Overview
Treasury and the IRS issued final regulations removing the requirement for exempt organizations, other than section 501(c)(3) organizations and section 527 organizations, to disclose the names and addresses of donors to the IRS on Form 990, Schedule B. This change is particularly significant for organizations exempt under section 501(c)(4), which often engage in advocacy activities and may have donors who prefer anonymity.
Internal Revenue Code section 6033 requires that section 501(c)(3) organizations report the names and addresses of substantial contributors on the annual Form 990. Under prior regulations, the IRS extended this requirement to most tax-exempt organizations to report the names and addresses of all persons who contributed $5,000 or more on an annual basis. For organizations other than private foundations, the names and addresses are not publicly disclosed with the Form 990.
In July 2018, the IRS issued Rev. Proc. 2018-38, providing that the IRS would no longer require organizations exempt from tax under section 501(a), other than section 501(c)(3) organizations, to report information about their contributors on Schedule B of their Forms 990 or 990-EZ. After the District Court of Montana invalidated Rev. Proc. 2018-38 in July 2019 for failing to meet the Administrative Procedure Act's notice and comment rulemaking requirements, Treasury and the IRS reissued similar rules in the form of proposed regulations in September 2019.
The preamble addresses public comments and explains that Treasury and the IRS have concluded that the IRS does not need the names and addresses of substantial contributors to be reported annually in order to administer the tax laws. In light of the risks and burdens associated with requiring the annual reporting of this information, the final regulations finalize the proposed rollback of donor disclosure requirements.
Exempt organizations will still need to maintain records about their substantial contributors. The regulations do not alter the existing requirement contained in Schedule B of the Form 990 and 990-EZ for tax-exempt organizations to report annually the amounts of contributions from each substantial contributor, or the existing requirement to maintain the names and addresses of substantial contributors should the IRS need this information on a case-by-case basis.
The final regulations also reflect other statutory changes and reporting relief announced in prior guidance to help tax-exempt organizations generally find the reporting requirements in one place. The final regulations are applicable to returns filed after May 28, 2020, but tax-exempt organizations can choose to apply the regulations to returns filed after September 6, 2019.
