IRS released final regulations (The Regulations) under IRC §6033 on May 26th, clarifying nonprofit donor disclosure requirements and easing those requirements for many non-charitable tax-exempt organizations. These final regulations were released with little changes to the Proposed Regulations issued in September 2019. IRC §6033 and the corresponding regulations grant the IRS authority to determine the information to be reported on the annual returns, such as IRS Form 990.
The one major clarification, which follows the proposed regulations is what donor information must be included on the annual returns and by which types of organizations. The Regulations explain that tax-exempt organizations other than IRC §501(c)(3) organizations and §527 political organizations are no longer required to disclose the names and addresses of contributors (generally those contributing $5,000 or more) on their annual return, Schedule B. This means organizations such as §501(c)(4) and (6) do not have to disclose the names and addresses of contributors. However, these organizations still must disclose the amount of the contributions and maintain the names and addresses of the donors in the organization’s books and records. The IRS could request this information later, or upon audit.
The Regulations also make some minor updates and changes including increasing the gross receipts threshold for all U.S. formed tax-exempt organizations (other than private foundations and supporting organizations) to $50,000 ($25,000 for §527 organizations). They also added items that are required to be reported in the annual return, such as information relating to taxes imposed on certain lobbying and political expenditures, and §4958 taxes imposed with respect to an organization, its manager, or disqualified persons.
State compliance on donor disclosure requirements vary by state. New York State issued guidance in November 2019 after the proposed regulations were issued clarifying that the complete (including names and addresses) Schedule B of Form 990 be included in the NYS filings for those registered with the Charities Bureau. View here for more information.
There were over 8,000 comments on the proposed regulations discussing an increase in donor anonymity with respect to campaign finance. Comments also focused on state-level complications where the states use this information for state tax administration and enforcement of certain state laws. In the end, the changes in the proposed regulations were left generally unchanged, offering compliance relief for certain tax-exempt organizations.
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We, therefore, make no warranties, expressed or implied, on the services provided hereunder.