August 22, 2003
Ms. Cheryl Chasin
Tax Law Specialist
Internal Revenue Service (T:EO:RA:T:3)
1750 Pennsylvania Avenue, NW
On behalf of the American Institute of Certified Public Accountants (AICPA), I would like to thank you and Midori again for meeting with us on July 16, 2003, to review the schemas for e-filing the Form 990 with Schedules A and B. The Exempt Organization Taxation Technical Resource Panel has completed their "beta test."
We have the following specific comments:
- Occasionally, taxpayers have large detailed schedules to attach to the tax return. "Listings of Contributors" for Schedule B and the "Grants Paid" Schedule may include hundreds, and in some cases thousands, of entries. Taxpayers often prepare this information electronically in a spreadsheet, a word-processing document, or a PDF file. Is there a provision to attach such a schedule to the e-filed Form 990, or must all the data be entered directly? We acknowledge that the Service may not agree; however, we ask that you reconsider accepting documents that have been electronically formatted in the same fashion.
- There is a format for both United States and foreign addresses. However, the phone number blank requires exactly 10 digits. Foreign phone numbers frequently follow a different format. For example, Irish phone numbers have 8 digits, and including the 3-digit country code (necessary for the IRS to contact the filer) also affects the length of a foreign telephone number. Will there be a provision to enter these phone numbers?
- The "Gain/Loss from Sale of Nonpublic Securities" Schedule requires entering the date acquired and the date sold. When the same type of securities are acquired and sold throughout the year, will it be possible to enter "Various" for these dates?
- The "Reason for Non-Private Foundation Status" requires organizations exempt under section 509(a)(3) to provide information about the supported organization, including the reason for the supported organization's Non-Private Foundation Status. The element to enter the line number for the status of the supported organization only allows entry of the strings 5 through 12. However, if the supported organization is exempt under sections 501(c)(4), (5), or (6), and the supported organization meets the section 509(a)(2) test, then the line number should be left blank. Is it possible to enter the name of a supported organization, yet leave the line number blank?
- We suggest that a longer explanation field be used (ExplanationType, 9000 characters, or some other length of more than 1000 vs. ShortExplanationType, 1000 characters) for the following attachment schedules:
- Activities Not Previously Reported Explanation
- Excess Benefit Transaction Statement
- General Explanation Attachment
- Reasonable Cause Explanation
- Program Services Description in Form 990
- On Special Events Schedule, it might be useful to be able to list more than 5 special events; perhaps 10 would be a good limiter.
- Schedule A, part VII, line 5—Sometimes the same explanation applies to more than one subline of Line 51. Will there be the ability to insert multiple applicable lines for the same general explanation? This same question also applies to answers provided in Form 990, Part VIII.
- Form 990-EZ, Primary Exempt Purpose—should permit input greater in length than 100 characters. We frequently use the organization's mission statement or similar statement to indicate primary purpose, and most of these are longer than 100 characters. The 1000 character length would be more appropriate. Note that the Form 990 field permits 1000 characters.
- The numerical field definition for Form 990, Part VII, column (B) appears to permit only positive numbers. Occasionally UBI amounts will be negative. Example: passthrough amounts from partnership investments. This is also true for OtherRevenue on the Form 990 and for OtherInvestmentIncome.
- The numerical field definition for Form 990, Part II, Line 43, appears to permit only positive numbers. There are instances in which a negative number must be used. Example: allocation of overhead from Column (C) to Column (B).
- Form 990, Part IV—occasionally, organizations, especially small ones, will have a negative ending cash balance. While technically this is a liability, it would be good to have the flexibility of being able to enter a negative number for lines 45 and 46, for BOY and EOY comparability.
- Form 990, Part IV-A—Net unrealized losses are frequently, for audited financial statement purposes, included in investment income. Accordingly, it would be useful to be able to enter a negative number on line b(1); the same goes for line b(4), for both Part IV-A and IV-B, and d(2) for both Part IV-A and IV-B. Additionally, is there a way to mark these sections "N/A" if there is no audit. Otherwise, they will just be left blank.
- Form 990, Part V—it would be useful to be able to put in a non-numerical qualifier for number of hours per week devoted to position. We frequently use entries such as "<1," "1+," ".5," "as needed" etc, for hours devoted, especially by unpaid officers and directors. The smaller numbers and non-numerical qualifiers are especially useful for small organizations where even 1 hour a week is an overestimation.
- What is the cause of the Reasonable Cause explanation? We have generally found such things are ignored by the ServiceCenter unless they are submitted in response to a notice.
- The Contractor Compensation Explanation allows for 9000 characters. Why?
- The Depreciation and Depletion schema appears to provide input for asset type and amount only. This doesn't seem to be enough information.
Members of our Exempt Organizations Group have tentatively planned to meet with you in September to discuss additional Form 990 issues. If you have any questions before then, please contact me at (202) 434 –9234.
Lisa A. Winton
cc: Lois Lerner