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CUNA Regulatory Comment Call

June 25, 2002

EXECUTIVE SUMMARY

• The Internal Revenue Service (IRS) is developing an electronic filing system for tax-exempt organizations’ returns (Form 990, Return of Organization Exempt From Income Tax). To ensure that the system takes into account the needs of all who have an interest in the information returns filed by tax-exempt organizations, the IRS has issued a request for comments from exempt organizations, practitioners, and other stakeholders. Basically, credit union leagues (including chapters), credit union foundations, and some political action committees (PACs) are required to file Form 990.
• The success of an electronic filing system for tax-exempt organizations will depend on the extent to which exempt organizations can use it to fulfill reporting requirements and the extent to which various stakeholders can use it to satisfy their information needs. Therefore, the IRS is asking specific questions concerning factors that should be incorporated into the agency’s business plan for developing the electronic filing system.
• The IRS has indicated to CUNA that the agency would be interested in receiving additional input from credit union leagues (including chapters), credit union foundations, and PACs concerning this proposal. Please channel your responses through CUNA so that we may share them with the IRS. Please send your responses to CUNA by July 12, 2002. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Senior Regulatory Counsel Catherine Orr at corr@cuna.com; or mail them to Mary or Catherine in c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, 6th Floor - South Building, Washington, DC 20004.

BACKGROUND

• The IRS Restructuring and Reform Act of 1998 requires the IRS to receive 80 percent of all returns electronically by 2007. The ability to file exempt organization returns electronically would reduce the filing burden as well as provide easier and quicker access to information for users of return data.
• Studies show that 80 percent of Forms 990 and 990-EZ filed are prepared using software.
• The returns filed by exempt organizations are unique in the following respects:
• They are filed by diverse organizations ranging from volunteer membership organizations to complex hospital systems.
• They are primarily information returns rather than tax returns. As such, they typically include a significant amount of narrative text in addition to financial data.
• Most tax exempt organization information returns are subject to public disclosure.
• The returns assist with federal tax administration, state regulation, and public oversight of exempt organizations.

1. Which Form 990 does your organization file (990-EZ, etc.)?
   
   

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2. Who (attorney, accountant, employee, volunteer) prepares your organization’s returns?
   
   

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3. How are your organization’s returns prepared (tax return software, forms software, spreadsheets, etc.)?
   
   

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4. Which form 990 series returns should be introduced first, and why?
   
   

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5. What factors or concerns would encourage organizations to file electronically?
   
   

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6. What factors or concerns would discourage organizations from filing electronically?
   
   

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7. What could be done to address concerns that would discourage organizations from filing electronically?
   
   

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8. How will your experience with any other IRS e-file program (for example, W-2s) affect your decision to file your exempt organization returns electronically?
   
   
   

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9. Should the system be designed so organizations can use it to satisfy multiple filing or reporting requirements (for example, state reporting requirements or grant reports)?
   
   Yes ______ No ______
   
   If not, why not?
   
   
   
   

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10. What specific changes to the current Form 990 series of returns would facilitate electronic filing of these forms?
    
    

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