Have you ever requested a Form 990 from an organization?
Did the organization acknowledge your request? Did the organization comply with the request in a reasonable and timely manner? We asked our newsletter readers these question in June.
Some 55 percent of respondents indicated they have requested a Form 990. Of that 55 percent, roughly 71 percent stated that they received the document in a timely fashion. Kevin McCumber of the Rural Community Assistance Corporation (RCAC) commented, "Prior to availability of most 990s on GuideStar, I requested dozens of 990s from other organizations. Nine out of ten responded promptly."
Not all our readers, however, were so fortunate. "The request was denied by the financial manager of the nonprofit," said Penny Eardley of Boys Hope Girls Hope of Nevada "Wisely, he mentioned the request to his supervisor who then tracked me down to assure me that he would prepare a copy of the 990 for me that day."
June's question of the month also asked readers if they had ever been asked to provide their organization's Form 990. Some 53 percent of respondents indicated they had. In some cases the request came from a foundation from which they were seeking funding; other requests came from similar organizations that wanted to perform a comparison.
So, exactly what are the IRS regulations regarding Form 990 disclosure? How do you know as an employee of a nonprofit organization when you are required to provide your Form 990? How do you know as an interested party if you are eligible to request and receive an organization's Form 990?
The IRS states that under IRC 6104 nonprofit organizations must make their three most recent annual returns publicly available. Congress's reasoning behind this law was to allow the general public access to the returns of organizations and trusts that accept donations from the public.
There are several documents that are covered under the disclosure law, including IRS Forms 990, 990-EZ, 990-PF, and 1023 and an organization's letter of determination.
- Form 990 or 990-EZ. With the exception of most faith-based organizations, tax-exempt nonprofits with incomes of more than $25,000 must file this return annually with the IRS. The three most recent returns must be made available along with any filed attachments, although the names and addresses of contributors must be masked on copies made available to the public. Amounts of contributions and bequests must be disclosed, unless they would identify contributors.
- Form 990-PF. A private foundation must follow the disclosure rules that apply to Forms 990 and 990-EZ.
- Form 1023. A charitable organization's application for exemption (Form 1023), any attachments to the application, and any materials the IRS requests in connection with the application must also be disclosed.
- Letter of determination. An organization must make its letter of determination available to the public.
If this information is requested in person at a nonprofit's principal office, generally the organization must provide the information that day. If the information is requested in writing, the organization usually has 30 days to comply.
Keep in mind that organizations do have the right to charge the requester "reasonable copying costs" for the document in question. The allowable charge is the same amount charged by the IRS for providing copies—$1.00 for the first page and $.15 for each subsequent page.
What happens if the information is not supplied? The penalty for not disclosing an annual return is $20 per day for as long as the failure to comply continues, up to a maximum of $10,000 maximum fee per return not disclosed. There is no maximum fee for failure to provide the application for exemption.
Organizations that do not wish to provide hard copies of these document(s) do have another option: they can post a copy on their Web site. With the exception of masking donor's names and addresses on Forms 990, 990-EZ, and 990-PF, the documents must not be altered in any way.
Many charitable nonprofits have found that having their annual returns available on GuideStar has made their jobs easier. "We now direct requests to your Web site; many persons may go directly there and not even ask us," explained one respondent. GuideStar obtains the documents directly from the IRS and posts them to our Web site in PDF format.
To obtain more information about IRS disclosure regulations, take a look at some IRS FAQs regarding public disclosure requirements.