Abby Axelrod-Wunderman, Director of Charitable Giving
Many of you have been tracking developments related to the disclosure of donor identity and proposed IRS regulations to clarify its applicability.
You may recall that focus on this issue increased on July 30, 2019, when a Montana federal district court judge set aside the IRS’s Revenue Procedure 2018-38. Under that Revenue Procedure, the IRS had removed the Schedule B disclosure requirements for Section 501(c)(4) and several other forms of tax-exempt entities.
Because the court based its ruling wholly on procedural grounds, advisors remained concerned that the public could access information regarding clients’ contributions to 501(c)(4) social welfare organizations and 501(c)(6) trade associations.
This concern is now laid to rest. The IRS’s final regulations, effective on May 28, 2020 (which may be applied to returns filed after September 6, 2019) retained the provisions in the proposed regulations requiring only 501(c)(3) charitable organizations and 527 political organizations report names and addresses of substantial contributors during a taxable year.
The net-net here is clients who are giving money to specific organizations that tackle controversial social issues on either end of the political spectrum and are less likely to have their identities revealed, sparing your clients from potential harassment. In an era when more and more people are mobilizing to stand up for their beliefs and causes, the IRS’s nod to free speech and privacy is likely to be a welcome development.
To learn more, please reach out to Abby Axelrod-Wunderman, Director of Charitable Giving at firstname.lastname@example.org or 561.340.4512.