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Proposed Rules to End Donor Reporting Requirement for Non-501(c)(3) and Non-527 Organizations

On September 10, 2019, proposed REG-102508-16 was issued to end the reporting of names and addresses of substantial contributors listed on Schedule B of Form 990 or Form 990-EZ for non-501(c)(3) and non-527 organizations. The Treasury Department and the IRS have determined that this information is not necessary for the effective administration of the law and that the cost and risks associated with reporting this information outweigh the IRS’s need for it.

While names and addresses of each substantial contributor may no longer be required, the individual dollar amounts of substantial contributors is still required to be reported to the IRS. No change will occur to the information that is currently available to the public as this Schedule B information is already redacted on an otherwise disclosed information return. Tax-exempt organizations are still required to file Schedule L of Form 990 or Form 990-EZ identifying transactions between the exempt organization and interested persons (including substantial contributors), which may indicate possible risks of private benefit or inurement.

What else you need to know:

  • The regulations are proposed to be effective as of the date of publication of final regulations adopting the new rules.
  • Organizations must still maintain the names and addresses of donors for IRS inspection on a case-by-case basis during examination or enforcement proceeding.

The notice and commenting period for REG-102508-16 ends December 9, 2019. Given the public dialogue that has taken place about the Revenue Procedure 2018-38 (which was ruled unlawful by Bullock, et al. v. IRS, but covered the same topic), there could be changes before the final regulations are issued.

If you have any questions or concerns about the proposed regulation please contact your local Blue & Co. advisor.

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