Tax-exempt organizations are different from non-exempt organizations in many ways; one of which is their annual returns and exemption forms are required to be made available to the public. The law requiring public disclosure affects organizations exempt from federal income tax under Internal Revenue Code (the Code) section 501(a) and described in sections 501(c) or 501(d). Political organizations exempt from taxation under section 527(a) also fall under this disclosure requirement.
This law does not apply to certain split-interest trusts, and it does not affect those organizations exempt under other provisions of the Code (i.e. farmers’ cooperatives exempt under section 521, homeowners’ associations exempt under section 528, and qualified state tuition programs exempt under section 529).
Exemption applications –
- Public disclosure requirements for tax-exempt status applications apply to the form itself (Forms 1023, 1023-EZ, or 1024) and include any letter or document issued by the Internal Revenue Service (IRS) concerning the application. This can include any supporting schedules submitted with the forms, any questions posed by the IRS, and a favorable determination letter if one is obtained.
- Typically, the only information that can be withheld from public inspection relates to trade secrets, patents, or other processes.
Annual tax filings –
- For those organizations that do fall under this requirement, Forms 990, 990-EZ, 990-PF, and 990-BL must be available for public inspection for the three-year period beginning with the due date (including extensions) or the date filed, whichever is later. An amended return must be available for a period of three years from the date filed with the IRS.
- Form 990-T is also required to be available for public inspection if filed by an organization exempt under section 501(c)(3) of the Code. Certain forms and attachments can be withheld.
- Returns made available for inspection must be exactly the same as those filed with the IRS; including all attachments and supporting documentation. Salary information, for example, may not be omitted.
- The public may request copies in person during regular business hours at an organization’s principal office, or at its regional or district offices. Requests may also be made in writing. The organization may charge a reasonable fee to cover copying and mailing costs. Copies usually must be provided immediately in the case of in-person requests, and within 30 days in the case of written requests.
- An organization does not have to comply with individual requests for copies if it makes the documents widely available as described in the regulations. This can be done by posting the documents on a readily accessible World Wide Web site, either its own or on a database of exempt organization documents maintained by another organization. To be within this exception, however, the documents must be posted in a format that meets the criteria set forth in the regulations. In general, the format must exactly reproduce the image of the original document and allow an Internet user to access, download, view and print the posted document without the payment of a fee. One format that currently meets the criteria is Portable Document Format (.pdf). An organization that makes its documents widely available in this manner must advise requesters how to access the forms.
- Schedule B (Schedule of Contributors) is also open to public inspection when attached to Form 990-PF or to Form 990 or Form 990-EZ for section 527 political organizations. It’s also important to note that private foundations cannot delete the names and addresses of their contributors. All other organizations can remove names and addresses from Schedule B; however, all other information, including amounts of contributions and descriptions of any noncash contributions are still open to the public, unless the information clearly identifies the contributor. Note that the public disclosure copy must include Schedule B without the names and addresses. Guidestar and other organizations remove the Schedule B entirely; therefore, simply referring individuals to Guidestar does not satisfy public disclosure of Form 990.
- If you are filing Form 990 or 990-EZ with a state, you should not include Schedule B unless specifically required, as a state might inadvertently make the schedule available to the public.
For more information, please visit https://www.irs.gov/charities-non-profits/exempt-organization-public-disclosure-and-availability-requirements, or give us a call.