All nonprofit organizations (other than private foundations) exempt under Code Section 501(c) are subject to regulations that require disclosure of certain information to interested members of the public. The regulations require disclosure of the following:
Annual Information Returns
The exempt organization’s last 3 annual information returns including federal Form 990, 990-N, 990-EZ, and 990-T, and all schedules and supporting attachments. However, under the regulations, an exempt organization is not required to make available:
- lists of contributions, gifts, or grants received;
- Schedule A of Form 990-BL;
- Schedule K-1 of Form 1065; or
- Form 1120- POL.
Application for Tax Exemption
The exempt organization’s application for recognition of tax exemption (e.g., Form 1023 or Form 1024) includes all documents and supporting statements submitted to the IRS in connection with the application. However, under the regulations, the exempt organization is not required to disclose:
- Applications that the IRS has not yet approved (i.e., preliminary or final determination letter has not been received); or
- An application for tax exemption was filed before July 15, 1987 (unless the exempt organization had a copy of its application on July 15, 1987).
Procedures for Processing Requests
1. On-Site Requests
If someone requests the application for tax exemption or the last 3 annual information returns at the exempt organization’s principal office, the exempt organization must alloy an inspection and must allow the individual to photocopy the documents free of charge if the individual provides photocopying equipment at the place of inspection. The exempt organization may have a representative observe the photocopying.
2. Written Requests
Exempt organizations must fulfill written requests within 30 days of receipt of the request. The request must include the address to which a copy of the documents should be sent. The exempt organization is permitted to charge a reasonable fee for processing a request as well as actual postage.
This fee should not exceed $1.00 for the first page of copying and $0.15 for each additional page. Nonprofits are permitted to require advance payment of any fees prior to releasing the requested document. A copy of the documents is deemed to be provided as of the date of the postmark or private delivery mark. If an exempt organization provides the documents via e-mail, the documents are deemed provided on the date it is logged as successfully sent.
3. Exemption for Website Posted Documents
An exempt organization that makes its documents “widely available” on the Internet is not required to comply with copy requests. However, the exempt organization must provide the Internet address, instructions as to how to download the information and make the information available in a format that replicates the documents exactly as they appear when filed.
Penalties for Noncompliance
The IRS may impose fines on tax-exempt exempt organizations that don’t comply with these disclosure requirements. Penalties are $20 per day. There is a maximum penalty of $10,000 for each return not provided and no maximum penalty for the failure to provide an application for tax exemption.
Tax-exempt organizations that do not want to provide hard copies of these documents can post a copy on their website. With the exception of redacting donors’ names and addresses on Forms 990, 990-EZ, and 990-PF, the documents must be identical to the forms filed with the IRS.
Many charitable organizations find that directing donors to Guidestar to view their annual returns has made satisfying their disclosure obligations easier. GuideStar obtains the documents directly from the IRS and posts them to their website in PDF format.
To obtain more information about IRS disclosure regulations, take a look at the IRS FAQs on public disclosure requirements.
Ellis Carter is a nonprofit lawyer licensed to practice in Washington and Arizona. Ellis advises tax-exempt clients on federal tax matters nationwide.