2 min read

Form 990 Potential Discrepancy?


Content provided for general information. Talk to your advisor to learn about recent updates or other rules that may apply to your situation.

If you are new to reviewing Form 990s, it can be overwhelming and confusing at times. The form, which is filed by tax-exempt organizations with the Internal Revenue Service (IRS), provides information about the organization's mission, programs, and finances. It is an important tool for donors, researchers, and the general public to understand how tax-exempt organizations are using their resources. However, as with any financial document, discrepancies and errors can occur. In this blog post, we will address a potential discrepancy found in a Form 990 and discuss the steps to take when encountering such a situation.

The first step when reviewing a Form 990 is to familiarize yourself with the different sections and their corresponding line numbers. The document is divided into multiple parts, with each part addressing a specific aspect of the organization. In this case, the discrepancy was found in Part IV, which focuses on revenue and expenses. Line 17 specifically asks if the organization had a total of over $15k for professional fundraising expenses, indicated by Part IX lines 6 and 11e. The organization in question answered "no" to this question, but upon further review, it appears that they did have over $15k in professional fundraising expenses, as shown in Part IX lines 6 and 11e.

So, what could be causing this discrepancy? One possibility is a simple error made by the organization when filling out the form. It is not uncommon for mistakes to occur, especially for smaller organizations with limited resources and personnel. Another possibility is that the organization may have misunderstood the question and mistakenly answered "no" when they should have answered "yes". Regardless of the reason, it is important to address this potential discrepancy and seek clarification.

One option is to reach out to the organization directly and ask for an explanation. This can be done by contacting the organization's leadership or financial team. It is important to approach the situation with a curious and non-confrontational attitude. The goal is to understand the reasoning behind the potential discrepancy, not to accuse or criticize the organization.

Another option is to consult with a tax advisor. They can provide insight and guidance on how to handle the situation and may even be able to help you interpret the information on the Form 990. A tax advisor can also offer advice on how to proceed if the discrepancy turns out to be a significant issue.

It is also essential to keep in mind that there may be legitimate reasons for the discrepancy. For example, the organization may have included expenses from a previous year in their total, which could explain the discrepancy. However, it is still important to seek clarification to ensure accuracy and transparency.

In conclusion, while reviewing Form 990s, it is not uncommon to come across potential discrepancies. It is essential to approach these situations with a curious and non-confrontational attitude and seek clarification from the organization or a tax advisor. It is also crucial to keep in mind that there may be legitimate reasons for the discrepancy, and it is essential to verify the information before making any assumptions. By taking these steps, we can ensure the accuracy and transparency of information provided by tax-exempt organizations.