Including Donor Information on Returns to End for Many Exempt Organizations

Many tax-exempt organizations will no longer have to report the names and addresses of their larger contributors, including:

    • exempt organizations that are not public charities;
    • nonprofit recreational clubs;
    • fraternal beneficiary lodges that provide insurance-type benefits to their members; and
    • domestic fraternal lodges that use their net earnings only for religious, charitable, scientific, literary, educational, and fraternal purposes.

For example, 501(c)(4) social welfare organizations, such as “dark money” political groups, will no longer have to reveal their donors to the IRS.

These exemptions from the disclosure requirements apply to information returns for tax years ending on or after December 31, 2018. Thus, they will apply to returns that become due on or after May 15, 2019.

Exempt Organization Returns

The law requires exempt organizations to keep records and accounts of gross income and receipts, including donor information for larger contributions. Public charities, also known as “501(c)(3) organizations,'” must report this information on:

  • Form 990, Return of Organization Exempt from Income Tax;
  • Form 990-EZ, Short Form Return of Organization Exempt from Income Tax;
  • Form 990-PF, Return of Private Foundation; or
  • Form 990-BL, Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons.

Although the donor disclosure law applies only to public charities, the IRS has used regulations to extend the disclosure requirements to other exempt organizations. Most organizations must identify donors who contribute $5,000 or more, but fraternal societies must identify donors that contribute $1,000 or more.

Public Inspection

Forms 990 are generally available to the public. However, the IRS and most exempt organizations cannot disclose donor names or addresses. Thus, this information has to be redacted from the publicly available forms.

Donor Disclosure Exemptions

The IRS has decided that it does not need exempt organizations to report personally identifiable donor information in order to carry out its responsibilities. In addition, requiring the information:

  • can increase compliance costs,
  • consumes IRS resources to redact the information, and
  • risks inadvertent disclosure of donor information.

Accordingly, after 2018, a tax-exempt organization will not have to provide names and addresses of donors on its Form 990 unless it is a public charity. However, the organization must continue to collect donor names and addresses, and make the information available if the IRS requests it.

This change also does not affect:

  • other Form 990 reporting requirements, or
  • the donor disclosure requirements for 501(c)(3) organizations.

Rev. Proc. 2018-38

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AUTHOR

CCHTaxGroup

All stories by: CCHTaxGroup