Final rules for returns by tax-exempt organizations

Under final regulations issued on May 27, certain tax-exempt organizations will not have to supply the names and addresses of substantial donors on Schedule B, Schedule of Contributors, of Form 990, Return of Organization Exempt From Tax (T.D. 9898). The IRS had previously exempted these organizations from supplying that information using a revenue procedure, but that method was successfully challenged as not complying with the Administrative Procedure Act (APA) (Bullock, 401 F. Supp. 3d 1144 (D. Mont. 2019)).

To comply with the APA’s notice-and-comment requirement, the IRS issued proposed regulations last year (REG-102508-16) that were finalized in T.D. 9898. Among the requirements being finalized without change, the IRS is exempting tax-exempt organizations with gross receipts that do not exceed $50,000 from filing Form 990. They still do have to file Form 990-N, called an e-postcard, annually. (This requirement was already in place under Rev. Proc. 2011-15.)

Under the regulations, the only organizations that will need to report the names and addresses of substantial contributors generally are Sec. 501(c)(3) organizations and Sec. 527 political organizations. Other exempt organizations will no longer have to include this donor data on Form 990; Form 990-EZ, Short Form Return of Organization Exempt From Income Tax; or Form 990-PF, Return of Private Foundation. However, all these organizations will continue to be obligated to collect and keep this information and make it available to the IRS upon request.

The IRS says it considered all the comments it received in depth and adopted the proposed regulations without substantive revision.

The regulations were effective May 28, 2020, but tax-exempt organizations may choose to apply them to returns filed after Sept. 6, 2019.