5 Expert Tips for Filing IRS Form 990
The following are the combined answers of Chris Rivard, partner, Rich Croghan, partner, Tracy Paglia, senior manager, and Renie Burbank, senior manager, to five questions on Form 990 and 990 Schedule H:
1. Have non-profit hospitals and health systems taken the necessary steps to meet the parameters of this tax regulation?
Form 990 has been an annual filing requirement for some time; however, it has undergone significant changes over the past few years. All these changes have created new challenges for organizations. One of the biggest changes applies to additional information required from hospitals. Hospitals now need to disclose much more information on their charity care and governance. Our clients are becoming overwhelmed with the changes; they are spending a lot of time gathering the information rather than tending to their organization's mission.
2. How does this tax regulation influence physician employment arrangements?
The Form 990 requires disclosure of compensation paid to physician employees only if they have key roles in the organization. There also may be disclosure of other arrangements with physician groups if they are one of the organization's largest contractors for services.
Due to the public disclosure of Form 990, physician employment arrangements may be approached differently. We are seeing organizations focus on governance, including executive compensation and physician arrangements, and use this as an opportunity to make real improvements. Most organizations now have a documented process on executive or physician compensation. The new disclosures on compensation allow organizations to illustrate the process that they go through in setting executive compensation.
3. What are the main areas that CFOs should watch closely in their current and future employment agreements so they don't run into issues with the IRS?
CFOs should have a clear policy on setting compensation and make sure that the policy is effective and consistently followed. They should consider how that policy may be viewed by outsiders. Further, the CFO can work with the Board so that the compensation of the executives is fairly set and meets the Safe Harbor guidelines provided by the IRS, and approved by the Board or Committee, which should have a set methodology of determining compensation and contemporaneously document the process.
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