In a Revenue Procedure, IRS has removed the requirement that exempt organizations other than Code Sec. 501(c)(3) organizations disclose the names and address of their contributors on their exempt organization tax return.
Background.
The tax code requires certain tax-exempt organizations to file annual information returns that include information required by forms or regulations. The annual information returns required for exempt organizations are Forms 990 (and various versions). The tax code provides that tax-exempt organizations described in Code Sec. 501(c)(3) that are subject to certain disclosure must furnish information annually setting forth certain items including the total of the contributions and gifts received by it during the year, and the names and addresses of all substantial contributors.
This generally requires all types of tax-exempt organizations to report the names and addresses of all persons who contribute $5,000 or more in a year. Reg. It also requires organizations described in Code Sec. 501(c)(7) (generally, social clubs), Code Sec. 501(c)(8) (generally, fraternal beneficiary societies), or Code Sec. 501(c)(10) (generally, domestic fraternal societies) to report the name of each person who contributed more than $1,000 during the tax year to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.
The tax code provides a discretionary exception from the annual filing requirement under which IRS may relieve any organization otherwise required to file an information return from filing such a return if IRS determines that the filing is not necessary to the efficient administration of the internal revenue laws. Regulations authorizes IRS to relieve any organization or class of organizations from filing, in whole or in part the annual return required by this section where the IRS determines that such returns are not necessary for the efficient administration of the internal revenue laws.
In general, IRS must make the annual returns filed available to the public. However, IRS is not authorized to disclose the name or address of any contributor to any tax-exempt organization other than a private foundation. Further, the regulations provide that even if the names and addresses are not disclosed, the amounts of contributions to an organization must be made available for public inspection unless the disclosure of such information can reasonably be expected to identify any contributor. In addition to the required disclosure by IRS, the tax code and related regulations require certain tax-exempt organizations to provide their annual information returns upon request by a member of the public.
Requirement removed for many tax-exempt organizations.
Generally, Rev Procedure 2018-38 provides that tax-exempt organizations required to file annual information reports will no longer be required to provide names and addresses of contributors and thus will not be required to complete these portions. Similarly, organizations described in Code Sec. 501(c)(7), Code Sec. 501(c)(8), or Code Sec. 501(c)(10) will no longer be required to provide on their annual disclosure forms the names and addresses of persons who contributed more than $1,000 during the tax year to be used for exclusively charitable purposes.
Organizations must continue to keep this information in their books and records in order to permit IRS to efficiently administer the internal revenue laws through examinations of specific taxpayers.
IRS explained the changes contained in the Revenue Procedure by noting that IRS does not need personally identifiable information of donors to be reported in order for it to carry out its responsibilities.
Effective date.
The revised reporting requirements contained in the Revenue Procedure will apply to information returns for tax years ending on or after Dec. 31, 2018. Thus, the revised reporting requirements generally will apply to returns that become due on or after May 15, 2019.
