IRS FORM 990, PART VII, SECTION A
The U.S. IRS Form 990, Part VII, Section A requires nonprofits to disclose the names of the organization’s officers, directors, trustees (both individuals and organizations), key employees, and highly-compensated employees. The key to completing this section depends on the organization’s understanding of how the IRS defines each of these roles as the definitions may differ from how the organization applies these terms internally.
The title “director” is perhaps the most self-explanatory of those requested by the IRS. All members of the organization’s Board of Directors will be marked with this categorization, regardless of compensation.
An “officer” is a person elected or appointed to manage an organization’s daily operations. This title encompasses those members of the Board of Directors who hold the position of president/chair, vice president/chair, secretary, and treasurer. Thus, these individuals will be marked with both the “director” and the “officer” categorizations.
Other positions that will be categorized as “officer” include the organization’s top management official(s), regardless of title. These top management individuals are those within the organization that have ultimate responsibility for implementing the decisions of the governing body or for supervising the management, administration, or operation of the organization. This typically includes the organization’s president/executive director/CEO.
In addition to this, the organization’s top financial official, regardless of title, will also be categorized as an “officer” on the 990. This individual should be the one ultimately responsible for the management of the organization’s finances.
There is no minimum compensation threshold that must be met for an individual to be classified as an “officer”. In addition, an individual who has served at any time during the organization’s tax year will be considered a current officer.
Organizations must use a three-part test to determine which individual(s) to categorize as a “key employee”. To be a current “key employee”, all three of the following must be met:Compensation TestThe employee receives reportable compensation from the organization and all related organizations in excess of US$150,000 during the calendar year ending with or within the organization's tax year.Responsibility TestThe employee meets one of the following:
- Has responsibilities, powers, or influence over the organization as a whole that is similar to that held by officers or directors;
- When compared to the organization as a whole, manages a discrete segment or activity that represents 10% or more of the activities, assets, income, or expenses of the organization; or
- Has or shares the ability to control or determine 10% or more of the organization's capital expenditures, operating budget, or compensation for employees.Top 20 TestOf those employees that “pass” the compensation and responsibility tests described above, only those 20 employees with the highest reportable compensation from the organization and related organizations for the calendar year ending with or within the organization's tax year. Thus, the maximum number of “key employees” should not exceed 20.It’s important to note that officers, directors and trustees are not considered key employees. Therefore, these individuals will not be marked as a “key employee” if they are already categorized as an officer, director, and/or trustee on the 990.
Lastly, the organization should list the current five highest compensated employees who received over US$100,000 in reportable compensation, excluding, however, those individuals already categorized as an officer, director, trustee, or key employee on the 990.