By MsSaraKelly [CC BY 2.0], via Wikimedia Commons
January 31, 2017; IRS Newswire

In its IRS Newswire e-newsletter (IR-2017-14) this week, the IRS announced it has added 29 pop-up question icons to the on-screen version of the Form 990-EZ, the annual information return filed by smaller nonprofit organizations. The instructions for the Form 990-EZ have also been updated to reflect the changes.

In announcing the change, nonprofits are advised by the IRS to use the pop-up windows as reminders only, not as a substitute for the instructions (or, presumably, for qualified tax counsel). The new PDF form may be filled out online, then printed out and mailed to the IRS.

Why introduce a new 990-EZ and instructions solely or predominately to add pop-up help icons to the online form?

“We’ve been reviewing the areas of the form where exempt organizations encounter the most trouble,” said IRS Commissioner John Koskinen. “One out of three paper filers has an error on their form. After reviewing these trouble spots, we developed this new option to help groups navigate the form. This common-sense approach is designed to make it easier for exempt organizations to avoid problems up front—and avoid getting a follow-up contact from the IRS.”

Based on our experience reviewing Form 990 returns, we are surprised that errors are found on only a third of paper-filed 990-EZ forms filed with the IRS. Visitors to websites like GuideStar or the National Center for Charitable Statistics (NCCS) at the Urban Institute reviewing Form 990s frequently find forms filed by nonprofits with required fields left blank, required schedules missing or incomplete, or information in one area of the form that conflicts with information reported elsewhere in the return.

With the IRS digitizing the data contained in Form 990 returns, we expect that many nonprofits will be getting the “follow-up contact” letters to which Koskinen refers.—Michael Wyland