EY has prepared annotated versions of the 2025 Form 990, Return of Organization Exempt from Income Tax, and its schedules and instructions; Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, and instructions; Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation and its schedules and instructions; Form 990-T, Exempt Organization Business Income Tax Return, and instructions; and Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, and instructions.

These annotated forms, schedules and instructions (attached to this Tax Alert) highlight changes the IRS has made for tax year 2025 and explain some of the more significant differences from the tax year 2024 forms, schedules and instructions. The annotated Form 990 includes a table of contents from which readers can hyperlink to parts of the form, specific schedules and instructions.

Changes to the 2025 Form 990, schedules and instructions

The changes to the 2025 Form 990, schedules and instructions consist of minor clarifications and updates. Penalty and dues amounts have been updated to account for inflation, and references to revenue procedures have also been updated to reflect the most recently published revenue procedures. The IRS has clarified that original and amended Forms 990 for the past three tax years must be e-filed, whereas original and amended Forms 990 for earlier tax years must be paper filed. The 2025 instructions clarify the public inspection and disclosure requirements of Form 990 in Appendix D, noting that an exempt organization must make physical copies of its three most recently filed Forms 990 available for public inspection at its office(s) during normal business hours, even if it meets its public disclosure requirement by posting those Forms 990 on the Internet.

The 2025 Schedule A instructions have been revised to align with the final regulations on Type I and Type III supporting organizations, specifically concerning notification requirements for Type III supporting organizations, distribution requirements for Type III non-functionally integrated supporting organizations, and how Type III functionally integrated supporting organizations can meet the integral part test either as a parent or through support of a governmental organization or organizations. Readers may also reference Technical Guides TG 3-31 and TG 3-33 for a comprehensive overview of the final regulations (see Tax Alert 2024-1826).

A key change to the 2025 Schedule H instructions is a clarification that a hospital organization filing Schedule H must (rather than "may," which was used in prior years) treat multiple buildings operated by the organization under a single state license as a single hospital facility.

Changes to the 2025 Form-EZ 990 and instructions

Most of the changes to the 2025 Form 990-EZ and instructions are minor clarifications and updates. Penalty and dues amounts have been updated to account for inflation, and references to revenue procedures have also been updated to reflect the most recently published versions of the revenue procedures. Like the Form 990, the 2025 Form 990-EZ instructions also clarify that original and amended Forms 990-EZ for the past three tax years must be e-filed, whereas original and amended Forms 990-EZ for earlier tax years must be paper-filed.

Changes to the 2025 Form 990-T, schedules and instructions

Significant changes to the 2025 Form 990-T and instructions include:

1. Part III, Line 5b and Instructions; Page 15, Line 5b: Added a new line item for reporting any payments made under IRC Section 1062, as enacted by the "One Big Beautiful Bill Act" (OBBBA), which addresses gain from the sale or exchange of qualified farmland property to qualified farmers. New instructions for this line provide guidance on reporting the IRC Section 1062 applicable net tax liability on Form 990-T, and instruct filers to attach new Form 1062 to Form 990-T.
2. Part III, Line 6k and Instructions; Page 16, Line 6k: Added a new line item to report net tax liability under IRC Section 1062. New instructions for this line provide guidance on reporting the IRC Section 1062 applicable net tax liability on Form 990-T, and instruct filers to attach new Form 1062 to Form 990-T.
3. Part III, Line 11 and Instructions; Page 2, What's New: Direct Deposit and Instructions, Page 16: Requires taxpayers to complete and attach Form 8050 if they request a refund of unrelated business income tax.
4. Instructions, Page 1, What's New: Relief from additions to tax for underpayment of estimated income tax by taxpayers making an election under IRC Section 1062: Explains that the IRS provides partial underpayment penalty relief related to IRC Section 1062 tax, potentially impacting organizations' quarterly payments and Form 2220 calculations.
5. Instructions, Page 1, What's New: Domestic research and experimental expenditures: Explains that IRC Section174A allows a current deduction for domestic research and experimental expenditures for tax years beginning after December 31, 2024, or an election to capitalize and amortize ratably. Revenue Procedure 2025-28 (2025-38 I.R.B. 393) provides options to recover unamortized amounts paid or incurred within the window provided.

Changes to the 2025 Form 990-PF, schedules, and instructions

Significant changes to the 2025 Form 990-PF and instructions include:

1. Part V, Line 11 and Instructions; Page 24, Part V. Excise Tax based on Investment Income (IRC Section 4940(a), 4940(b), or 4948), Line 11 Refund: Clarifies that a private foundation must file Form 8050 electronically to request a refund of net investment income tax.
2. Instructions, Page 1, What's New: Electronic Payments: Encourages taxpayers to make payments electronically and explain that the IRS will make any refunds electronically. During a transition period, the IRS will accept paper-based payments in limited circumstances.
3. Instructions, Page 4, Disqualified Person: Updated to clarify that a disqualified person includes a corporation, partnership, trust, estate, or unincorporated enterprise in which substantial contributors and foundation managers own 35% of the voting power and profits interest, respectively.
4. Instructions, Page 8, Electronic Filing: Explains that electronic filing is available only for the current tax year and the two prior years. Any return older than the past three tax years, including original and amended Forms 990-PF, must be paper-filed.

Changes to the 2025 Form 4720, schedules, and instructions

Most of the changes to the 2025 Form 4720 and instructions are minor clarifications and updates, including:

1. Part III, Line 4 and Instructions; Page 1, What's New: Direct deposit for overpayments and Instructions, Page 8: Requires taxpayers to complete and attach Form 8050 to request a refund of excise tax.

Implications

Updates to the 2025 Form 990-series returns, schedules and instructions reflect changes to federal tax law and IRS procedure, and clarifications and guidance on how to accurately complete certain sections of the forms and schedules. Tax-exempt organizations should continue to carefully review and adhere to the instructions when completing the forms and schedules. They should also consult their software providers to confirm electronic filing capability for their Form 990-series returns and the ability to upload and e-file required attachments.