July 19, 2018 IRS will no longer require donor reporting for non-501(c)(3) exempt organizations In Revenue Procedure 2018-38, the IRS has announced that it is ending the requirement for Section 501(a) tax-exempt organizations, other than Section 501(c)(3) organizations, to report the names and addresses of their contributors on Schedule B of Form 990 or 990-EZ returns. Background Section 501(c)(3) tax-exempt organizations are generally required by statute (Section 6033) to report the names and addresses of substantial contributors on their Forms 990. Although no similar explicit statutory requirement applies to other types of tax-exempt organizations, the regulations under Section 6033 have generally imposed the same requirement on tax-exempt organizations not described in Section 501(c)(3) as well. Specifically, the regulations require all tax-exempt organizations to report contributors of $5,000 or more in a year, and they also require reporting of contributors of $1,000 or more in a year of charitable contributions to certain types of organizations (i.e., those described in Sections 501(c)(7), 501(c)(8) and 501(c)(10)). The same regulations that impose the donor reporting requirements on non-501(c)(3) tax-exempt organizations also grant the IRS Commissioner authority to grant relief from those requirements where they are deemed unnecessary for efficient tax administration. Revised reporting requirements The IRS stated that it has determined that it does not need the Schedule B donor-identifying information to carry out its responsibilities. Moreover, it stated that the contributor reporting requirement can increase compliance burdens, consume IRS resources in redacting the information, and also increase the risk that the IRS may inadvertently disclose non-public contributor information to the public. Therefore, the IRS will no longer require organizations exempt under Section 501(a) other than those described in Section 501(c)(3) to report the names and addresses of contributors on their Forms 990 or 990-EZ. Non-501(c)(3) tax-exempt organizations must still report contribution information (except donor names and addresses) otherwise required by Schedule B, including the contribution amount and a description of any included non-cash property. In addition, these organizations must still collect and retain contributor information in their books and records and make such information available to the IRS upon request, as needed for tax administration. The revised reporting requirements described in Revenue Procedure 2018-38 apply to returns for tax years ending on or after December 31, 2018. Implications The Treasury Department's decision to lift the requirement to disclose contributor names and addresses on Schedule B of Forms 990 and 990-EZ will help decrease compliance burdens and protect donor privacy for organizations that fall under the purview of this change. However, it is important to note that this decision does not affect Section 501(c)(3) public charities and private foundations, nor any Section 527 political organizations. Furthermore, Revenue Procedure 2018-38 does not release any exempt organization from the requirement to itemize the amount of each substantial contribution (generally from donors that contribute more than $5,000) on Schedule B as well as the description of any non-cash property contributed. Currently, tax-exempt organizations required to file a Form 990 series return must list substantial contributions on Schedule B and include the name and address of the donor, the amount of the contribution, and a description of any non-cash property included in the contribution. Although this information is filed with the IRS, the organization is not required to disclose names and addresses of the contributors as part of its public disclosure requirement — requiring the filing organization and IRS to make a copy of the most recently filed Form 990 available to the public. Therefore, the change is procedural in that qualifying organizations will no longer need to disclose donor information to the IRS. The public was never privy to this information, except in the case of private foundations and Section 527 political organizations. Further, current law will not change for Section 501(c)(3) organizations. Public charities and private foundations must continue to disclose the names and address of substantial contributors (as required by Schedule B of Form 990) to the IRS, but are not required to disclose this information to the public. Similarly, this revenue procedure may not affect state reporting requirements; organizations should continue to monitor their respective state filing requirements to determine whether any particular state conforms its requirements to align with the provisions of Revenue Procedure 2018-38. Lastly, organizations benefited by this new rule must continue to keep record of contributor information, because the IRS can still require access to these names and addresses during an examination or enforcement proceeding. These revised reporting requirements will apply beginning tax years ending on or after December 31, 2018. Thus, the revised reporting requirements generally will apply to returns that become due on or after May 15, 2019. Please contact your EY Tax professional with any questions. ——————————————— — For more information about EY's Exempt Organization Tax Services group, visit us at www.ey.com/ExemptOrg. ———————————————
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