The IRS has updated the form that charities and other tax-exempt organizations use to file their annual returns.

The new Form 990 allows organizations to describe their exempt accomplishments and missions up front and provides more opportunities throughout to explain their activities. Other major changes were made to the form’s summary page, governance section, and various schedules, including those relating to executive compensation, related organizations, foreign activities, hospitals, noncash contributions, and tax-exempt bonds. A checklist of schedules was also added.

Steven Miller, commissioner of the IRS’s Tax Exempt and Government Entities division, says the new version of Form 990 “reflects the way this growing sector operates in the 21st century.”

The changes are the result of nearly 700 comment letters received by the IRS. The new form will be used for the 2008 tax year for returns filed in 2009. The IRS also announced a graduated transition period for smaller organizations to begin using the shorter Form 990-EZ instead of Form 990 if they choose.

For the 2008 tax year, organizations with gross receipts of more than $1 million or total assets topping $2.5 million must use Form 990. For the 2009 tax year — returns filed in 2010 — organizations with gross receipts higher than $500,000 or total assets surpassing $1.25 million will have to use the longer form. The filing thresholds will be set permanently at $200,000 in gross receipts and $500,000 in total assets beginning with the 2010 tax year.

Also, starting with the 2010 tax year, the IRS will increase the filing threshold for organizations required to file Form 990-N — also known as the e-postcard — from $25,000 to $50,000.