July 19, 2018
The IRS released Revenue Procedure 2018-38 on July 16, which modified the Schedule B filing requirements for tax-exempt organizations exempt under IRC section 501(c) other than 501(c)(3) organizations. Non-501(c)(3) organizations, like 501(c)(4) social welfare organizations or 501(c)(6) trade associations, will no longer have to report the donors’ names and addresses on Schedule B. Schedule B will still have to be completed by these organizations, but only contribution amounts will be listed. These organizations must still collect and maintain the donor information. This change is effective for taxable years ending on or after December 31, 2018 and therefore, will apply to returns due on or after May 15, 2019.
IRC section 6033, and the regulations thereunder, generally require all tax-exempt organizations to report the names and addresses of all persons who contribute $5,000 or more in a year on Schedule B. Note: the names and address of donors are only reported to the IRS. The public disclosure copy of Form 990 – which is required to be provided if requested – does not have to provide the names and address of donors, just the amount of contributions. 501(c)(3) organizations may continue to redact this information on their public disclosure copy of Form 990.
In a statement in connection with the release of Revenue Procedure 2018-38, U.S. Treasury Secretary Steven T. Mnuchin stated, “Americans shouldn’t be required to send the IRS information that it doesn’t need to effectively enforce our tax laws, and the IRS simply does not need tax returns with donor names and addresses to do its job in this area.”
The reporting change set forth in Revenue Procedure 2018-38 is not without controversy. Some have praised the change for relieving an unnecessary compliance burden on tax-exempt organizations that do not receive deductible contributions, and for limiting the possibility of the inadvertent revelation of donors’ names and addresses to the public by the IRS. Others have criticized the change for allowing organizations that may participate in political activity to shield donors’ identity from the IRS.
Moving Forward
We will keep you updated on the developments, but if you have questions on how this new revision impacts your organization, please contact us at rlocastro@grfcpa.com, skelin@grfcpa.com or 301-951-9090.