IRS Glossary of Terms
Director or trustee: A member of the organization's governing body, but only if the member has any voting rights. A member of an advisory board that does not exercise any governance authority over the organization is not considered a director or trustee.
Disregarded entity or entities: An entity wholly owned by the organization that is generally not treated as a separate entity for Federal tax purposes. (e.g., single-member limited liability company of which the organization is the sole member.) See Regulations sections 301.7701-2 and 3.
EIN: Employer identification number, a nine-digit number. Use Form SS-4 to apply for an EIN.
Financial statements: An organization's statements of revenue and expenses and balance sheet, or similar statements prepared regarding the financial operations of the organization.
Group return: A Form 990 filed by the central organization of a group exemption for two or more of the subordinate organizations. See General Instructions and Appendix E. Group Returns—Reporting Information on Behalf of the Group, for more information.
Hospital: For purposes of Schedule H (Form 990), a hospital is a facility that is, or is required to be, licensed, registered, or similarly recognized by a state as a hospital. This includes a hospital that is operated through a disregarded entity or a joint venture treated as a partnership for federal income tax purposes. It does not include hospitals that are located outside the United States. It also does not include hospitals that are operated by entities organized as separate legal entities from the organization that are taxable as a corporation for federal tax purposes (except for members of a group exemption included in a group return filed by an organization). For purposes of Schedule H (Form 990), an animal hospital is not a hospital.
Joint venture: Unless otherwise provided, a partnership, limited liability company, or other entity treated as a partnership for federal tax purposes, as described in Regulations sections 301.7701-1 through 301.7701-3.
Key employee:For purposes of Form 990, an employee of an organization (other than an officer, director, or trustee) who meets all three of the following tests applied in the following order:
1. $150,000 Test. Receives reportable compensation from the organization and all related organizations in excess of $150,000 for the calendar year ending with or within the organization's tax year.
2. Responsibility Test. The employee: a. has responsibilities, powers or influence over the organization as a whole similar to those of officers, directors, or trustees; b. manages a discrete segment or activity of the organization that represents 10% or more of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole; c. or has or shares authority to control or determine 10% or more of the organization's capital expenditures, operating budget, or compensation for employees.
3. Top 20 Test. Is one of the 20 employees (that satisfy the $150,000 Test and Responsibility Test) with the highest reportable compensation from the organization and related organizations for the calendar year ending with or within the organization's tax year.
Management company: An organization that performs management duties for another organization customarily performed by or under the direct supervision of the other organization's officers, directors, trustees, or key employees. These management duties include, but are not limited to, hiring, firing, and supervising personnel; planning or executing budgets or financial operations; and supervising exempt operations or unrelated trades or businesses.
Medical research: For purposes of a medical research organization operated in conjunction with a hospital (see Schedule A (Form 990 or 990-EZ), Public Charity Status and Public Support), medical research means investigations, studies and experiments performed to discover, develop, or verify knowledge relating to physical or mental diseases and impairments and their causes, diagnosis, prevention, treatment, or control.
Officer: Unless otherwise provided, (e.g., Signature Block, principal officer in Heading) a person elected or appointed to manage the organization's daily operations, such as a president, vice-president, secretary, treasurer, and, in some cases, Board Chair. The officers of an organization are determined by reference to its organizing document, bylaws, or resolutions of its governing body, or as otherwise designated consistent with state law, but at a minimum include those officers required by applicable state law. For purposes of Form 990, treat the organization's top management official and top financial official as officers.
Related organization: An organization, including a nonprofit organization, a stock corporation, a partnership or limited liability company, a trust, and a governmental unit or other government entity, that stands in one or more of the following relationships to the filing organization at any time during the tax year.
-Parent: an organization that controls the filing organization.
-Subsidiary: an organization controlled by the filing organization.
-Brother/Sister: an organization controlled by the same person or persons that control the filing organization.
-Supporting/Supported: an organization that is (or claims to be) at any time during the organization's tax year (i) a supporting organization of the filing organization within the meaning of section 509(a)(3), if the filing organization is a supported organization within the meaning of section 509(f)(3); (ii) or a supported organization, if the filing organization is a supporting organization.
The organization must determine its related organizations for purposes of completing Form 990, Parts VI (Governance), VII (Compensation), VIII (Statement or Revenue) and X (Balance Sheet), Schedule D (Form 990), Part V, Schedule J (Form 990), and Schedule R (Form 990). See instructions for those parts and schedules for related organization reporting requirements.
Tax year: The annual accounting period for which the Form 990 is being filed, whether the calendar year ending December 31st or a fiscal year ending on the last day of any other month. The organization may have a short tax year in its first year of existence, in any year when it changes its annual accounting period (for example, from a December 31 year-end to a June 30 year-end), and in its last year of existence (for example, when it merges into another organization or dissolves). See also current year, fiscal year, and short period.