us internal revenue service: i990-ez--1999

8/14/2019 US Internal Revenue Service: i990-ez--1999

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1999 Department of the TreasuryInternal Revenue ServiceInstructions 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 in General Instruction H.

(other than private foundations) on disclosingtheir exemption application and their three mostrecent annual information returns to the public.See General Instruction M.

See the instruction under Phone Help forinformation on the new toll-free telephoneservice for answering questions on the Form990 or Form 990-EZ.

Photographs of MissingChildrenThe Internal Revenue Service is a proudpartner with the National Center for Missingand Exploited Children. Photographs ofmissing children selected by the Center mayappear in instructions on pages that wouldotherwise be blank. You can help bring thesechildren home by looking at the photographsand calling 1-800-THE-LOST (1-800-843-5678)if you recognize a child.

Phone HelpIf you have questions and/or need helpcompleting Form 900 or Form 990-EZ, pleasecall 1-877-829-5500. This toll-free telephoneservice is available Monday through Fridayfrom 8:00 a.m. to 9:30 p.m. Eastern time.

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 ofcontributors) 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. 16 hr., 48 min. 21 hr., 55 min. 48 min.

990-EZ 28 hr., 28 min. 10 hr., 24 min. 12 hr., 16 min. 16 min.

Schedule A (Form 990) 50 hr., 13 min. 9 hr., 26 min. 10 hr., 40 min. 0

Changes To NoteFinal regulations under Code section 6104(d)provide guidance to exempt organizations

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

Contents Page

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

Photographs of Missing Children ..... 1 N Disclosures Regarding CertainInformation and Services Furnished. 11 Phone Help....................................... 1

O Disclosures Regarding CertainTransactions and Relationships ....... 11

Purpose of Form............................... 1

General Instructions.......................... 2P Taxes on Excess Benefit

Transactions ..................................... 11A Who Must File................................... 2

B Organizations Not Required To File. 2 Q Erroneous Backup Withholding ........ 13C Exempt Organization Reference

Chart ................................................. 3R Group Return .................................... 13

S Organizations in Foreign Countriesand U.S. Possessions ...................... 14D Forms and Publications To File or

Use .................................................... 3T Public Interest Law Firms................. 14

E Use of Form 990, or Form 990-EZ,

To Satisfy State ReportingRequirements .................................... 4 U Requirements for a ProperlyCompleted Form 990 or Form990-EZ .............................................. 14

F Other Forms as Partial Substitutesfor Form 990 or Form 990-EZ.......... 4 Specific Instructions for Form 990.... 15

Specific Instructions for Form990-EZ .............................................. 32

G Accounting Periods and Methods..... 5

H When and Where To File ................. 5 Index ................................................. 39

I Extension of Time To File ................ 5

J Amended Return/Final Return.......... 6

K Penalties ........................................... 6

L Contributions ..................................... 6

Cat. No. 22386X


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General Instructions

Note: The General Instructions apply to bothForm 990 and Form 990-EZ, Short FormReturn of Organization Exempt From IncomeTax. See also the Specific Instructions for eachof these forms.

A. Who Must File

Filing tests

If the organization does not meet any of theexceptions 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.

Disregarded Entities

A disregarded entity, as described inRegulations sections 301.7701-1 through301.7701-3, is treated as a branch or divisionof its parent organization for Federal taxpurposes. Therefore, financial and otherinformation applicable to a disregarded entitymust be reported as the parent organization'sinformation.

Section 4947(a)(1) nonexempt charitabletrusts

Any nonexempt charitable trust (described in

section 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 not

more 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 noreturn 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 the organizationterminates or undergoes a substantialcontraction, see the instructions for line 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 at1-877-829-5500. Exempt organizations thatstop 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 are

described 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 insection 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 of

Employee Benefit Plan.11. A religious or apostolic organization

described 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 for1999, Organization M reported $50,000 as total

revenue. 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 as agent.If a local chapter of a section 501(c)(8) fraternalorganization collects insurance premiums forits parent lodge and merely sends thosepremiums to the parent without asserting anyright to use the funds or otherwise deriving anybenefit from collecting them, the local chaptershould not include the premiums in its grossreceipts. The parent lodge should report theminstead. The same treatment applies in other

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


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situations in which one organization collectsfunds merely as an agent 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;

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

Note: To determine how the instructions forForm 990 and Form 990-EZ apply to you, youmust know the Code section under which youare exempt.

D. Forms and Publications To File orUse

Personal computer. You can access theIRS's Internet Web Site 24 hours a day, 7 daysa week at www.irs.gov to:q Download forms, instructions, andpublications.q See answers to frequently asked taxquestions.q Search publications on-line by topic orkeyword.q Send us comments or request help viae-mail.q Sign up to receive local and national taxnews by e-mail.

You can also reach us using file transferprotocol at ftp.irs.gov.CD-ROM. Order Pub. 1796, Federal TaxProducts on CD-ROM, and get:q Current year forms, instructions, andpublications.q Prior year forms, instructions, andpublications.q Popular forms that may be filled inelectronically, printed out for submission, andsaved for recordkeeping.q The Internal Revenue Bulletin.

Buy the CD-ROM on the Internet atwww.irs.gov/cdorders from the National

Technical Information Service (NTIS) for $16(plus a $5 handling fee) and save 30%, or call1-877-CDFORMS (1-877-233-6767) toll free tobuy the CD-ROM for $23 (plus a $5 handlingfee).By phone and in person. You can orderforms and publications 24 hours a day, 7 daysa week, by calling 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 private

foundation (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 Penalty

may 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 not

apply 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 itsinstructions; 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 fileForm 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 receipts

discussion 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 1098 series. Information returns toreport student loan interest and tuition andrelated expenses received.

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 account, original issue discount,distributions from pensions, annuities,retirement or profit-sharing plans, IRAs,

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' BeneficiaryAssociations ........................................... 501(c)(9)

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

Benevolent Life Insurance Associations,Mutual Ditch or Irrigation Companies,Mutual or Cooperative Telephone

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) Item

A Tax year (fiscal year or short period, ifapplicable)

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

B Applicable checkboxesEmployee Funded Pension Trusts C Name and address

(created before 6/25/59)......................... 501(c)(18)D Employer identification number (EIN)G Section 4947(a)(1) nonexempt charitable trust

box. (Item I in Form 990-EZ)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 Insurance andReinsurance Organizations .................... 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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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 Time

To 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 excess

benefit transactions.

Form 5500. Annual Return/Report ofEmployee Benefit Plan. Employers whomaintain pension, profit-sharing, or otherfunded deferred compensation plans aregenerally required to file the Form 5500. Thisrequirement applies whether or not the plan isqualified under the Internal Revenue Code andwhether or not a deduction is claimed for thecurrent tax year.

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; and

Information Return for Small Tax-ExemptGovernmental Bond Issues, Leases, andInstallment Sales, respectively.

Publication 17. Your Federal Income Tax.

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 946. How To Depreciate Property.

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 or

part 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, suchas 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, or

other charitable organizations; (b) conductingprograms; (c) having employees within thatjurisdiction; (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 be

submitted 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 completedby following the applicable Form 990, or Form990-EZ, instructions or supplemental stateinstructions. If so, the organization may beasked to provide the missing information or to

submit 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, 1998),supplemented by Standards of Accounting andFinancial Reporting for Voluntary Health andWelfare Organizations(Washington, DC,National Health Council, Inc., 1998, 4thedition).

Donated services and facilities

Even though reporting donated services andfacilities as items of revenue and expense is

called for in certain circumstances by the twopublications 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 990and 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 an

amended 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 bereported 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 IRS

may differ from that made available by thestates. See the Caution in General InstructionL under Schedule of contributors.

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 990or 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 Annual



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Report, 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.

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

An employee benefit plan may be able tosubstitute Form 5500 for part of Form 990 or

Form 990-EZ. The substitution can be made ifthe organization filing Form 990, or Form990-EZ, and the plan filing Form 5500, meetall the following 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 andForm 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, orForm 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 periods

Calendar year. Use the 1999 Form 990, orForm 990-EZ, to report on the 1999 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 1999 Form 990, or Form 990-EZ, to reporton the organization's fiscal year that began in1999 and ended 12 months later. A fiscal yearaccounting period should normally coincidewith the natural operating cycle of theorganization. Be certain to indicate in theheading of Form 990, or Form 990-EZ, the datethe organization's fiscal year began in 1999and the date the fiscal year ended in the year2000.Short period. Use the 1999 Form 990, orForm 990-EZ, to report on a short accounting

period (less than 12 months) that began in1999 and ended November 30, 2000, or earlier.

Because the Form 990, or Form 990-EZ, forthe year 2000 may not be distributed until theyear 2001, use the prior year form, the 1999Form 990, or Form 990-EZ, to report on a shortaccounting period that begins in the year 2000and ends November 30, 2000, or earlier. Strikethe 1999 year on the form and show the year2000.

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 accountingperiod within the 10-calendar-year period thatincludes the beginning of the short period, and

it 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 tax

purposes 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 with

the books of account, unless the way one ormore items are reported on the state returnconflicts 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 acceptablefor 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 15th

day 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 Center, Ogden, UT 84201-0027.Private delivery services. You can usecertain private delivery services designated by

the IRS to meet the timely mailing as timelyfiling/paying rule for tax returns and payments.The most recent list of designated privatedelivery services was published by the IRS inAugust 1999. The list includes only thefollowing: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 DayAir, UPS 2nd Day Air A.M.

The private delivery service can tell you howto 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. If more time is needed, file asecond Form 2758 for an additional 90-dayextension. This will be granted only in casesof undue hardship. In no event will anextension of more than 6 months be granted toany domestic organization.



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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 beingamended. 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 the return.

The organization may file an amendedreturn at any time to change or add to the

information 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.

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 organization

files an incomplete return or furnishes incorrectinformation. 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 was

due to reasonable cause. If more than oneperson is responsible, they are jointly andindividually liable for the penalty.

There are also penaltiesfines andimprisonmentfor 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. Contributions

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.

TIP

Do not put the names of thecontributors on the Form 990, the Form990-EZ, or the Schedule A (Form 990).

List the contributors on a separate schedule.If no one contributed $5,000 or more, the

organization does not need to attach aschedule.

On the schedule:1. Total a contributor's gifts of $1,000 or

more 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, andc. Total amount given (unless the employee

gave enough to be listed separately).

5. Report on property with readilydeterminable market value (i.e., marketquotations for securities) by:

a. Describing the property, andb. Listing its fair market valueestimate if

market 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 the

above criteria should be included in theschedule of contributors for the year of thechange. See General Instruction G.

If an organization meets either Exception 1or 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 of Form 990 that theorganization received during the year (line 1 ofForm 990-EZ).

Exception 2. An organization described insection 501(c)(7), (8), or (10) that receivedcontributions 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 $1,000

or 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 of Form

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

must be in an easily recognizable formatwhether the solicitation is made in written orprinted form, by television or radio, or bytelephone. This provision applies only to thoseorganizations whose annual gross receipts arenormally more than $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.

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 fundraisingmaterials used by theoutside fundraisers.



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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 bonafide bid and asked prices) on the contributiondate. See Regulations section 20.2031-2 of theEstate Tax Regulations for rules to determinethe value of contributed stocks and bonds.When market value cannot be readilydetermined, use an appraised or estimatedvalue.

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 geta 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) shouldbe 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 written2. Be contemporaneous3. State the amount of any cash it received4. State:a. Whether the organization gave the donor

any 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 the

organization:a. Received (no valuation needed)b. Gave (good faith estimate needed).

Exception. An organization need not make agood faith estimate of a quid pro quocontribution 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 partners.Disclosure 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's

disclosure statement must:1. Be written2. Estimate in good faith the organization's

goods 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 value2. Certain membership benefits, or3. 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 a paymentof $36.00 or more to a charity and receivesonly token items in return, the items haveinsubstantial value if they:q Bear the charity's name or logo, andq Have an aggregate cost to the charity of

$7.20 or less (low-cost article amount ofsection 513(h)(2)).Fair market value basis. If a taxpayer

makes 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 $72,whichever is less, the benefits received haveinsubstantial value in determining thetaxpayer's contribution.

The dollar amounts given above areapplicable to tax year 1999. They are adjustedannually for inflation.

When a donee organization provides adonor only with goods or services havinginsubstantial value under Rev. Proc. 98-61,1998-2 C.B. 811 (and any successordocuments), the contemporaneous written

acknowledgment 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 ataxpayer 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, per

person,b. Within the low-cost article limitation.

Examples.1. E offers a basic membership benefits

package for $75. The package gives membersthe right to buy tickets in advance, free parking,and a gift shop discount of 10%. E's $150preferred membership benefits package alsoincludes a $20 poster. Both the basic andpreferred membership packages are for a12-month period and include about 50productions. E offers F, a patron of the arts,the preferred membership benefits in return fora payment of $150 or more. F accepts thepreferred membership benefits package for

Donor's contribution $300. E's written 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. Nonmemberscan 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 faithestimate is not needed.

Example. Museum J offers a basicmembership 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 isoffered in both benefit packages and the valueof the tee 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'semployees 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 of thedonor: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 theamount 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 the

contributions 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:

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

Equals: Donor's deductible charitablecontribution.



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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 purchasetickets to athletic events. The right to

purchase tickets for an athletic event is valuedat 20% of the payment.Example. When a taxpayer pays $312.50

for the right to purchase tickets for an athleticevent, the right is valued at $62.50. Theremaining $250 is a charitable contribution thatthe taxpayer must substantiate.

Substantiation of matched payments. Ifa 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 thetaxpayer's payment and not in consideration forthe matching payment.

Disclosure statement. An organizationmust provide a written disclosure statement to

donors 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 disclosurestatement requirement in a timely mannerbecause of the penalties involved.

Quid pro quo contribution. A "quid pro quocontribution" is a payment that is given both asa contribution and as a payment for goods orservices provided by the donee organization.

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 organization mayuse any reasonable method in making a goodfaith estimate of the value of goods or services

provided by an organization in consideration fora taxpayer's payment to that organization. Agood faith estimate of the value of goods orservices that are not generally available in acommercial transaction may be determined byreference to the fair market value of similar orcomparable goods or services. Goods orservices may be similar or comparable eventhough they do not have the unique qualitiesof the goods or services that are being valued.

Goods or services. Goods or servicesmean:q Cash,q

Property,q Services,q Benefits, andq Privileges.

In consideration for. A donee organizationprovides goods or services in consideration fora taxpayer's payment if, at the time thetaxpayer makes the payment to the doneeorganization, the taxpayer receives, or expectsto receive, goods or services in exchange forthat 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 minimistangible benefits, such as wine,provided in connection with a religiousceremony.

Distributing organization as donee. Anorganization described in section 170(c), or anorganization 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 toone or more organizations described in section170(c).

Penalties. A charity that knowingly providesa false substantiation acknowledgment to adonor may be subject to the penalties undersection 6701 for aiding and abetting anunderstatement 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. The

charity 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 for

exemption 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 organization

Treasury Decision 8818, issued on April 8,1999, contains final regulations regardingpublic disclosure requirements under Codesection 6104(d), as amended by the Tax andTrade Relief Extension Act of 1998. These

regulations became effective June 8, 1999.Regulations sections 301.6104(d)-2 through

301.6104(d)-5 provide a tax-exemptorganization, other than a private foundation,with the guidance needed for making theorganization's application for tax exemptionand annual returns available for publicinspection and for fulfilling requests for copiesof these forms.



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Public inspection and distribution ofapplications for tax exemption and annualinformation returns of tax-exemptorganizations (other than privatefoundations). A tax-exempt organization,other than a private foundation, must:q make its application for recognition ofexemption and its annual information returnsavailable for public inspection without chargeat its principal, regional and district officesduring regular business hours.q make each annual information returnavailable for a period of 3 years beginning onthe date the return is required to be filed(determined with regard to any extension oftime for filing) or is actually filed, whichever islater.q provide a copy without charge, other than areasonable fee for reproduction and actualpostage costs, of all or any part of anyapplication or return required to be madeavailable for public inspection to any individualwho makes a request for such copy in personor in writing (except as provided in Regulationssections 301.6104(d)-4 and -5).Definitions.

Tax-exempt organizationis anyorganization that is described in section 501(c)or section 501(d) and is exempt from taxationunder section 501(a).

Private foundationmeans a private

foundation as defined in section 509(a).Application for tax exemptionincludes(except as described later):q any prescribed application form (such asForm 1023 or Form 1024),q all documents and statements the IRSrequires an applicant to file with the form,q any statement or other supporting documentsubmitted in support of the application, andq any letter or other document issued by theIRS concerning the application.

Application for tax exemption does notinclude:q any application for tax exemption filed beforeJuly 15, 1987, unless the organization filing theapplication had a copy of the application onJuly 15, 1987; orq any material that is not available for publicinspection under section 6104.

Annual information returnincludes:q an exact copy of the Form 990, Schedule A(Form 990), and Form 990-EZ filed by atax-exempt organization as required by section6033.q any amended return the organization fileswith the IRS after the date the original return isfiled.

The copy must include all informationfurnished to the IRS on Form 990, or Form990-EZ, as well as all schedules, attachmentsand supporting documents, except for thename and address of any contributor to theorganization.

Annual returns more than 3 years old.An annual information return does not include

any return after the expiration of 3 years fromthe date the return is required to be filed(including any extension of time that has beengranted for filing such return) or is actually filed,whichever is later.

If an organization files an amended return,however, the amended return must be madeavailable for a period of 3 years beginning onthe date it is filed with the IRS.

Local or subordinate organizations. Forrules relating to annual information returns oflocal or subordinate organizations, seeRegulations section 301.6104(d)-3(f)(2).

Regional or district offices. A regional ordistrict office is any office of a tax-exemptorganization, other than its principal office, thathas paid employees, whether part-time orfull-time, whose aggregate number of paidhours a week are normally at least 120.

A site is not considered a regional or districtoffice, however, if

The only services provided at the site furtherexempt purposes (such as day care, healthcare or scientific or medical research); and

The site does not serve as an office formanagement staff, other than managers whoare involved solely in managing the exemptfunction activities at the site.

Special rules relating to public inspection.

Permissible conditions on publicinspection. A tax-exempt organization may have an employee present in the roomduring an inspection. must allow the individual conducting theinspection to take notes freely during theinspection. must allow the individual to photocopy thedocument at no charge, if the individualprovides photocopying equipment at the placeof inspection.

Organizations that do not maintainpermanent offices. A tax-exempt organization

with no permanent office must make its application for tax exemptionand its annual information returns available forinspection at a reasonable location of itschoice. must permit public inspection within areasonable amount of time after receiving arequest for inspection (normally not more than2 weeks) and at a reasonable time of day. may mail, within 2 weeks of receiving therequest, a copy of its application for taxexemption and annual information returns tothe requester instead of allowing an inspection. may charge the requester for copying andactual postage costs only if the requesterconsents to the charge.

However, an organization that has apermanent office, but has no office hours, or

very limited hours during certain times of theyear, must make its documents availableduring those periods when office hours arelimited, or not available, as though it were anorganization without a permanent office.

Special rules relating to copies.

Time and place for providing copies inresponse to requests made in-person. Atax-exempt organization must provide copiesof the documents it is required to provide undersection 6104(d) in response to a request madein person at its principal, regional and districtoffices during regular business hours.

Except for unusual circumstances (seebelow), an organization must provide suchcopies to a requester on the day the request is

made.Unusual circumstances. In the case of an

in-person request, where unusualcircumstances exist so that fulfilling the requeston the same business day causes anunreasonable burden to the tax-exemptorganization, the organization must provide thecopies no later than the next business dayfollowing the day that the unusualcircumstances cease to exist or the 5thbusiness day after the date of the request,whichever occurs first.

Unusual circumstances include:q receipt of a volume of requests that exceedsthe organization's daily capacity to makecopies;q requests received shortly before the end ofregular business hours that require anextensive amount of copying; orq requests received on a day when theorganization's managerial staff capable offulfilling the request is conducting specialduties, such as student registration or attendingan off-site meeting or convention, rather thanits regular administrative duties.

Agents for providing copies. For rulesrelating to use of agents to provide copies, seeRegulations sections 301.6104(d)-3(d)(1) and(2).

Request for copies in writing. Atax-exempt organization must honor a writtenrequest for a copy of documents (or therequested part) that the organization is requiredto provide under section 6104(d) if the request:

1. Is addressed to, and delivered by mail,electronic mail, facsimile, or a private deliveryservice, as defined in section 7502(f), to aprincipal, regional, or district office of theorganization; and

2. Sets forth the address to which the copyof the documents should be sent.

Time and manner of fulfilling written

requests.

IF the tax-exemptorganization

THEN the organization

Receives a writtenrequest for a copy,

Must mail the copy of therequested documents (orthe requested parts)within 30 days from thedate it receives therequest.

Mails the copy of therequested document,

Is deemed to haveprovided the copy on thepostmark date or privatedelivery mark (if sent bycertified or registeredmail, the date ofregistration or the date ofthe postmark on the

sender's receipt).Requires payment inadvance,

Is required to provide thecopies within 30 daysfrom the date it receivespayment.

Receives a request orpayment by mail,

Is deemed to havereceived it 7 days afterthe date of the postmark,absent evidence to thecontrary.

Receives a requesttransmitted by electronicmail or facsimile,

Is deemed to havereceived it the day therequest is transmittedsuccessfully.

Receives a writtenrequest without paymentor with an insufficientpayment, when payment

in advance is required,

Must notify the requesterof the prepayment policyand the amount duewithin 7 days from the

date of the request'sreceipt.

Receives consent from anindividual making arequest,

May provide a copy of therequested documentexclusively by electronicmail (the material isprovided on the date theorganization successfullytransmits the electronicmail).



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Request for a copy of parts of document.A tax-exempt organization must fulfill a requestfor a copy of the organization's entireapplication for tax exemption or annualinformation return or any specific part orschedule of its application or return. A requestfor a copy of less than the entire application orless than the entire return must specificallyidentify the requested part or schedule.

Fees for copies. A tax-exempt organizationmay charge a reasonable fee for providingcopies. A fee is reasonable only if it is no morethan the per-page copying fee charged by theIRS for providing copies to a requester, plus

no more than the actual postage costs incurredby the organization to provide the copies. SeeRegulations section 601.702(f)(5)(iv)(B)). Thecurrent copying fee is $1.00 for the first pageand $.15 for each subsequent page.

Before the organization provides thedocuments, it may require that the individualrequesting copies of the documents pay thefee. If the organization has provided anindividual making a request with notice of thefee, and the individual does not pay the feewithin 30 days, or if the individual pays the feeby check and the check does not clear upondeposit, the organization may disregard therequest.

Form of payment(A) Request made inperson. If a tax-exempt organization chargesa fee for copying, it must accept payment by

cash and money order for requests made inperson. The organization may accept otherforms of payment, such as credit cards andpersonal checks.

(B) Request made in writing. If atax-exempt organization charges a fee forcopying and postage, it must accept paymentby certified check, money order, and eitherpersonal check or credit card for requestsmade in writing. The organization may acceptother forms of payment.

Avoidance of unexpected fees. Where atax-exempt organization does not requireprepayment and a requester does not enclosepayment with a request, an organization mustreceive consent from a requester beforeproviding copies for which the fee charged forcopying and postage exceeds $20.

Documents to be provided by regionaland district offices. Except as otherwiseprovided, a regional or district office of atax-exempt organization must satisfy the samerules as the principal office with respect toallowing public inspection and providing copiesof its application for tax exemption and annualinformation returns.

A regional or district office is not required,however, to make its annual information returnavailable for inspection or to provide copiesuntil 30 days after the date the return isrequired to be filed (including any extension oftime that is granted for filing such return) or isactually filed, whichever is later.

Documents to be provided by local andsubordinate organizations.Applications for tax exemption. Except as

otherwise provided, a tax-exempt organizationthat did not file its own application for taxexemption (because it is a local or subordinateorganization covered by a group exemptionletter) must, upon request, make available forpublic inspection, or provide copies of, theapplication submitted to the IRS by the centralor parent organization to obtain the groupexemption letter and those documents whichwere submitted by the central or parentorganization to include the local or subordinateorganization in the group exemption letter.

However, if the central or parentorganization submits to the IRS a list ordirectory of local or subordinate organizations

covered by the group exemption letter, the localor subordinate organization is required toprovide only the application for the groupexemption ruling and the pages of the list ordirectory that specifically refer to it. The localor subordinate organization must permit publicinspection, or comply with a request for copiesmade in person, within a reasonable amountof time (normally not more than 2 weeks) afterreceiving a request made in person for publicinspection or copies and at a reasonable timeof day. See Regulations section301.6104(d)-3(f) for further information.

Annual information returns. A local or

subordinate organization that does not file itsown annual information return (because it isaffiliated with a central or parent organizationthat files a group return) must, upon request,make available for public inspection, or providecopies of, the group returns filed by the centralor parent organization.

However, if the group return includesseparate schedules with respect to each localor subordinate organization included in thegroup return, the local or subordinateorganization receiving the request may omitany schedules relating only to otherorganizations included in the group return.

The local or subordinate organization mustpermit public inspection, or comply with arequest for copies made in person, within areasonable amount of time (normally not more

than 2 weeks) after receiving a request madein person for public inspection or copies andat a reasonable time of day.

In a case where the requester seeksinspection, the local or subordinateorganization may mail a copy of the applicabledocuments to the requester within the sametime period instead of allowing an inspection.In such a case, the organization may chargethe requester for copying and actual postagecosts only if the requester consents to thecharge.

If the local or subordinate organizationreceives a written request for a copy of itsannual information return, it must fulfill therequest by providing a copy of the group returnin the time and manner specified in theparagraph above, Request for copies in

writing.The requester has the option of requesting

from the central or parent organization, at itsprincipal office, inspection or copies of groupreturns filed by the central or parentorganization. The central or parent organizationmust fulfill such requests in the time andmanner specified in the paragraphs, Specialrules relating to public inspection andSpecial rules relating to copies above.

Failure to comply. If an organization failsto comply with the requirements specified inthis paragraph, the penalty provisions ofsections 6652(c)(1)(C), 6652(c)(1)(D), and6685 apply.Making applications and returns widelyavailable. A tax-exempt organization is notrequired to comply with a request for a copy

of its application for tax exemption or an annualinformation return if the organization has madethe requested document widely available (seebelow).

An organization that makes its applicationfor tax exemption and/or annual informationreturn widely available must nevertheless makethe document available for public inspection asrequired under Regulations section301.6104(d)-3(a).

A tax-exempt organization makes itsapplication for tax exemption and/or an annualinformation return widely available if theorganization complies with the Internet postingrequirements and the notice requirementsgiven below.

Internet posting. A tax-exemptorganization can make its application for taxexemption and/or an annual information returnwidely available by posting the document on aWorld Wide Web page that the tax-exemptorganization establishes and maintains or byhaving the document posted, as part of adatabase of similar documents of othertax-exempt organizations, on a World WideWeb page established and maintained byanother entity. The document will beconsidered widely available only if

(A) the World Wide Web page through whichit is available clearly informs readers that the

document is available and provides instructionsfor downloading it;

(B) the document is posted in a format that,when accessed, downloaded, viewed andprinted in hard copy, exactly reproduces theimage of the application for tax exemption orannual information return as it was originallyfiled with the IRS, except for any informationpermitted by statute to be withheld from publicdisclosure; and

(C) any individual with access to the Internetcan access, download, view and print thedocument without special computer hardwareor software required for that format (other thansoftware that is readily available to membersof the public without payment of any fee) andwithout payment of a fee to the tax-exemptorganization or to another entity maintaining

the World Wide Web page.Transition rule. A tax-exempt organization

that posted its application for tax exemption orits annual information returns on a World WideWeb page on or before April 9, 1999, in amanner consistent with regulation projectREG-246250-96 (1997-2 C.B. 627) will betreated as satisfying the requirements ofparagraphs (B) and (C) above until June 8,2000, provided that an individual can access,download, view and print the document withoutpayment of a fee to the tax-exemptorganization or to another entity maintainingthe World Wide Web page.

Reliability and accuracy. In order for thedocument to be widely available through anInternet posting, the entity maintaining theWorld Wide Web page must have procedures

for ensuring the reliability and accuracy of thedocument that it posts on the page and musttake reasonable precautions to preventalteration, destruction or accidental loss of thedocument when posted on its page. In theevent that a posted document is altered,destroyed or lost, the entity must correct orreplace the document.

Notice requirement. If a tax-exemptorganization has made its application for taxexemption and/or an annual information returnwidely available, it must notify any individualrequesting a copy where the documents areavailable (including the address on the WorldWide Web, if applicable). If the request is madein person, the organization must provide suchnotice to the individual immediately. If therequest is made in writing, the notice must be

provided within 7 days of receiving the request.Tax-exempt organization subject toharassment campaign. If the district director(or designee) determines that the organizationis being harassed, a tax-exempt organizationis not required to comply with any request forcopies that it reasonably believes is part of aharassment campaign.

Whether a group of requests constitutes aharassment campaign depends on the relevantfacts and circumstances such as:

A sudden increase in requests; anextraordinary number of requests by formletters or similarly worded correspondence;hostile requests; evidence showing bad faith



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or deterrence of the organization's exemptpurpose; prior provision of the requesteddocuments to the purported harassing group;and a demonstration that the organizationroutinely provides copies of its documents uponrequest.

A tax-exempt organization may disregardany request for copies of all or part of anydocument beyond the first two received withinany 30-day-period or the first four receivedwithin any 1-year-period from the sameindividual or the same address, regardless ofwhether the district director (or designee) hasdetermined that the organization is subject to

a harassment campaign.A tax-exempt organization may apply for a

determination that it is the subject of aharassment campaign and that compliancewith requests that are part of the campaignwould not be in the public interest by submittinga signed application to the district director (ordesignee) for the key district where theorganization's principal office is located.

In addition, the organization may suspendcompliance with any request it reasonablybelieves to be part of the harassment campaignuntil it receives a response to its application fora harassment campaign determination.However, if the district director (or designee)determines that the organization did not havea reasonable basis for requesting adetermination that it was subject to a

harassment campaign or reasonable belief thata request was part of the campaign, the officer,director, trustee, employee, or otherresponsible individual of the organizationremains liable for any penalties for notproviding