|
IRS REGULATIONS ON
TAX EXEMPT DISCLOSURE REQUIREMENTS
IRS FORM 990 AND 1023
Discussion
In 1996 Congress passed a law (IRC 6104) that requires tax-exempt organizations to provide
copies of their last three annual information returns (IRS Form 990 or Form
990EZ), application for tax-exempt status (IRS Form 1023) and their Letter of
determination to anyone who asks for copies
by mail or in person. Previously, nonprofits only had to make these documents
available at their place of business. On April 9, 1999, the IRS issued
implementation regulations that became effective on June 8. A summary of the
regulations follows.
1. Covered documents
-
Form 1023 and any supporting documents filed by or on behalf of the
organization in connection with its application.
-
Any letter or document issued by the IRS in connection with the application.
-
Annual information returns (such as Form 990, 990-EZ, 990-BL and Form 1065) that have been filed for the previous three years.
2. The tax-exempt
organization’s obligations if it gets a request for disclosure
-
In-person request to review covered documents: The organization must make
the documents listed above available free of charge at the organization’s
principal places of business and regional offices with three or more staff.
-
In-person requests for copies: An organization must comply with in-person requests on the same business day unless there are “unusual circumstances” such as when key staff are attending an off-site meeting. In no event may the delay exceed 5 business days. The organization may charge up to $1.00 for the first page and $.15 for each additional page. It may require payment by cash or money order.
- In-writing requests for copies: The
organization must respond to requests made in writing, whether by mail,
electronic mail, fax or a private delivery service. Copies of the requested
documents must be mailed within 30 days from the date the organization
receives the request. If the organization requires payment in advance, copies
must be sent within 30 days of the date it receives payment. However, within
seven days of receiving the request, the organization must notify the
requester that it has a prepayment policy and the amount due. The organization
must accept payment by certified check, money order, personal check or credit
card for requests received in writing. If the organization does not require
payment in advance, it must notify the requester and receive consent before
providing copies for which the fee will exceed $20.
3. Making documents available on the Internet
An organization can avoid the above requirements to provide copies if it makes
the covered documents “widely available.” This can be accomplished by posting
the documents on the Internet and allowing the general public to access them at
no charge. With the exception of masking the names and addresses of donors on
Form 990 or Form 990EZ, the regulations require that the documents be posted in a
format that when downloaded, viewed and printed, exactly reproduces the image of
the document as it was originally filed. PDF files are acceptable. The actual
regulations give more specific details.
Within seven days of receiving a written request for copies, organizations that use the Internet to make their documents widely available must notify requesters how to access the documents. In person requesters must be told the Internet address at the time they appear on site.
Please note that even if the documents are posted on the Internet, an
organization must still make them available for inspection on site.
4. What to do if the
organization feels it is the target of a harassment campaign
- An organization that “reasonably” believes it is being subjected to a harassment campaign may suspend compliance, but must file for a “harassment campaign determination” within 10 days. The IRS provides that a harassment campaign exists when the relevant facts and circumstances show the purpose of requests is to disrupt the operations of the organization rather than to obtain information.
- An organization may disregard requests for copies in excess of two per month or four per year made by a single individual or sent from a single address. The organization does not have to submit an application for a harassment campaign determination in these situations.
An organization should be cautious in exercising the harassment exception. If
the IRS determines that the organization was not “reasonable” in its belief that
it was subject to a harassment campaign, it will be subject to the same fines
that are applied for failure to comply with the disclosure requirements. The
fines will be assessed retroactively to the day the organization suspended
compliance.
5. Penalties
The penalty for not disclosing an annual return is $20 per day for as long as
the failure to disclose continues, to to a maximum of $10,000 per return.
There is no maximum penalty for failure to provide the application for
exemption.
NAVREF encourages each VA-affiliated nonprofit foundation to identify a staff
person who will become familiar with these regulations and to whom any
disclosure requests should be directed.
Complete regulations: Federal Register, April 9, 1999 (Volume 64, Number
68)][Rules and Regulations] [Page 17279-17291] For the regulations themselves,
go to: http://www.access.gpo.gov/su_docs/aces/aces140.html.
Scroll down and check “1999 Federal Register.” Enter “page 17279” in the Search
Terms box; click submit. Scroll down to document fr09ap99R Public Disclosure of
Material Relating to Tax Exempt. Click your preferred format.
Helpful links
Internal Revenue Service
http://www.irs.gov/
GuideStar http://www.guidestar.org
Complete list of disclosure documents http://www.irs.gov/pub/irs-tege/topic-b.pdf
Back to
Public Openness and Accountability >
|
