The Wall Street Journal quotes Tony Martignetti on Charity Registration.

GETTING PERSONAL: Charity Board Members Inspect New Tax Forms 
By Shelly Banjo 
May 5, 2009

Copyright ©2009 Dow Jones & Company, Inc. All Rights Reserved

NEW YORK (Dow Jones)–Charities’ board members and staffs need to pay close attention to new, more detailed disclosure requirements in their annual filing with the Internal Revenue Service – or risk hefty penalties.

The revised Form 990 underwent its first big overhaul in decades and has a greater emphasis on board governance, transparency and accountability. The forms are due four months and 15 days after the close of a charity’s fiscal year, which comes on May 15 for many charities. Officers who sign these forms are liable for any false statements.

The intention “is to let the sun shine on governance practices, let the public see how your organization is run [and] what standard of conduct you desire and aspire to,” said Steven Miller, former commissioner of the IRS tax-exempt and government entities division at a recent conference.

In the newly added governance, management and disclosure section, for the first time the IRS asks detailed governance questions, such as: Does the organization document board meetings? Was a copy of the Form 990 provided to board members before it was filed? Does the organization have policies on conflicts of interest and whistleblowers.

The revised form focuses more closely on compensation, asking for figures for current and former executives, trustees and key employees, including details on pay from third parties for services rendered to the organization.

Involving the board in the 990 process is part of the IRS’ intent with the new form. “The IRS feels the more the board is familiar with what’s in the form, the more effective they will be in governance and oversight,” says Michael Peregrine, a partner at McDermott Will & Emery LLP who specializes in nonprofit law.

How board members engage with the new form will differ by charity, with some boards delegating a special committee to review forms and others asking every member to be familiar with the filings. Peregrine suggests board members watch out for red flags with respect to possible conflicts of interest, high executive compensation and financial transactions with insiders or key employees.

If something doesn’t make sense or seems off, they need to ask questions, he says. The form obliges the charity to research state compliance rules. Charities must list states that require a copy of the Form 990 in order to register and raise funds within that state.

Charities that skip the step could risk a perjury violation for making false statements.

This practice “has long been a regulatory morass that most nonprofits avoided or ignored,” says Tony Martignetti, managing director of Martignetti Planned Giving Advisors. “This year, the IRS stepped in and changed the game.”

Read the full article on the Wall Street Journal website.