May 27, 2020 •

New IRS Rules: Some Tax-Exempt Groups Don’t Have to Report Contributors

IRS Building, Washington DC

Home of the Internal Revenue Service - by Joshua Doubek

On May 28, new Internal Revenue Service (IRS) regulations allowing certain tax-exempt organizations to refrain from reporting the names and addresses of contributors on their annual reports to the IRS will take effect and be published in the U.S. Federal […]

On May 28, new Internal Revenue Service (IRS) regulations allowing certain tax-exempt organizations to refrain from reporting the names and addresses of contributors on their annual reports to the IRS will take effect and be published in the U.S. Federal Register.

 

This exemption from reporting applies to tax-exempt organizations generally not receiving tax-deductible contributions, such as labor unions, volunteer fire departments, issue-advocacy groups, local chambers of commerce, veterans’ groups, and community service clubs. These organizations are still required to continue to collect and keep the donor information and to make it available to the IRS upon its request. This change does not affect the information required to be reported by charities primarily receiving tax-deductible contributions, such as 501(c)(3) organizations, certain nonexempt private foundations, or 527 political organizations.

 

The Treasury Department and IRS had given three primary reasons for the change: the IRS makes no systematic use of this information collected by these organizations; the policy reduces the risk of inadvertent disclosure or misuse of confidential information; and the policy saves both private and government resources.

 

Previously, the IRS had issued a guidance to this effect, but on July 30, 2019, the IRS guidance limiting these disclosure requirements was set aside by a federal judge. In Bullock v. IRS, the U.S. District Court District of Montana (Great Falls) found the IRS violated the Administrative Procedure Act by not providing notice and allowing a public comment period before the guidance was issued. It predicated this decision by finding the guidance was a legislative rule. Subsequently, on September 6, the IRS issued a notice of a proposed rulemaking and accepted public comment.

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September 11, 2019 •

IRS Moves Again to Exempt Certain Tax-Exempt Organizations From Reporting Contributor Info

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On September 6, the Internal Revenue Service (IRS) issued a notice of a proposed rulemaking for allowing certain tax-exempt organizations to no longer be required to report the names and addresses of contributors on their annual reports. Previously, the IRS […]

On September 6, the Internal Revenue Service (IRS) issued a notice of a proposed rulemaking for allowing certain tax-exempt organizations to no longer be required to report the names and addresses of contributors on their annual reports.

Previously, the IRS had issued a guidance to this effect, but on July 30, the IRS guidance limiting these disclosure requirements was set aside by a federal judge.

In Bullock v. IRS, the U.S. District Court District of Montana (Great Falls) found the IRS violated the Administrative Procedure Act by not providing notice and allowing a public comment period before the guidance was issued. It predicated this decision by finding the guidance was a legislative rule.

On July 16, 2018, the U.S. Treasury Department and the IRS had announced certain tax-exempt organizations would no longer be required to report the names and addresses of contributors on their annual reports. This exemption from reporting applies to tax-exempt organizations generally not receiving tax-deductible contributions, such as labor unions, volunteer fire departments, issue-advocacy groups, local chambers of commerce, veterans’ groups, and community service clubs, according to the department’s press release.

These organizations are still required to continue to collect and keep the donor information and to make it available to the IRS upon its request.

This change did not affect the information required to be reported by charities primarily receiving tax-deductible contributions, such as 501(c)(3) organizations, certain nonexempt private foundations, or 527 political organizations. The Treasury Department and IRS had given three primary reasons for the change:

    1. The IRS makes no systematic use of this information collected by these organizations
    2. The policy reduces the risk of inadvertent disclosure or misuse of confidential information
    3. The policy saves both private and government resources

Comments on the proposed rule will be accepted for 90 days after the notice’s publication in the Federal Register.

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July 17, 2018 •

IRS Exempts Certain Tax-Exempt Organizations From Reporting Contributor Info

On July 16, the U.S. Treasury Department and the IRS announced certain tax-exempt organizations will no longer be required to report the names and addresses of contributors on their annual reports. This exemption from reporting will apply to tax-exempt organizations […]

On July 16, the U.S. Treasury Department and the IRS announced certain tax-exempt organizations will no longer be required to report the names and addresses of contributors on their annual reports.

This exemption from reporting will apply to tax-exempt organizations generally not receiving tax-deductible contributions, such as labor unions, volunteer fire departments, issue-advocacy groups, local chambers of commerce, veterans’ groups, and community service clubs, according to the department’s press release.

These organizations are still required to continue to collect and keep the donor information and to make it available to the IRS upon its request.

This change does not affect the information required to be reported by charities primarily receiving tax-deductible contributions, such as 501(c)(3) organizations, certain nonexempt private foundations, or 527 political organizations.

The Treasury Department and IRS gave three primary reasons for the change: the IRS makes no systematic use of this information collected by these organizations; the new policy will reduce the risk of inadvertent disclosure or misuse of confidential information; and the new policy saves both private and government resources.

The revised reporting requirements apply to information on returns for taxable years ending on or after December 31, 2018 and becoming due on or after May 15, 2019.

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July 14, 2014 •

Tax-Exempt Status Applications for 501(c)(3) Charities Streamlined for Most Groups

Applications for tax-exempt status of charities filing under section 501(c)(3) of the tax code are now quicker and easier for as many as 70 percent of all applicants, says the IRS. According to an IRS press release, organizations with gross […]

IRS.svgApplications for tax-exempt status of charities filing under section 501(c)(3) of the tax code are now quicker and easier for as many as 70 percent of all applicants, says the IRS.

According to an IRS press release, organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible to use a new three-page application form. The standard form is 26 pages.

IRS Commissioner John Koskinen said, “It didn’t matter if you were a small soccer or gardening club or a major research organization. [The standard form] process created needlessly long delays for groups, which didn’t help the groups, the taxpaying public or the IRS.” According to the IRS, the new shorter form will “speed the approval process for smaller groups and free up resources to review applications from larger, more complex organizations while reducing the application backlog.”

There is a concern groups not having true charitable purposes may use the tax-exempt status to make political contributions without having to reveal the original source of the funds. In a TIME magazine article published July 13, Koskinen dismissed the idea that “if someone has been forced to do more paperwork they’re going to be less nefarious.”

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July 11, 2011 •

IRS Stops Investigating 501(c)(4) Organizations

Future Action Possible

IRS logoThe Internal Revenue Service will not pursue its proposed check on the applicability of gift tax contributions to 501(c)(4) organizations. Acknowledging it has limited history or guidance on this issue, the IRS announced it “will not use resources to pursue examinations on this issue. Any future action we take will be prospective and after notice to the public.”

In recent years, 501(c)(4) organizations, which allow for limited disclosure requirements, have taken a more prominent role in the campaign finance landscape.

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