IRS Changes Donor Disclosure Requirements

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On July 17, 2018, the IRS released Revenue Procedure 2018-38, removing the reporting requirement for organizations exempt under Section 501(a)—other than those exempt under 501(c)(3)—to disclose the names and addresses of contributors on Schedule B of Form 990 and Form 990-EZ, and Part IV of Form 990-BL, for taxable years ending on or after December 31, 2018.

Tax-exempt organizations under §501(a) are required to file annual information returns per §6033(a) of the Internal Revenue Code. These information returns include reporting of items of gross income, receipts and disbursements, as well as any other information required specifically by the forms and regulations. Initially, only organizations exempt under §501(c)(3) were required to provide the total contributions and gifts received during the year, as well as the names and addresses of contributors who gave more than $5,000. The donor reporting requirement was further expanded by Treasury Regulation §1.6033-2 to include all organizations exempt under §501(a) with limited exceptions.

The regulation provides that the names and addresses generally are required on the annual information returns if the contributed amounts are more than $5,000 for exempt organizations under §501(a) and more than $1,000 for organizations exempt under §501(c)(7), (8) and (10)—generally social clubs, fraternal beneficiary societies and domestic fraternal societies, respectively. If the reporting thresholds are met, the names and addresses of contributors are reported on Schedule B, Schedule of Contributors, with Forms 990, 990-EZ and 990-PF or in Part IV of Form 990-BL for trusts exempt under §501(c)(21).

Under the public disclosure requirements, the annual information returns (Form 990 Series) and tax exemption applications submitted to the IRS must be made available to the public and are subject to inspection. While donor information is required to be disclosed to the IRS on Schedule B, the names and addresses of contributors aren’t allowed to be disclosed to the public unless the organization falls under the definition of a private foundation under §509(a) or is a political organization exempt under §527. While the name and address of the donor isn’t allowed to be disclosed to the public, the amounts of contributions received by an exempt organization should be disclosed unless such disclosure can easily be expected to identify any contributor. In other words (with the exception of private foundations), Schedule B should be included in the public disclosure copy of the information return with only the name and address redacted unless the amount disclosed could be expected to identify the donor.

The IRS recently reviewed the current disclosure requirements, the additional costs and potential risks to organizations providing this information and the IRS’ own consumption of resources to make this information available to the public. Based on its review, the IRS determined personally identifiable information of donors isn’t needed to achieve its objective. Therefore, the Commissioner of Internal Revenue exercised the authority to no longer require the disclosure of names and addresses of contributors for tax-exempt organizations other than those organizations under §501(c)(3). 

The contribution information, other than the names and addresses of contributors, is still required to be disclosed on Schedule B of Forms 990 and 990-EZ and Part IV of Form 990-BL for exempt organizations other than those listed under §501(c)(3). Exempt organizations under §501(c)(3) are required to disclose the name, address and contribution information for any contributor meeting the reporting requirement thresholds as stated earlier. The revised reporting requirements will apply to information returns for taxable years ending on or after December 31, 2018. The revenue procedure will have no effect on Schedule B information currently open to public inspection. All tax-exempt organizations are required to continue the document retention requirements for their books and records.

For more information on how the updated reporting requirements affect your organization, contact Gerson or your trusted BKD advisor.

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