RSM Resources

June 2007

Do you know you are required to make your organization's Form 990-T, Exempt Organization Business Income Tax Return, available for public inspection and copying?

It is generally common knowledge that Form 990, Return of Organization Exempt From Income Tax, must be made available for public inspection and copying. However, the Pension Protection Act of 2006 extended these requirements, with limited exceptions, to an organization's Form 990-T, Exempt Organization Business Income Tax Return, filed after August 17, 2006. An exact copy of the Form 990-T, including all schedules, attachments and supporting documents, that is filed with the IRS, must be made available for inspection and copying.

The IRS recently issued Notice 2007-45 (See the Notice at the IRS website), providing interim guidance on the requirement that exempt organizations make available for public inspection a copy of Form 990-T. Form 990-T, filed by exempt organizations to report and pay tax on their unrelated business income, must be made available during regular business hours at the principal office of the organization; and at any regional or district office with three or more employees. Copies of the Form 990-T must be made available to individuals without charge, except for a reasonable fee for reproduction and mailing.

Organizations that make their Form 990-T "widely available" do not need to comply with an individual's request for a copy of the return, although they need to make the return available for public inspection. The "widely available" exception requires that the Form 990-T be posted in a format that exactly reproduces the image of the return as it was originally filed with the IRS, including all schedules, attachments and supporting documents. You can accomplish this by posting your organization's Form 990-T in PDF format on your website.

Churches, state colleges and universities recognized as exempt under section 501(c)(3), and other tax-exempt organizations that may not be required to file Form 990, must also comply with the Form 990-T public inspection and copying requirements. Exempt organizations, however, that file Form 990-T solely to request a refund of the federal telephone excise tax are not required to make the form available for public inspection and copying.

If an exempt organization fails to comply with the public inspection or copying requirements of its Form 990-T, the person or persons whose duty it is to allow inspection or copying of the return (e.g., any officer, director, employee, or other individual assigned such duties) may be subject to a $20 per-day penalty for each day during which the failure continues, not to exceed $10,000 for all persons with regard to any one return. Additional penalties may apply for willful failure to comply and willfully furnishing fraudulent or false information.

Authors: John Romano is a managing director based in RSM McGladrey's Davenport office and works exclusively with tax-exempt clients across the country. Chris Hendricks is a tax associate in RSM McGladrey's Davenport office and also works with tax-exempt clients. If you have any questions regarding the information in this article, please contact Romano at 563.888.4155, or john.romano@rsmi.com, or contact Hendricks at 563.888.4142 or chris.hendricks@rsmi.com.