By The NonProfit Times

The long-rumored reworking for the federal Form 990 has formally begun. The U.S. Department of the Treasury (DoT) announced that the Internal Revenue Service (IRS) plans to revise the Form 990 in an attempt to improve transparency, strengthen tax administration, and provide clearer reporting on certain activities of tax-exempt organizations described in section 501(c)(3) of the Internal Revenue Code.

There will be a special focus on government contracts, government grants, and fiscal sponsorship arrangements. The changes are intended to detect misconduct and hold wrongdoers accountable, according to a statement from the DoT. 

When it comes to government contracts and grants, nonprofits might be required to provide clearer reporting on the sources and specific uses of public funds, although a definition of clearer was not described.

Fiscal sponsorship is an umbrella term for several longstanding and lawful structures through which a tax-exempt organization support charitable projects and initiatives. 

According to the DoT announcement, “recent congressional oversight has raised concerns that some fiscal sponsorship arrangements may be used to obscure who is operating a project, who controls project funds, and how those funds are being used. Increased reporting can help address those concerns and make it harder for rogue organizations to hide behind opaque arrangements.”

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