Nonprofit Updates: 990 Rule Change

On July 16, 2018, the IRS released Revenue Procedure 2018-38, modifying donor disclosure requirements for certain organizations exempt from tax under Section 501(a) of the Internal Revenue Code, other than organizations described in Section 501(c)(3). Those nonprofits will no longer be required to report donor names and addresses on Schedule B of IRS Form 990 or 990-EZ information returns.

This change affects all organizations that are tax-exempt under Section 501(c), other than charitable organizations described under Section 501(c)(3). Organizations impacted include labor unions, trade associations, recreational clubs, social welfare groups, issue-advocacy groups, local chambers of commerce, and veteran groups.

The IRS highlights three key benefits to the change: Schedule B information is not used as part of tax enforcement, reduced risk of inadvertent release of confidential donor information, and reduced administrative costs for both the IRS and filers.

The tax-exempt organizations relieved of the obligation to report the names and addresses of their contributors must continue to keep this information in their books and records in case the IRS wishes to examine this information.

These revised reporting requirements apply to 990 and 990-EZ information returns for tax years ending on or after Dec. 31, 2018. Consequently, the revised requirements generally will apply to returns that become due on or after May 15, 2019.

Contact your Whittlesey Advisor for more information.