The IRS has released Revenue Procedure 2018-38, which relaxes the reporting requirements for organizations exempt from federal income tax under IRC Section 501(a) that are not Section 501(c)(3) organizations. Generally, non-501(c)(3) exempt organizations no longer are required to report the names and addresses of their contributors on Schedule B of Form 990, “Return of Organization Exempt From Income Tax,” or 990-EZ. For non-501(c)(3) tax-exempt organizations, this is a welcome change that will decrease their tax compliance burden and serve to protect donor privacy.
Following are common questions and answers that provide additional details about the revenue procedure.
What is the current reporting requirement relating to contributor names and addresses (prior to the change)?
Various annual information returns are required of tax-exempt organizations under Section 6033:
Annual returns filed under Section 6033 are available to the public, although the IRS is not authorized to disclose the name or address of any contributor to any tax-exempt organization other than a private foundation or a Section 527 organization. Even though the contributor names and addresses are not disclosed, the amounts of contributions generally must be made available for public inspection.
What types of organizations are affected by this reporting change?
Under the revenue procedure:
No – the change described in the revenue procedure has no impact on the tax reporting of Section 501(c)(3) organizations.
What is the rationale for the change in reporting?
The revenue procedure confirms that the IRS does not need personally identifiable information of donors in order to carry out its tax administration responsibilities. In fact, the requirement to report such information increases compliance costs, consumes IRS resources (because of the need to redact certain information), and poses a risk of inadvertent disclosure of information that is not open to public inspection.
What ongoing responsibilities remain for organizations affected by this reporting change?
Organizations relieved of the obligation to report contributors’ names and addresses must continue to keep this information in their books and records and make it available in the event of IRS examination.
When does the reporting change become effective?
The revised reporting requirements apply to information returns for tax years ending on or after Dec. 31, 2018.
Following are common questions and answers that provide additional details about the revenue procedure.
What is the current reporting requirement relating to contributor names and addresses (prior to the change)?
Various annual information returns are required of tax-exempt organizations under Section 6033:
- 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”
- Form 990-BL: “Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons”
Annual returns filed under Section 6033 are available to the public, although the IRS is not authorized to disclose the name or address of any contributor to any tax-exempt organization other than a private foundation or a Section 527 organization. Even though the contributor names and addresses are not disclosed, the amounts of contributions generally must be made available for public inspection.
What types of organizations are affected by this reporting change?
Under the revenue procedure:
- Non-501(c)(3) tax-exempt organizations required to file Form 990 or Form 990-EZ no longer are required to provide names and addresses of contributors.
- Organizations described in Section 501(c)(7), (8), or (10) no longer are required to provide the names and addresses of persons who contributed more than $1,000 during the tax year to be used for charitable purposes.
No – the change described in the revenue procedure has no impact on the tax reporting of Section 501(c)(3) organizations.
What is the rationale for the change in reporting?
The revenue procedure confirms that the IRS does not need personally identifiable information of donors in order to carry out its tax administration responsibilities. In fact, the requirement to report such information increases compliance costs, consumes IRS resources (because of the need to redact certain information), and poses a risk of inadvertent disclosure of information that is not open to public inspection.
What ongoing responsibilities remain for organizations affected by this reporting change?
Organizations relieved of the obligation to report contributors’ names and addresses must continue to keep this information in their books and records and make it available in the event of IRS examination.
When does the reporting change become effective?
The revised reporting requirements apply to information returns for tax years ending on or after Dec. 31, 2018.
