Reporting the names and addresses of substantial donors has been a burden to both tax-exempt orgs and the IRS for some time and the IRS has finally decided to do something about it.
With the issuance of Rev. Proc. 2018-38, the IRS seeks to alleviate the burden on tax-exempt organizations and itself in the process. Under the new guideline, most tax-exempt organizations are no longer required to report the names and addresses of substantial donors. The change does not apply to purely public charities exempt under Sec. 501(c)(3) because they are required to make those disclosures under Sec. 6033(b).
Donor information is currently reported on Schedule B of form 990, Return of Organization Exempt From Income Tax, Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, Form 990-PF, Return of Private Foundation, and Part IV, “Statement With Respect to Contributors, etc.,” of Form 990-BL, Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons.
The IRS has determined that it does not need the personally identifiable information of donors to be reported on Schedule B to carry out its duties, and the requirement increases tax-exempt organizations’ compliance costs, takes up the IRS’s time to redact the information, and poses a risk of inadvertent disclosure of donor information that is not supposed to be open to public inspection. This was the logic used by the IRS in its decision to make the changes.
Not affected are the reporting of contribution information, other than the names and addresses of contributors, required to be reported on Schedule B of Forms 990 and 990-EZ and Part IV of Form 990-BL. The IRS also reminds that although qualifying organizations no longer must report the names and addresses of donors on their information returns, they must keep the information in their books and records to allow the IRS to effectively administer the Code by examining specific taxpayer-donors.