Public Disclosure Rules for Tax-Exempt Organizations

5 min

Public Inspection A tax-exempt organization must make readily available for (in-person) public inspection its application for recognition of tax exemption (Form 1023 or 1024) (along with all materials, such as Articles of Incorporation and Bylaws, submitted in support of the application (with certain exceptions), and all correspondence to and from the IRS in connection with the application, including but not limited to the IRS "determination letter" affirming the organization's tax-exempt status, all questions posed to the organization by the IRS, and the organization's answers to such questions) and its most recent three annual information returns (Form 990 or Form 990-EZ) - including all schedules and attachments filed with such returns - to anyone who requests them. The organization need not disclose the names or addresses of its contributors. In addition, the Form 990-T is not subject to these disclosure requirements.

These documents must be made available during regular business hours at the organization's principal office, and at any regional or district offices with three or more employees.

These disclosure requirements do not apply to applications for tax exemption (or supporting and related documents, as described above) filed before July 15, 1987, unless the organization filing the application had a copy of the application on July 15, 1987; this exception does not apply to the organization's annual information returns.

Requests for Copies In addition, tax-exempt organizations must comply with requests, made in person or in writing, for copies of such documents. Individuals can request parts of such documents rather than the entire document as long as they identify the specific part they want. An organization is allowed to charge reasonable fees for copying and mailing costs. The fees cannot exceed amounts charged by the IRS (the current fees are $1 for the first page and 15 cents for each subsequent page).

If a request for copies is made in person, it must be satisfied immediately (unless unusual circumstances exist, such as receipt in-person requests that exceed the organization's ability to process such requests on the same day, or a request received while the organization's staff are performing special duties such attending an off-site meeting or convention).

An organization is permitted 30 days to provide the copies of such documents if the request is made in writing. Advance payment for such copies can be required (provided the copies are provided within 30 days of payment), so long as the request for advance payment is made within seven days of receiving the written request for the copies. To protect requesters from unexpected fees, when an organization receives a request in writing without advance payment, it must obtain consent before providing copies that will result in fees of over $20.

An organization must accept payment by (i) cash or money order, or (ii) personal check, if the request is made in writing, but the organization is not required to accept other means of payment, such as credit cards. However, an organization is not required to accept personal checks if it permits payment by credit card.

Exceptions to Copying Requirements There are two exceptions to these copying requirements. An organization will be relieved of its obligation to provide copies if: (i) it makes the requested documents widely available to the public (e.g., if the documents are posted on the organization's Web site on the Internet or in a similar publicly-available database); or (ii) it receives a waiver because the IRS has determined that the organization is the subject of a harassment campaign by opponents and that a waiver would be in the public interest (i.e., where the IRS determines that the purpose of a group of requests is to disrupt the operations of the organization rather than to obtain information). IRS regulations provide that an organization may, without requesting IRS approval, 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.

Subordinate Organizations Covered by Group Exemption A tax-exempt organization that did not file its own application for tax exemption because it is a subordinate organization covered by a group exemption must, upon request, make available for public inspection, or provide copies of, (i) the application submitted to the IRS by the central organization to obtain the group exemption, and (ii) the documents submitted to the IRS to include the subordinate organization in the group exemption. If the central organization provides lists or directories of the subordinate organizations covered by the group exemption, the subordinate organization is only required to provide the application for the group exemption along with the page or pages of the list or directory that specifically refers to it.

Subordinate Organizations Included in Group Return An organization that does not file its own annual information return because it is affiliated with a central organization that files a group return in which it is included must, upon request, make available for public inspection, or provide copies of, the group returns filed by the central organization. If the group return includes separate schedules with respect to each subordinate organization, schedules relating to other subordinate organizations may be omitted.

For both applications for group exemption and annual information returns of subordinate organizations, the requester has the option of requesting these documents directly from the central organization.

Alerting IRS of Noncompliance with Requirements If an organization denies an individual's request for inspection or a copy of any such documents, the individual may "alert" the IRS "to the possible need for enforcement action" by sending a written statement to the IRS' central tax-exempt organizations office in Cincinnati, Ohio describing the reason why the individual believes the denial was in violation of the requirements.

Penalties for Noncompliance The penalty on the organization for each willful failure to permit public inspection or provide copies of such documents is $5,000 for each information return or application for tax exemption. In addition, responsible individuals of an organization who fail to provide such documents as required may be subject to a penalty of $20 per day for as long as the failure continues. There is a maximum penalty on responsible individuals of $10,000 for each failure to provide a copy of an annual information return; there is no maximum penalty for the failure to provide a copy of a tax exemption application.