prohibitedtransaction based on the organization's grossor net income). Organization managers whoparticipate in an excess benefit transactionknowing that it is an improper transaction aresubject to a first-tier penalty tax of 10% of theamount of the excess benefit (subject to amaximum penalty of $10,000). Second-tiertaxes may be imposed on a disqualified personif there is no correction of the excess benefittransaction within a specified time period. In

such cases, the disqualified person is subjectto a penalty tax equal to 200% of the amountof excess benefit. For this purpose, the termcorrection means undoing the excess benefitto the extent possible and taking any additionalmeasures necessary to place the organizationin a financial position not worse than that inwhich it would be if the disqualified personwere dealing under the highest fiduciarystandards.

The intermediate sanctions for excessbenefit transactions may be imposed by theIRS in lieu of (or in addition to) revocation ofan organization's tax-exempt status. If more

than one disqualified person or manager isliable for a penalty excise tax, then all suchpersons are jointly and severally liable for suchtax.

The section 4958 excise taxes apply toexcess benefit transactions occurring on orafter September 14, 1995. They do not apply,however, to any benefit arising from atransaction pursuant to any written contract thatwas binding on September 13, 1995, andcontinued in force through the time of thetransaction.

Persons liable for the section 4958 taxesmust file Form 4720 to report and pay the tax.See the instructions for line 89 of Form 990,and line 40 of Form 990-EZ, which discuss therequired reporting of both the excess benefittransactions and the excise taxes imposed.

Q. Erroneous Backup Withholding

Recipients of dividend or interest paymentsgenerally must certify their correct taxpayeridentification number to the bank or other payeron Form W-9, Request for TaxpayerIdentification Number and Certification. If thepayer does not get this information, it mustwithhold part of the payments as backupwithholding. If the organization was subject toerroneous backup withholding because thepayer did not realize it was an exemptorganization and not subject to this withholding,it can claim credit on Form 990-T for theamount withheld. See the Instructions for Form990-T. Claims for refund must be filed within 3years after the date the original return was due;3 years after the date the organization filed it;

or 2 years after the date the tax was paid,whichever is later.

R. Group Return

If a parent organization wants to file a groupreturn for two or more of its subsidiaries, it mustuse Form 990. The parent organization cannotuse a Form 990-EZ for the group return.

A central, parent, or like organization canfile a group return on Form 990 for two or morelocal organizations that are: 1. Affiliated with the central organization atthe time its annual accounting period ends, 2. Subject to the central organization'sgeneral supervision or control, 3. Exempt from tax under a groupexemption letter that is still in effect, and

4.

Have the same accounting period as thecentral organization.If the parent organization is required to file

a return for itself, it must file a separate returnand may not be included in the group return.See General Instruction B for a list oforganizations not required to file.

Every year, each local organization mustauthorize the central organization in writing toinclude it in the group return and must declare,under penalty of perjury, that the authorizationand the information it submits to be included inthe group return are true and complete.

If the central organization prepares a groupreturn for its affiliated organizations, check theYes box in item H(a), in the heading of Form



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990, and indicate the number of organizationsfor which the group return is filed in item H(b).Attach either (1) a schedule showing the name,address, and employer identification number(EIN) of each affiliated organization included,or (2) a statement indicating that the groupreturn includes all affiliated organizationscovered by the group ruling. In item I, indicatethe group exemption number (GEN). Whenpreparing the return, be sure not to confuse thefour-digit GEN number in item I with thenine-digit EIN number in item D of the form'sheading.

The central organization should send the

annual information required to maintain a groupexemption letter to the Ogden Service Center,Ogden, UT 84201-0027.

An affiliated organization covered by a groupruling may file a separate return instead ofbeing included in the group return. In suchcase, check the Yes box in item H(c), in theheading of Form 990, and enter the GENnumber in item I.

Parts IV-A and IV-B of Form 990 do not haveto be completed on group returns.

S. Organizations in Foreign Countriesand U.S. Possessions

Refer to General Instruction B for the filingexemption for foreign organizations with$25,000 or less in gross receipts from U.S.sources.

Report amounts in U.S. dollars and statewhat conversion rate you use. Combineamounts from within and outside the UnitedStates and report the total for each item. Allinformation must be written in English.

T. Public Interest Law Firms

A public interest law firm exempt under section501(c)(3) or 501(c)(4) must attach a statementthat lists the cases in litigation, or that havebeen litigated during the year. For each case,describe the matter in dispute and explain howthe litigation will benefit the public generally.Also attach a report of all fees sought andrecovered in each case. See Rev. Proc. 92-59,1992-2 C.B. 411.

U. Requirements for a ProperlyCompleted Form 990 or Form 990-EZ

Public Inspection. All information theorganization reports on or with its Form 990,or Form 990-EZ, including attachments, will beavailable for public inspection, except theschedule of contributors required for line 1, PartI, of either form. Please make sure the formsand attachments are clear enough tophotocopy legibly.Signature. To make the return complete, anofficer of the organization authorized to sign itmust sign in the space provided. For a

corporation, or association, this officer may bethe president, vice president, treasurer,assistant treasurer, chief accounting officer, orother corporate, or association officer, such asa tax officer. A receiver, trustee, or assigneemust sign any return he or she files for acorporation or association. For a trust, theauthorized trustee(s) must sign.

Generally, anyone who is paid to preparethe return must sign it in the Paid Preparer'sUse Only area.

The paid preparer must:q Sign the return, by hand, in the spaceprovided for the preparer's signature (signaturestamps and labels are not acceptable).q Enter the preparer's social security number(SSN), or employer identification number (EIN),only if the Form 990, or Form 990-EZ, is for a

section 4947(a)(1) nonexempt charitable trustthat is not filing Form 1041.q Complete the required preparer information.q Give a copy of the return to the organization.

Leave the paid preparer's space blank if thereturn was prepared by a regular employee ofthe filing organization.Recordkeeping. The organization's recordsshould be kept for as long as they may beneeded for the administration of any provisionof the Internal Revenue Code. Usually, recordsthat support an item of income, deduction, orcredit must be kept for 3 years from the datethe return is due or filed, whichever is later.Keep records that verify the organization's

basis in property for as long as they areneeded to figure the basis of the original orreplacement property.

The organization should also keep copiesof any returns it has filed. They help inpreparing future returns and in makingcomputations when filing an amended return.Rounding Off to Whole Dollars. You mayshow money items as whole-dollar amounts.Drop any amount less than 50 cents andincrease any amount from 50 through 99 centsto the next higher dollar.Completing All Lines. Unless the

organization is permitted to use certain DOLforms or Form 5500 series returns as partialsubstitutes for Form 990, or Form 990-EZ, (seeGeneral Instruction F), do not leave anyapplicable lines blank or attach any other formsor schedules instead of entering the requiredinformation on the appropriate line on Form990 or Form 990-EZ.Assembling Form 990 or Form 990-EZ.Before filing the Form 990, or Form 990-EZ,assemble the package of forms andattachments in the following order:q Form 990 or Form 990-EZq Schedule A (Form 990). The requirement toattach Schedule A (Form 990) applies to ALLsection 501(c)(3) organizations and ALLsection 4947(a)(1) nonexempt charitable truststhat file Form 990 or Form 990-EZ.q

Attachments to Form 990 or Form 990-EZq Attachments to Schedule A (Form 990)Attachments. Use the schedules on theofficial form unless you need more space. Ifyou use attachments, they must: 1. Show the form number and tax year; 2. Show the organization's name and EIN; 3. Identify clearly the Part or line(s) to whichthe attachments relate; 4. Include the information required by theform and use the same format as the form; 5. Follow the same Part and line sequenceas the form; and 6. Be on the same size paper as the form.



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Specific Instructions for Form990

Note: See also the General Instructions thatapply to both the Form 990 and Form 990-EZ.

Completing the Heading of Form 990

The instructions that follow are keyed to itemsin the heading for Form 990.

Item AAccounting period

Use the 1997 Form 990 to report on a calendaryear accounting period beginning January 1,1997, and ending December 31, 1997.

Use the 1997 Form 990 also to report on anaccounting period other than a calendar year(either a fiscal year that began in 1997 or ashort period (less than 12 months) that beganin 1997). You must show the month and day in1997 that your fiscal year began, or the shortperiod began. You must also show the day,month, and year your fiscal year, or shortperiod, ended. See General Instruction G.

Item BCheckboxes

Change of address and Initial return. Checkthe appropriate box if the organization changedits address since it filed its previous return, orif this is the organization's initial return.Final return and Amended return. Check theappropriate box if this is a final return, or anamended return. See the instructions for line79 if the final return is because of theliquidation of a corporation or termination of atrust. If amending a return, see GeneralInstruction J.

Item CName and address

If we mailed the organization a Form 990Package with a preaddressed mailing label,please attach the label in the name andaddress space on the return. Using the labelhelps us avoid errors in processing the return.If any information on the label is wrong, drawa line through that part and correct it.

Include the suite, room, or other unit numberafter the street address. If the Post Office doesnot deliver mail to the street address and theorganization has a P.O. box, show the boxnumber instead of the street address.

Enter information in the following order: city,province or state, and the name of the country.Follow the foreign country's practice in placingthe postal code in the address. Please do notabbreviate the country name.

If a change in address occurs after the returnis filed, use Form 8822 to notify the IRS of thenew address.

Item DEmployer identification number

The organization should have only one Federalemployer identification number (EIN). If it hasmore than one and has not been advised whichto