The Internal Revenue Service today announced proposed regulations to eliminate donor information disclosure requirements for certain nonprofits. The proposed regulations provide “relief from requirements to report contributor names and addresses on annual returns filed by certain tax-exempt organizations, previously provided in Revenue Procedure 2018-38.” Once the notice is published in the Federal Register, the IRS will accept comments on the proposal before finalizing the regulations. The comments will be due 90 days after the date of publication, which is expected to be September 10, 2019.
The new proposed regulations respond to a Montana federal court ruling we reported on this summer that the IRS violated the Administrative Procedure Act when it issued Revenue Ruling 2018-38 without providing a notice-and-comment rulemaking procedure. The Revenue Ruling had provided that tax-exempt organizations, other than Internal Revenue Code Section 501(c)(3) charities and Section 527 political organizations, were no longer required to report the names and addresses of contributors to the IRS on Schedule B of the annual information return (Form 990).
Under the proposed regulations, tax-exempt organizations must continue to file Schedule B with an annual return but organizations, other than Section 501(c)(3) charities and Section 527 political organizations, would not include the names and addresses of contributors. That information must be kept by the organization, in the event of an IRS request. The proposed regulations would allow tax-exempt organizations to apply the regulations to any annual returns filed after today.
The IRS also issued Notice 2019-47, which exempts any tax-exempt organizations that failed to report donor names and addresses with their 2018 Form 990, based on Revenue Ruling 2018-38, from incurring penalties for following the IRS guidance.