On March 3rd, the U.S. House of Representatives passed the For the People Act (the “Act”). Of the provisions within the Act, Section 4502 calls for the repeal of Internal Revenue Service (“IRS”) reporting requirements related to guidance under Internal Revenue Code (“Code”) Section 6033.
In 2018, the IRS released Revenue Procedure 2018-38 that no longer required certain tax-exempt organizations to report donor names and addresses on the Schedule B to the Return of an Organization Exempt from Income Tax (Form 990). In effect, this allowed most tax-exempt organizations to merely retain the names and addresses of contributors in their official records without additional disclosure requirements from the IRS.
Shortly after the IRS released this Revenue Procedure, a case was brought on behalf of Montana and New Jersey, with Montana Governor Steve Bullock named as plaintiff, challenging this same Revenue Procedure on procedural grounds, stating that the IRS failed to follow notice and comment requirements under the Administrative Procedure Act. In July 2019, a federal district court in Montana sided with the plaintiff and invalidated Revenue Procedure 2018-38.
During all of this, tax-exempt organizations were left wondering what the reporting requirements might look like after this case, but in 2020, the IRS released final regulations that codified rules stating that the only tax-exempt organizations required to report contributor names and addresses on its Schedule B to the Return of Organizations Exempt from Income Tax (Form 990) are those organizations organized and operated under Section 501(c)(3) and 527 of the Code.
The passing of the Act in the U.S. House of Representatives represents a long-held struggle regarding these particular disclosure and privacy rules. The Senate will consider the Act next, and if the Senate passes, the Act will move to President Biden’s desk for signature and enactment. We will continue to monitor this particular piece of legislation. Please contact us if you would like to discuss the potential effect this could have for your tax-exempt organization.
Comprehensive Estate Planning Attorney Emily Ramseyer explains updates under SECURE Act
Donor privacy and disclosure rules are changing. Our tax-exempt attorney, Stacy Lubbers explains.