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The New York Times
I.R.S. Seeks More
Charity Transparency
By STEPHANIE STROM,
nytimes on the Web, June 15, 2007
The Internal Revenue Service
yesterday proposed a vast overhaul of the main tax form for charities, an effort
to make it easier for the I.R.S. and the public to tell how much nonprofit
groups are paying their executives and how much of their money goes toward
fund-raising.
The proposed changes, to Form 990, also include separate schedules to help
determine how much nonprofit hospitals actually spend on charity care and to
provide more information about gifts of goods and services to charities.
Lois G. Lerner, director of the tax-exempt division of the I.R.S., said that
although the revenue service had tinkered with the form from time to time to
accommodate changes in laws and regulations, the last major revamping of it was
more than 25 years ago.
“In my view,” Ms. Lerner said, “this is probably the biggest thing the
tax-exempt division has done in the last quarter-century.”
“We now have large organizations that look like for-profit organizations, and
many types of organizations doing business that weren’t around 25 years ago,”
she said. “While the sector has changed, the form has pretty much stayed
the same.”
Max Baucus, the Montana Democrat who heads the Senate Finance Committee, said:
“This new form will help the public and the I.R.S. assess whether tax-exempt
organizations are staying true to the reasons they were granted exempt status in
the first place. We must be assured that the public’s donations are used
appropriately.”
Nonprofit groups and their legal advisers have been eagerly awaiting the new
form, which is described on the I.R.S. site at irs.gov/charities
/article/0,,id=171216,00.html. They greeted its debut with guarded
optimism.
“Increased transparency is critical to maintaining the public trust on which
nonprofit organizations depend to do their work,” Diana Aviv, president of
Independent Sector, a coalition of nonprofits, said in a statement.
Ms. Aviv said her organization would be examining the new form with an eye
toward making recommendations that will strengthen it. Nonprofits and
others, including the general public, can comment on it through Sept. 14.
Ms. Lerner said the goal was to have a final form ready in time for charities to
use it to report for 2008.
Trent Stamp, president of Charity Navigator, an online service that uses
information reported on the form to evaluate charities for donors, said he
thought the draft was a good first step. But he said Ms. Lerner’s emphasis
on ensuring that the revised form did not impose additional burdens on charities
disturbed him. Ms. Lerner said, for instance, that while the number of
schedules associated with the form would increase to 15 from 2, most charities
would need to fill out only three of them. Asked whether charities would
be required to supply more information on the form, she replied that they would
be providing “better information.”
“From the get-go,” Mr. Stamp said, “this has been a political exercise designed
to appease all constituencies. She said the form would enhance
transparency and reduce the burden on the filing organizations, but those things
are mutually exclusive. Greater transparency will mean more work for
charities, no doubt about it.”
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