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IRS Proposes New Set of Non-Charitable Donor Disclosure Rules

October 24, 2019

Nonprofits, the IRS has released proposed regulations to allow non-charitable tax-exempt organizations to keep their donor lists private, weeks after a court in Montana determined the rule invalid. Read on.

Attention non-charitable tax-exempt organizations…the IRS has announced a proposed regulation to allow non-charitable nonprofits to keep their donor lists private. This comes only a few weeks after a federal court in Montana determined this rule to be invalid. What changed exactly? Let’s delve into the ruling.

Donor disclosure rules

Revenue Procedure 2018-38 was released in 2018 and allowed exempt organizations (other than 501(c)(3) organizations) to redact the names and addresses of donors from Form 990 Schedule B.

In July 2019, a federal judge suspended this rule after a federal court in Montana determined the rule to be invalid because the IRS did not follow proper notice-and-comment procedures.

What’s the latest?

On September 6th, the IRS announced proposed regulations to eliminate donor information disclosure requirements for certain nonprofits. The IRS will accept comments on the proposal before finalizing the regulations. All comments are due by December 9th.

More about the proposed regs

Under the proposed regulations, tax-exempt organizations must continue to file Schedule B with an annual return but organizations do not need to include the names and addresses of contributors.

The proposed regulations do not apply to 501(c)(3) charities and Section 527 political organizations. These organizations must include names and addresses of contributors when filing the Schedule B.

Notice 2019-47 also exempts any tax-exempt organizations that failed to report donor names and addresses on their 2018 Form 990 (because they were adhering to Revenue Procedure 2018-38) from incurring penalties.

What’s the benefit of keeping donor lists private?

As with all donations, for the most part, donors would prefer to have them kept private. Other organizations can get this information and solicit donors who have given to similar causes. Organizations can also harass those donors who support causes that oppose theirs.

Questions on the ruling? Reach out to our Not-for-profit Team.

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