On Monday, July 16, 2018, the Treasury Department and Internal Revenue Service (“IRS”) released Revenue Procedure 2018-38 (“Revenue Procedure”) removing the donor disclosure requirement for certain tax-exempt organizations. More specifically, tax-exempt organizations, other than Internal Revenue Code (“IRC”) §501(c)(3) and §527 organizations, will no longer be required to disclose donor names and addresses for tax years ending on or after December 31, 2018.
Presently, exempt organizations that receive contributions of $5,000 or greater from any person or entity are required to report the names and addresses along with the amount received on Form 990, Schedule B, Schedule of Contributors. Similarly, certain organizations – i.e. social clubs, fraternal societies and fraternal beneficiary societies – are required to report information on contributions received from individuals or entities greater than $1,000 that are to be used exclusively for religious, charitable, scientific, literary or educational purposes, or for the prevention of cruelty to children and animals.
What does this Revenue Procedure mean?
With the release of this Revenue Procedure, tax-exempt organizations, other than those classified under IRC §501(c)(3) and §527, will need to include only the amounts of contributions received by the tax-exempt organization on Form 990 Schedule B or the similar portions of Part IV of the Form 990-BL. However, even though the donor names and address are no longer required to be disclosed on these Forms, tax-exempt organizations will still be required to collect and retain donor names and addresses for their records to have available to the IRS upon request.
Treasury Secretary Steven T. Mnuchin stated that “the IRS simply does not need tax returns with donor names and addresses to do its job in this area.” The Treasury Department also noted that this move would save thousands of organizations money by reducing their compliance costs and would save the IRS time by reducing the amount of paperwork it handles, also helping prevent the improper disclosure of donor information by the federal government.
These revised reporting requirements will apply to information returns for tax years ending on or after December 31, 2018; thus, it will be applicable to returns that become due on or after May 15, 2019. Form 990 filing for the tax year 2017 is still subject to the Schedule B filing requirement to include the names and addresses of all donors.
Presently, certain states (i.e., New York) require tax-exempt organizations to include a copy of a completed, unredacted Form 990, Schedule B reflecting the names and addresses of donors as part of their charitable solicitation registration process. It is important to note that these states have not yet indicated whether or not they will also implement the requirements under the Revenue Procedure.
A copy of Revenue Procedure 2018-38 can be accessed here.
Insights
For questions on donor disclosure, contact a member of Withum’s Not-for-Profit Services Group or fill out the form below and we’ll reach out to you.
