IRS Issues Final Form 990 Regulations Clarifying Compensation Reporting & Eliminating Advance Ruling Process

The Internal Revenue Service and Department of the Treasury issued final regulations relating to the annual Form 990.  Little changed from the proposed and temporary regulations issued previously, the final regulations eliminate the “advance ruling” process that used to require section 501(c)(3) organizations seeking to avoid private foundation status based on public support to submit proof of that support after five taxable years of existence and to receive an IRS letter confirming that status at that time.  Now newly formed organizations simply need to report their public support information on the Form 990 each year (assuming they are required to file it).  They also clarify (in § 1.6033-2) that compensation paid to officers, directors, trustees, key employees, highly compensated employees, and independent contractors should be reported on a calendar year basis. 

LHM