The 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 few changes to the Proposed Regulations issued in September 2019. IRC §6033 and the corresponding regulations grant the IRS authority to determine what information is to be reported on the annual returns, such as IRS Form 990.
Donor Information Clarifications
The one major clarification of the proposed regulations, which follows, covers 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 which can be seen here.
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 to the proposed regulations were left generally unchanged, offering compliance relief for certain tax-exempt organizations.
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This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute an accountant-client relationship.
