IRS to 501(c)s: Keep Your Irrelevant Donor Data

The IRS has announced that it is no longer requiring 501(c) organizations, other than 501(c)(3) charitable non-profits, to report lists of their donors. The new rule means that issue advocacy groups, labor unions, veterans groups, political organizations, and other 501(c) non-profits will no longer have to  proactively disclose their contributors to the IRS.

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The change does not affect 501(c)(3)s, as the IRS still needs the lists of donors entitled to claim charitable income tax deductions. Since the deduction is not available for contributions to political campaigns and other 501(c)s, however, the IRS does not need this information.

According to U.S. Treasury Secretary Steven T. Mnuchin:

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. It is important to emphasize that this change will in no way limit transparency.  The same information about tax-exempt organizations that was previously available to the public will continue to be available, while private taxpayer information will be better protected.  The IRS’s new policy for certain tax-exempt organizations will make our tax system simpler and less susceptible to abuse.

It might deserve noting that the requirement elimination has no bearing on any state or federal campaign finance disclosure requirements. That’s a completely different issue.

The IRS press release is available here. Formal guidance is here.

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