On Tuesday, the Treasury Department issued long-awaited final regulations on donor disclosure requirements for tax-exempt organizations. T.D. 9898 removes the requirement for most tax-exempt organizations, except for Section 501(c)(3) charities and Section 527 political organizations, to disclose the name and address of donors over a certain threshold on their annually filed Form 990. This includes organizations such as social welfare groups, social clubs, fraternal beneficiary societies, business leagues and labor unions. The final rules also went on to clarify that Section 527 political organizations were excluded from this change.
In September 2019, the Treasury issued proposed regulations regarding donor disclosure, but the guidance was ordered by a Montana judge to be set aside until the notice and comment period was complete. After more the 8,000 comments, the IRS determined that it was not necessary to have the names and addresses of significant donors to certain tax-exempt organizations in order to carry out the internal revenue laws. While this change does significantly reduce the administrative burden of both the IRS and the taxpayer, it does not alter the standing requirement for organizations to maintain donor information in their files should the IRS make a request to review the information.
The regulations also addressed a needed technical correction to amend Section 1.6033-2(g)(1)(iii) to replace the average gross receipts filing threshold of $5,000 with the $50,000 threshold already in effect and to apply that threshold to certain exempt organizations not already covered. This update does not eliminate the requirement of those entities falling below the threshold to file the Form 990N electronic postcard annually.
Organizations may choose to apply the regulations to tax returns filed after the date the final regulations were published in the Federal Register, May 28, 2020, or filed after the date of the proposed regulation, September 6, 2019.
Warren Averett will continue to monitor and provide updates on these and other important provisions. If you have any questions about how this will affect your organization, please contact your Warren Averett advisor or complete this form to have a member of our team reach out to you.