Many tax-exempt organizations no longer need to list donor information

To alleviate the burden on tax-exempt organizations and the IRS, the Service announced, with the issuance of Rev. Proc. 2018-38, that it will no longer require most tax-exempt organizations to report the names and addresses of substantial donors. The change does not apply to purely public charities exempt under Sec. 501(c)(3) because they are required to make those disclosures under Sec. 6033(b).

Donor information is currently reported on Schedule B, Schedule of Contributions, of 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, and Part IV, “Statement With Respect to Contributors, etc.,” of Form 990-BL, Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons.

Regs. Sec. 1.6033-2(a)(2)(ii)(f) requires all types of tax-exempt organizations to report the names and addresses of all people who contribute $5,000 or more during the year. Regs. Sec. 1.6033-2(a)(2)(iii)(d) requires Sec. 501(c)(7) organizations (social clubs), Sec. 501(c)(8) organizations (fraternal beneficiary societies), and Sec. 501(c)(10) organizations (domestic fraternal societies) to report the name of each person who contributed more than $1,000 during the year. However, Regs. Sec. 1.6033-2(g)(6) authorizes the IRS to grant relief from these requirements.

Sec. 6104(b) requires the IRS to make all returns filed under Sec. 6033 (generally, all tax-exempt organization returns) available to the public, but, at the same time, the IRS is not authorized to disclose the name and address of any contributor to a tax-exempt organization, except for private foundations. The IRS has determined that it does not need the personally identifiable information of donors to be reported on Schedule B to carry out its duties, and the requirement increases tax-exempt organizations’ compliance costs, takes up the IRS’s time to redact the information, and poses a risk of inadvertent disclosure of donor information that is not supposed to be open to public inspection. Therefore, the IRS is exercising its authority to no longer require tax-exempt organizations required to file Form 990 or 990-EZ (other than Sec. 501(c)(3) organizations) to provide the names and addresses of their contributors on those forms.

This revenue procedure does not affect the reporting of contribution information, other than the names and addresses of contributors, required to be reported on Schedule B of Forms 990 and 990-EZ and Part IV of Form 990-BL. And although qualifying organizations no longer must report the names and addresses of donors on their information returns, they must keep the information in their books and records to allow the IRS to effectively administer the Code by examining specific taxpayer-donors.

These new rules apply to tax years ending on or after Dec. 31, 2018, thus they will generally apply to returns due on or after May 15, 2019.

— Sally P. Schreiber (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.