October 2007

Changes Coming to Form 990 Executive Compensation Reporting

1 min

An article authored by Venable partner Patricia McDermott on the impending changes to Form 990 executive compensation reporting appears in the October 2007 issue of Associations Now.

The IRS called Form 990 "the primary tax compliance tool for tax-exempt organizations," when it unveiled changes to the form last June in an effort to increase the level of transparency in filings by tax-exempt organizations.

Compared to the existing Form 990, the redesigned form requires more information on the core form with respect to the compensation of officers, directors, and key employees, but uses a simpler measure of compensation, referred to as “reportable” compensation. In the case of an employee, reportable compensation means Medicare wages reported on Form W-2. In the case of other service providers, such as directors, reportable compensation means non-employee compensation reported on Form 1099-MISC.

Based on certain triggers, an organization might also be required to file a new Schedule J, showing additional detail on both taxable and nontaxable compensation. Schedule J must be filed, for example, if an executive has more than $150,000 reportable compensation or $250,000 total compensation, or if any person listed on the core form has compensation from a source other than the organization or a related organization.