How New IRS Donor Disclosure Rules Impact the Nonprofit Sector
Summary Prepared by Hannah Locop, GPNP Program Manager
On Monday, July 16, 2018 the Internal Revenue Service released new guidelines changing the way that some 501© organizations report to the IRS. GPNP is invested in educating our members on how the IRS’s new guidelines impact their 990 filing for 2018. You can find the full set of guidelines here.
As per the new rules, “tax-exempt organizations required to file the Form 990 or Form 990- EZ, other than those described in § 501(c)(3), will no longer be required to provide names and addresses of contributors on their Forms 990 or Forms 990-EZ and thus will not be required to complete these portions of their Schedules B.”
As Politico reports, “501(c)(3) charitable groups will still need to file the Schedule B for the Form 990, which required both names and addresses for donors who gave at least $5,000, but social welfare groups [501©(4)], business leagues [501©(6)] and labor organizations [501©(5)] will not.” In addition to charitable groups, political organizations tax-exempt under IRS section 527 will still be required to report donor names and addresses.
The U.S. Treasury Department, under the leadership of Secretary Steven Mnuchin, reasons that “the IRS makes no systematic use of Schedule B with respect to these organizations [501©] in administering the tax code.” The Treasury Department also argues “new policy will better protect taxpayers by reducing the risk of inadvertent disclosure or misuse of confidential information.”
Historically, the IRS has required all tax-exempt organizations to report the names and addresses of donors who contributed over $5,000 in one year. For 501©(7), 501©(8), and 501©(10) organizations, the IRS required reports of names and addresses for donors contributing over $1,000 in a year. The IRS would simply redact the donor information before making 990 forms available to the public. However, for 2018 returns due May 15, 2019, only 501©(3) and 527 tax-exempt organizations will be required to report the names and addresses of donors.
The IRS is still requiring all 501© tax-exempt organizations to keep books and records of donors’ personal information though, in case that information is ever requested, such as in the case of an audit.
For expert advice on how the new rules impact your organization specifically, please speak with a tax professional or call or email GPNP for a referral to an expert in tax law.