NEW YORK – Hospital executives have their work cut out for them as they face the prospect of filling out a revamped Form 990 next year.
However, rather than waiting too long, they should begin assessing now what the new Internal Revenue Service form will mean for their organizations.
Generally, the new form will require financial departments – which traditionally have carried the freight in handling new tax form requirements – to work more closely with a variety of departments, said James W. Sowar, Partner of Deloitte Tax LLP.
The form is intended to demonstrate that not-for-profit healthcare organizations are doing enough to merit their tax-exempt status. It poses new requirements for information on governance, community benefits, executive compensation, tax-exempt bonds and other areas.
The IRS recently issued instructions for the 11-page form, which is intended to assess what not-for-profit organizations are doing in terms of community benefit and what they’re paying top executives, among financial aspects.
“The changes made with the 2008 form are the biggest changes the IRS has made to this form in decades,” Sowar said.
The 2008 form, which covers this calendar year, must be submitted by May 15, 2009, unless an organization requests a six-month extension. The new form seeks more governance information, as well as documentation of policies and procedures.
Sowar suggests organizations begin the process of educating board members and other executive management about the scope of the changes in the form and the information that will be needed to fill it out.
“An organization may want to consider doing a ‘mock form’ so they know (what the implications are) if they leave the policies and procedures as they are now,” he said.
For example, one question on the revamped form asks if the organization has a whistleblower policy in place. “You may want to answer ‘yes’ to that, and so you may want to get (a policy) in place,” he said.
Typically, an organization’s CFO or vice president of finance signs tax documents. However, filling out all components of the new form will require input from other departments, such as legal, human resources and fund-raising or development, Sowar said.
“Hospitals are going to have to coordinate across various departments, not just finance,” he said.