Q&A #135 – Must directors who left the Board mid-year be listed in the Form 990?
Question: My nonprofit organization had a Board member resign from the Board in the middle of our fiscal year, and this Board member asked if they would show up in the list of Board members in the Form 990 for that year. Are we permitted to omit this person from the list because this person was no longer on the Board at the end of the fiscal year?
Answer: The IRS instructions for Part VII, Section A of the Form 990 provide that any director or trustee who “served at any time during the organization's tax year” is reported as a “current” director or trustee. In other words, Board members who step down in the middle of the year must appear on the list of directors, officers, key employees, and other individuals reported in Part VII, Section A of the Form 990.
It is important to be aware that the number of individuals listed as Board members in Part VII, Section A of the Form 990 may not match the number of Board members reported on Part VI, Section A, Line 1a, since the latter asks for the number of “voting members of the governing body at the end of the tax year.” Part VII is by its nature broader and is trying to elicit disclosure of compensation information about a wider range of individuals, while Part VI is only asking for the size of the Board as of the end of the fiscal year.
To give readers of the Form 990 a more detailed picture of an organization’s Board, many tax preparers note the dates of service of Board members listed in Part VII, Section A who leave or join the Board in the middle of the year. For example, a director who resigned from the Board on March 1 of the year at issue could be listed on Part VII, Section A with a note that the director served “until March 1.” This approach helps to clarify any apparent discrepancy between the Board member information reported in Part VI and Part VII.
Planning Tip – Pay careful attention when responding to questionnaires and other worksheets provided by your tax preparer to facilitate gathering information for the Form 990. Important issues can slip through the cracks during this very important phase of the Form 990 preparation process if you do not take the initiative to ask questions and mention any unusual issues or circumstances that came up during the year.
Be sure to avoid confusion related to use of the “former director” category in Part VII, Section A. In this context, a “former director” does not include a Board member who left the Board in the middle of the tax year being reported. Rather, this refers only to certain individuals who left service prior to the beginning of tax year and who received reportable compensation above the IRS specified thresholds.
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