The Updated 2020 Form 990
The 2020 Form 990 has various minor changes to both the form and instructions. Listed below are some of the key changes you should be aware of this filing season:
1. Exempt organizations are required to electronically file Form 990/990-EZ/990-T and 990-PF for tax years beginning on or after July 2, 2019. This means calendar year organizations will need to electronically file their 990 for the 2020 tax year.
2. Part VII Section A and Schedule J report the amount of compensation on Box 1 of Form 1099-NEC rather than reporting the compensation from 1099-MISC box 6 or 7.
3. Clarification of Loan Amounts Forgiven under the PPP
A. Part VII Line 1e – report the loan amounts forgiven during the year under the Paycheck Protection Program as a contribution from a governmental unit rather than program service revenue or miscellaneous income.
B. Schedule A Part II and Part III – consistent with reporting forgiven PPP loans as contributions from a governmental unit, the public support test should be treated as contributions from the general public (not subject to the 2% limitation). This applies to both Section 170(b)(1)(A)(vi) and Section 509(a)(2) organizations.
4. Schedule B Form and Instructions clarify that only Section 501(c)(3) and Section 527 organizations are required to disclose the name and addresses of its contributors. Other tax-exempt organizations who are required to complete Schedule B are not required to disclose the name and addresses.
5. Schedule H Part V clarifies that if a tax-exempt hospital used the relief under IRS Notice 2020-56 to extend the deadline of conducting both a Community Health Needs Assessment (CHNA) and to adopt its implementation strategy to December 31, 2020, the CHNA will be treated as having been completed by the original due date.
The Updated 2020 Form 990-PF
1. Exempt organizations are required to electronically file Form 990/990-EZ/990-T and 990-PF for tax years beginning on or after July 2, 2019. This means calendar year organizations will need to electronically file their 990 for the 2020 tax year.
2. Part V Qualification Under Section 4940(e) for Reduced Tax Rate on Net Investment Income HAS BEEN REPEALED. The Taxpayer Certainty and Disaster Tax Relief Act repealed the 1% or 2% excise tax on net investment income and instituted a flat 1.39%. As a result, Part V is no longer applicable. The tax rate for Part VI has been changed to 1.39%. For Part XII, the 1% reduced tax rate adjustment to qualifying distributions for private foundations is no longer applicable.
3. Clarification of Loan Amounts Forgiven under the PPP – any PPP loan amounts that were forgiven during the year are treated as contributions received from a governmental unit.
For questions or guidance related to the updated Form 990, contact VonLehman Nonprofit Tax Specialist, Bryan Pautsch, at bpautsch@vlcpa.com or 800.887.0437.
