CHAPTER SEVEN
Import of Form 990

The annual information return filed by most of the larger tax-exempt organizations with the IRS is Form 990.1 The Form 990 has enormous implications for charitable organizations and their fundraising programs.

There is more to this process, however, than the Form 990. Most medium-sized exempt organizations are permitted to file a shorter annual information return, the Form 990-EZ, which has also been revised. Small organizations are excused from filing an annual information return but are required to annually submit a notice to the IRS, by means of Form 990-N. Private foundations, irrespective of amount of gross receipts or asset size, file Form 990-PF.2

§ 7.1 FORM 990 SERIES BASICS

Most organizations that are exempt from federal income taxation must file an annual information return with the IRS. This return generally calls for the provision of much information, some of it financial and some in prose form. This document, being an information return, rather than a tax return, is available for public inspection.3

(a) Various Forms

For many large tax-exempt organizations, this information return that must be filed annually is Form 990. The medium-sized organizations—that is, those with gross receipts that are less than $500,000 and total assets that are less than $1,250,000 in value at the end of the reporting year—generally file Form 990-EZ.4 Sponsoring organizations with donor-advised funds,5 organizations that operate one or more hospital facilities,6 and controlling organizations,7 however, must file Form 990. Supporting organizations8 are required to file either Form 990 or Form 990-EZ, depending on their level of gross receipts and asset value. Other forms in the 990 series are Forms 990-N, 990-T,9 and 990-W.

(b) Filing Exceptions

The requirement for the filing of an annual information return does not apply to certain entities, such as churches, their integrated auxiliaries, conventions of churches, mission societies, and affiliates of governmental units.10

Otherwise, organizations that normally have gross receipts not in excess of $50,000, while not required to file an annual information return, must annually electronically submit a notice to the IRS by means of Form 990-N (known as the e-postcard).11

(c) Filing Due Dates

The annual information return (as well as the e-postcard) is due on or before the 15th day of the 5th month following the close of the organization's tax year. Thus, the return for a calendar-year organization should be filed by May 15 of each year. One or more extensions may be obtained. These returns are filed with the IRS service center in Ogden, Utah.

The filing date for an annual information return may fall due while the organization's application for recognition of tax-exempt status is pending with the IRS. In that instance, the organization should nonetheless file the information return (rather than a tax return) and indicate on it that the application is pending.

(d) Penalties

Failure to timely file the annual information return, without reasonable cause or an exception, can generally give rise to a $20-per-day penalty.12 The organization must pay for each day the failure continues, up to a maximum of $10,000.13 For larger organizations (those with annual gross receipts in excess of $1 million), the per-day penalty is $100 and the maximum penalty is $50,000.14

An additional penalty can be imposed, at the same rate and up to the same maximum, on the individual(s) responsible for the failure to file, absent reasonable cause. Other fines and even imprisonment can be imposed for willfully failing to file returns or for filing fraudulent returns and statements with the IRS.

(e) Disclosure Requirements

The IRS, in its instructions, observes: “Some members of the public rely on Form 990, or Form 990-EZ, as the primary or sole source of information about a particular organization. How the public perceives an organization in such cases may be determined by the information presented on its returns.”

A tax-exempt organization's completed Form 990 or Form 990-EZ is available for public inspection and disclosure. Schedule B15 is generally not available for public inspection, although it is available in the case of political organizations that file either return and private foundations. Form 990-T, filed by a charitable organization to report unrelated business income, is also available for public inspection and disclosure.16

(i) Availability through IRS.   Form 4506-A may be filed to request (1) a copy of a tax-exempt organization's return, report, notice, or application for recognition of exemption, and/or (2) an inspection of a return, report, notice, or application at an IRS office.

(ii) Availability through Exempt Organization. In general, a tax-exempt organization must:

  • Make its application for recognition of exemption and its annual information returns available for public inspection without charge at its principal, regional, and district offices during regular business hours.
  • Make each annual information return available for a period of three years, beginning on the date the return is required to be filed or is actually filed, whichever is later.
  • Provide a copy without charge, other than a reasonable fee for reproduction and actual postage costs, of all or any part of any application or return required to be made available for public inspection to any individual who makes a request for such copy in person or in writing.

A tax-exempt organization must:

  • Provide copies of required documents in response to a request made in person at its principal, regional, and district offices during regular business hours.
  • Provide these copies to a requester on the day the request is made, except under unusual circumstances.17

In the case of an in-person request, where unusual circumstances exist so that fulfilling the request on the same business day causes an unreasonable burden to the tax-exempt organization, the organization must provide the copies no later than the next business day following the day that the unusual circumstances cease to exist or the fifth business day after the date of the request, whichever occurs first. Unusual circumstances include requests received (1) that exceed the organization's daily capacity to make copies, (2) shortly before the end of regular business hours that require an extensive amount of copying, or (3) on a day when the organization's managerial staff capable of fulfilling the request is conducting special duties, such as student registration or attending an offsite meeting or convention.

A tax-exempt organization may charge a reasonable fee for providing copies. Before the organization provides the documents, it may require that the individual requesting the copies pay the fee. If the organization has provided an individual making the request with notice of the fee, and the individual does not pay the fee within 30 days, or if the individual pays the fee by check and the check does not clear, the organization may disregard the request.

A tax-exempt organization is not required to comply with a request for a copy of its application for recognition of exemption or an annual information return if the organization has made the requested document widely available. (It must nonetheless comply with the public inspection rules.) This widely available requirement is satisfied by posting the document on a website that the exempt organization maintains or on a website maintained by another organization where:

  • The website clearly informs readers that the document is available and provides instructions for downloading it.
  • The document is posted in a format that, when accessed, downloaded, viewed, and printed in hardcopy, exactly reproduces the image of the application for recognition of exemption or annual information return as it was originally filed with the IRS (except for any information permitted by statute to be withheld from public disclosure).
  • An individual with access to the Internet can access, download, view, and print the document without special computer hardware or software required for that format and without payment of a fee to the exempt organization or another entity maintaining the website.

If the Director of Exempt Organizations Examination (or a designee) determines that a tax-exempt organization is being harassed, the organization is not required to comply with any request for copies that it reasonably believes is part of a harassment campaign. Whether a group of requests constitutes a harassment campaign depends on the relevant facts and circumstances, such as a sudden increase in requests, an extraordinary number of requests by form letters or similarly worded correspondence, hostile requests, evidence showing bad faith or deterrence of the organization's exempt purpose, and a demonstration that the organization routinely provides copies of its documents on request. An exempt organization may disregard any request for copies of all or part of any document beyond the first two received within a 30-day period or the first four received within a one-year period from the same individual or the same address, irrespective of whether the IRS has determined that the organization is a victim of a harassment campaign.

§ 7.2 IRS GUIDING PRINCIPLES

When the IRS substantially overhauled the annual information return (Form 990) in 2007, the agency stated that the retooling of the form was based on these guiding principles:

  • Enhancing transparency by providing the IRS and the public with a realistic picture of the filing organization and its operations, along with the basis for comparing the organization to similar organizations.
  • Promoting compliance by designing a return that accurately reflects the organization's operations and use of assets, thereby enabling the IRS to more efficiently assess the risk of any noncompliance by the organization.
  • Minimizing the burden on filing organizations by asking questions in a manner that makes it relatively easy to prepare the return and not imposing unwarranted record-keeping or information-gathering burdens to obtain and substantiate the reported information.

§ 7.3 IMPORT OF FORM 990

Form 990 is no ordinary information return and, for that matter, is no ordinary government form. This is a significant, complex, and extraordinary document. It is, in many ways, a work of art, in that it captures the requirements of a large amount of statutory law. At the same time, because of its size and complexity, many organizations must engage in considerable effort (time and money) to create needed documents, maintain records, and properly prepare and timely file the return.

From a law perspective, the return has, as noted, enormous implications for tax-exempt organizations, for two reasons. First, the form in various places and ways has the effect of creating much new law. Dramatic examples of this fact include the return's impact on the regulation of charitable fundraising18 and on governance of public charities.19 Second, the form is designed to induce certain behavior by the management of nonprofit, tax-exempt organizations by in essence forcing organizations to check “yes” boxes (or avoid checking “no” boxes). The import of this “shaming technique” can been seen, for example, in the requirements as to development of various governance policies and dissemination to the public of various documents.20

§ 7.4 SUMMARY OF PARTS OF FORM 990

The redesigned Form 990 includes an 11-page “core form.” There is a one-page summary of the organization (Part I), followed by 10 additional parts (II–XI). Part II is the signature block. This core return is accompanied by 16 schedules.

(a) Part I (Summary)

The summary requests, in line 1, a brief description of the organization's mission or most significant activities. The organization has the choice as to which it wishes to highlight. This summary asks for the number of voting members of the organization's governing body (line 3), the number of these board members who are independent (line 4), the number of employees (line 5), and the number of volunteers (line 6). Other questions concern the amount of contributions and grants (line 8), program service revenue (line 9), investment income (line 10), other revenue (line 11), total gross unrelated business income (line 7a), total revenue and expenses (lines 12 and 18), grants and similar amounts paid (line 13), compensation (line 15), professional fundraising expenses (line 16a), other expenses (line 17), and total assets and liabilities (lines 20 and 21).

A box is to be checked (line 2) if the organization discontinued its operations or disposed of more than 25 percent of its assets. That is, this box is to be checked if the organization answered “yes” to lines 31 or 32 of Part IV and thus completed Schedule N, Part I or II.

As to volunteers (line 6), the organization is required to provide the number of volunteers, full-time and part-time, who provided services to the organization during the reporting year. Organizations that do not keep track of this information in their books and records or report this information elsewhere (such as in annual reports or grant proposals) may provide a “reasonable estimate [of this number], and may use any reasonable basis for determining this estimate.” Organizations may, but are not required to, provide an explanation on Schedule O as to how this number was determined, as well as the types of services or benefits provided by their volunteers.

As to unrelated business taxable income (line 7b), if the organization is not required to file a Form 990-T for the tax year, it should enter “0.” If the organization has not yet filed Form 990-T for the tax year, it should provide an estimate of the amount it expects to report on that return (line 34) when it is filed.

Lines 8–19 require reporting of prior-year revenue and expense amounts. The following list should be used to determine what to report on these lines for prior-year revenue and expense amounts from the previous Form 990:

  • Contributions and grants (line 8)
  • Program service revenue (line 9)
  • Investment income (line 10)
  • Other revenue (line 11)
  • Total revenue (line 12)
  • Grants and similar amounts paid (line 13)
  • Benefits paid to or for members (line 14)
  • Salaries, other compensation, employee benefits (line 15)
  • Professional fundraising expenses (line 16)
  • Other expenses (line 17)
  • Total expenses (line 18)
  • Revenue less expenses (line 19)

The IRS, in its instructions, advises organizations that, because Part I generally reflects information reported elsewhere in the new Form 990, completion of this part (Summary) should be deferred until completion of the other parts of the return.21

(b) Part II

To make the new Form 990 complete, an officer of the filing organization authorized to sign the return must sign it in the space provided. For a corporation or unincorporated association, this officer may be the president, vice president, treasurer, assistant treasurer, chief accounting officer, or other corporate or association officer, such as a tax officer. A receiver, trustee, or assignee must sign any return he or she files for a corporation or an association. For a trust, the authorized trustee(s) must sign the return.

Generally, anyone who is paid to prepare the return must sign in the Paid Preparer's Use Only area. The paid preparer must (1) sign the return in the space provided for the preparer's signature, (2) enter the preparer information (other than the preparer taxpayer identification number and the employer identification number blocks, except as described next), and (3) provide a copy of the return to the organization. The paid preparer, however, must enter the preparer taxpayer identification number and the preparer's firm's employer identification number only if filing Form 990 for a nonexempt charitable split-interest trust that is not filing Form 1041. The paid preparer's space is to be left blank if a regular employee of the filing organization prepared the return.

On the last line of Part II, the organization should check the “yes” box if the IRS may contact the paid preparer who signed the return to discuss the return. By checking this box “yes,” the organization is authorizing the IRS to contact the paid preparer to discuss any matter relating to this return. The “no” box is to be checked if the IRS is to contact the organization or its principal officer (listed in item F of the introduction [heading]) rather than the paid preparer.

(c) Part III

Part III of the redesigned Form 990 concerns the filing organization's program service accomplishments. It is required to describe its mission, new significant program services, any significant changes in the way it conducts a program, a cessation of any activity, and the exempt purpose achievements for each of its three largest program services by expenses. Charitable and social welfare organizations are required to report the amount of grants and allocations to others, total expenses, and any revenue for each program service reported.

(d) Part IV

Part IV of the redesigned Form 990 is a checklist of (potentially) required schedules. This checklist references 44 questions and 16 schedules.

(e) Part V

Part V of Form 990 pertains to a variety of activities and IRS filings. As to activities, there are questions about unrelated business income, involvement in a prohibited tax shelter transaction, use of supporting organizations, use of donor-advised funds, and payments with respect to personal benefit contracts. As to IRS filings, there are questions about the filing of seven forms (990-T, 1096, 1098-C, 8282, 8886-T, W-2G, and W-3).

(f) Part VI

Part VI of Form 990 concerns governance, management, policies, and disclosure. As to the governing body and management (Section A), questions concern the number of voting members of the governing body and the number of board members who are “independent.” Inquiry is made as to whether the organization has conflict-of-interest, whistleblower, and document retention and destruction policies, as well as policies governing the activities of chapters, affiliates, and “branches” (Section B). Additional questions pertain to various disclosures (Section C).

(g) Part VII

Part VII of Form 990 focuses on compensation of insiders and independent contractors. These persons currently in their positions must be listed (irrespective of compensation), along with a list of the organization's five highest-compensated employees (other than insiders) who received compensation of more than $100,000 from the organization and any related organizations during the year; the organization's former officers, key employees, or highest-compensated employees who received more than $100,000 of compensation from the organization and any related organizations during the year; and the organization's former directors or trustees who received (in that capacity) more than $10,000 of compensation from the organization and any related organizations during the year.

(h) Parts VIII–XI

Part VIII of Form 990 is a revenue statement, Part IX is a statement of expenses (including functional reporting), Part X is a balance sheet, and Part XI concerns financial statements.

§ 7.5 PREPARATION OF FORM 990, PART I22

Organizations that are required to file Form 990 may describe their mission in Part I, line 1, and are required to describe their mission in Part III, line 1.

The Summary (Part I) poses eight questions about an organization's activities and governance:

  1. The organization is asked to briefly describe its mission or most significant activities (line 1). This is an unusual choice, because, as noted, the mission pertains to the organization's purposes, while activities, of course, mean actual operations. These are two different matters entirely. The filing organization gets to choose.
  2. The organization must indicate (by checking a box) whether, during the filing year, it discontinued its operations or disposed of more than 25 percent of its assets (line 2).
  3. The number of voting members of the governing body (line 3) (see Form 990, Part VI, line 1a).
  4. The number of independent voting members of the governing body (line 4) (see Form 990, Part VI, line 1b).
  5. The total number of employees (line 5) (see Form 990, Part V, line 2a).
  6. The total number of volunteers (if necessary, an estimate will suffice) (line 6).
  7. The total amount of gross unrelated business revenue (line 7a) (see Form 990, Part VIII, line 12, column (C)).
  8. The net amount of unrelated business taxable income (line 7b) (see Form 990-T, line 34).

The summary poses 10 questions about revenue, five of which concern the current year and five of which concern the prior year:

  1. The amount of contributions and grants (line 8) (see Form 990, Part VIII, line 1h)
  2. The amount of program service revenue (line 9) (see Form 990, Part VIII, line 2g)
  3. The amount of investment income (line 10) (see Form 990, Part VIII, lines 3, 4, and 7d)
  4. The amount of other revenue (line 11) (see Form 990, Part VIII, lines 5, 6d, 8c, 9c, and 10c of column (A), and 11e)
  5. The amount of total revenue (line 12, which is the sum of the amounts on lines 8–11) (see Form 990, Part VIII, line 12, column (A))

The summary poses 16 questions about expenses, 8 of which concern the current year and 8 of which concern the prior year:

  1. The amount of grants and similar amounts paid (line 13) (see Form 990, Part IX, lines 1–3, column (A))
  2. The amount of benefits paid to or for members (line 14) (see Form 990, Part IX, line 4, column (A))
  3. The amount of salaries, other compensation, and employee benefits (line 15) (see Form 990, Part IX, lines 5–10, column (A))
  4. The amount of professional fundraising expenses (line 16a) (see Form 990, Part IX, line 11e, column (A))
  5. The total amount paid for fundraising, calculated on the basis of functional accounting (line 16b) (see Form 990, Part IX, line 25, column (D))
  6. The amount of other expenses (line 17) (see Form 990, Part IX, lines 11d, 11f–24f)
  7. The amount of total expenses (line 18, which is the sum of the amounts on lines 13–17) (see Form 990, Part IX, line 25, column (A))
  8. The amount of revenue less expenses (line 19, which is the amount on line 12 minus the amount on line 18)

The summary poses six questions about net assets or fund balances, three of which concern the amounts at the beginning of the year and three of which concern the amounts at the end of the year:

  1. The value of total assets (line 20) (see Form 990, Part X, line 16)
  2. The amount of total liabilities (line 21) (see Form 990, Part X, line 26)
  3. The value of net assets or the fund balance (line 22, which is the amount on line 20 minus the amount on line 21)

§ 7.6 SUMMARY OF FORM 990 SCHEDULES

As noted, the Form 990 includes 16 schedules.

(a) Schedule A

Schedule A of Form 990 is used by charitable organizations to report their public charity status.23 Specific questions about supporting organizations include identification of the organization's type, a certification as to lack of control by disqualified persons, contributions from disqualified persons, and information about supported organizations.

There are separate public support schedules for the basic types of publicly supported charitable organizations. The public support computation period has been elongated to five years, which makes it consistent with the advance ruling period public support test. An organization can claim public charity status on the basis of the facts-and-circumstances test on this schedule.

(b) Schedule B

Schedule B is the schedule used to report charitable contributions and grants. It is the same as the preexisting Schedule B.24

(c) Schedule C

Schedule C comprises questions concerning political campaign and lobbying activities, principally by charitable organizations. Filing organizations are required to describe their direct and indirect political campaign activities, including the amounts of political expenditures and volunteer hours. There are separate parts for lobbying charitable organizations that are under the substantial part test and the expenditure test. Certain other types of tax-exempt entities must prepare additional parts of this schedule.

(d) Schedule D

Schedule D is used to report supplemental financial information, such as for investments, liabilities, conservation easements, donor-advised funds, art collections, trust accounts, and endowment funds.

(e) Schedule E

Schedule E is filed by organizations that constitute tax-exempt private schools. Most of this schedule relates to the requirement that the organization cannot, to be tax-exempt, maintain a racially discriminatory policy. A question inquires as to whether the organization receives any financial aid or other assistance from a governmental agency.

(f) Schedule F

The essence of Schedule F is the reporting of activities outside the United States. These activities, such as program services, grantmaking, and fundraising, are reported on a per-region basis. Grantmakers are required to describe their procedures for monitoring the use of grant funds. Information must be supplied if a grantee or other recipient of assistance is related to any person with an interest in the grantmaking organization. Additional details are required in instances of grants or other assistance to organizations or individuals.

(g) Schedule G

Schedule G largely concerns fundraising activities.25 The filing organization indicates the type or types of fundraising in which it is engaged and provides information about any fundraising contracts (including those with insiders). The organization is required to list the jurisdictions in which it is authorized to solicit funds. A part of this schedule focuses on fundraising events;26 another part solicits details about gaming activities.27

(h) Schedule H

Schedule H is filed by tax-exempt hospitals. The first part of this schedule (Part I) is a “community benefit report.” The filing hospital indicates whether it provides free or discounted care to low-income individuals or those who are “medically indigent.” The hospital reports on its charity care (such as care at cost, unreimbursed Medicaid services, and other unreimbursed costs in connection with government programs) and other community benefits (such as health improvement services, health professions education, subsidized health services, and research). The organization is asked whether it prepares an annual community benefit report and to describe its charity care policy.

The second part of this schedule (Part II) inquires as to the hospital's “community-building” activities. These activities include physical improvements and housing, economic development, community support, environmental improvements, leadership development and training for community members, coalition-building, community health improvement advocacy, and workforce development.

Another part (Part III) pertains to bad debt, Medicare, and collection practices. A fourth part asks questions about the use of management companies and involvement in joint ventures. A fifth part (Part V) seeks information about the hospital's facilities. The schedule (Part VI) requests a description of how the organization assesses the health care needs of the communities it serves and how the organization informs patients about their eligibility for assistance under federal, state, or local government programs or under its charity care policy.

(i) Schedule I

Schedule I is used to solicit information about the organization's domestic grant and other assistance programs. For example, the organization is asked whether it maintains records to substantiate the amount of its assistance, and about the organization's selection criteria and grantees' eligibility. Information is required for grants of more than $5,000 to organizations and all grants to individuals.

(j) Schedule J

Schedule J is used to solicit supplemental information about compensation. The organization must indicate (in Part I) whether it provides to its insiders payments or items in forms such as first-class or charter travel, a discretionary spending account, a housing allowance, or health or social club dues; it is asked whether it follows a written policy in connection with such payments (or reimbursements) or items. The organization is asked how it determines certain executive compensation and, in the case of charitable and social welfare organizations, whether it provided any form of nonfixed payments.

The organization reports information concerning compensation paid to trustees, directors, officers, key employees, and highly compensated employees (Part II). There is a breakdown as to base compensation, bonus and incentive compensation, deferred compensation, and nontaxable benefits.

(k) Schedule K

Schedule K is used to solicit information about tax-exempt bond issues (Part I) and the use of the proceeds (Part II). There are questions about the private use rules (Part III) and arbitrage (Part IV).

(l) Schedule L

Schedule L concerns excess benefit transactions and loans to and from interested persons. Information sought includes the name of the debtor/creditor, original principal amount, balance due, the purpose of the loan, and whether there is a written agreement. Questions are also asked about grants or other forms of assistance benefiting, and business transactions involving interested persons.

(m) Schedule M

The focus of Schedule M is on noncash contributions.28 Thus, information is sought about gifts of art (including fractional interests), books, clothing and household goods, automobiles, airplanes, boats, intellectual property, securities, qualified conservation property, real estate, collectibles, food inventory, drugs and medical supplies, taxidermy, historical artifacts, scientific specimens, and archeological artifacts.

This schedule inquires as to the number of Forms 8283 received by the organization for contributions for which the organization completed the donee acknowledgment portion (see below); whether the organization received any property that it must hold for at least three years from the date of its contribution, which is not required to be used for exempt purposes during the entire holding period; whether the organization has a gift acceptance policy that requires the review of nonstandard contributions; and whether the organization used third parties or related organizations to solicit, process, or sell noncash distributions.

(n) Schedule N

Schedule N pertains to liquidations, terminations, dissolutions, and significant dispositions of assets. Questions include a description of the assets involved, their value, the method of determining the value, the date of the distribution, and the name and address of the recipient. Other questions concern the involvement of an insider with the successor or transferee organization, notification of one or more state officials, and other compliance with state laws. Additional information is sought concerning transfers of more than 25 percent of the organization's assets.

(o) Schedule O

Filing organizations use Schedule O to provide additional information for responses to specific questions in Form 990 and/or its schedules, and to provide additional information.

(p) Schedule R

Schedule R has as one of its purposes the identification of disregarded entities and related tax-exempt organizations. Related organizations taxable as a partnership and as a corporation or trust must also be identified. There is a series of questions about transactions with related organizations and unrelated organizations taxable as partnerships.

§ 7.7 FORM 990-EZ

To alleviate the annual reporting burden for smaller tax-exempt organizations, the IRS promulgated a less-extensive annual information return. This is the two-page Form 990-EZ.

This return may generally be used by tax-exempt organizations that have gross receipts that are less than $500,000 and total assets that are less than $1,250,000 in value at the end of the reporting year.

§ 7.8 INSTRUCTIONS

The IRS issued instructions to accompany the Form 990. These instructions provide guidance that is specific to each part and schedule of the new Form 990, plus an appendix of law.

The instructions include a sequencing list, to assist an organization in completing the form and its schedules. As is noted, “certain later parts of the form must first be completed in order to complete earlier parts.” According to this list, here is the way to approach the new Form 990:

  1. Complete lines A–F and H(a)–M in the heading of the return.
  2. Determine the organization's related organizations for which reporting will be required (see Schedule R).
  3. Determine the organization's officers, directors, trustees, key employees, and five highest-compensated employees (to be listed in Part VII, Section A).
  4. Complete Parts VIII, IX, and X (revenue and expense statements, and balance sheet).
  5. Complete line G in the heading (gross receipts).
  6. Complete Parts III, V, VII, and XI.
  7. Complete Schedule L (concerning transactions with interested persons) (if required).
  8. Complete Part VI.
  9. Complete Part I.
  10. Complete Part IV.

Complete remaining applicable schedules (for which “yes” boxes were checked in Part IV).

Complete Part II (signature block).

Another unique feature of these instructions is the Appendix, which provides information about:

  • Types of tax-exempt organizations (a reference chart)
  • Steps for determining various levels of gross receipts (such as the $25,000 filing threshold)
  • Public inspection of returns
  • Group exemption returns
  • Disregarded entities and joint ventures
  • Excess benefit transactions

Also, the IRS provided a 24-page glossary.

§ 7.9 FEDERAL AND STATE REGULATION OF GAMING

Federal tax law is generally silent on the matter of gaming by tax-exempt organizations; the little law there is consists of the IRS's instructions and the exception from treatment as unrelated business for qualified bingo games.29

(a) Definitions

The IRS's instructions provide that gaming includes “bingo, pull tabs/instant bingo (including satellite and progressive bingo), Texas Hold-'Em Poker and other card games, raffles, scratch-offs, [use of] charitable gaming tickets, break-opens, hard cards, banded tickets, jar tickets, pickle cards, Lucky Seven cards, Nevada Club tickets, casino nights, Las Vegas nights, and coin-operated gambling devices.” Coin-operated gambling devices include “slot machines, electronic video slot or line games, video poker, video blackjack, video keno, video bingo, [and] video pull tab games.”

The instructions define bingo as follows: a “game of chance played with cards that are generally printed with five rows of five squares each. Participants place markers over randomly called numbers on the cards in an attempt to form a preselected pattern such as a horizontal, vertical, or diagonal line, or all four corners. The first participant to form the preselected pattern wins the game. To be a ‘bingo’ game, the game must be of the type described in which wagers are placed, winners are determined, and prizes or other property are distributed in the presence of all persons placing wagers in that game.”

The instructions define pull-tabs/instant bingo/progressive bingo as follows: this phrase includes “games in which an individual places a wager by purchasing preprinted cards that are covered with pull-tabs. Winners are revealed when the individual pulls back the sealed tabs on the front of the card and compares the patterns under the tabs with the winning patterns preprinted on the back of the card. Included in the definition of pull-tabs are ‘instant bingo,’ ‘mini bingo,’ and other similar scratch-off cards. Satellite, Internet, and progressive bingo are games conducted in many different places simultaneously, and the winners are not all present when the wagers are placed; the winners are determined and the prizes are distributed. Revenue and expenses associated with satellite, Internet, and progressive bingo should be included under this category.”

The instructions define the phrase partnership formed to administer charitable gaming to mean “two or more organizations that are authorized under state law to conduct bingo or other gaming at the same location joining together to account for and/or share revenues, authorized expenses, and inventory related to bingo and gaming operations.”

(b) Law in General

The principal focus of the IRS in this regard, principally in the contexts of examinations, is on bingo and pull-tab games. Bingo games are excluded from the definition of unrelated business. Generally, however, the regular operation by a tax-exempt organization of gambling activities (including instant bingo, pull-tab games, and the like) is the conduct of an unrelated business, particularly where the activities involve the public. A gaming activity conducted entirely by volunteers may be exempt from unrelated business taxation.

In some instances, gaming activities can be substantially related activities, such as when conducted by a tax-exempt organization for social or recreational purposes for its members and their bona fide guests. These exempt organizations include social clubs, fraternal beneficiary societies, domestic fraternal societies, and veterans' organizations. Gaming activities involving only members and their guests directly furthers exempt purposes in these instances.

A nonmember, in this context, is defined in the instructions as an “individual who is not a member of the organization but who participates in recreational activities sponsored by the organization or receives services or goods from the organization and pays for the services or goods received.” These instructions continue: “Such an individual, even when accompanied by a member, is generally considered to be the principal in a business transaction with the organization. Gaming open to the general public may result in unrelated business income tax (UBIT) or adversely affect exempt status.”

Many states have gaming laws that identify the types of organizations that are allowed to conduct gaming activities and the conditions pursuant to which the games may be conducted (such as a requirement that volunteers be utilized or a limit on the number of nights in a week a tax-exempt organization can conduct gaming activity). If there is an IRS examination of an exempt organization as to gaming, it should be expected that the examining agent(s) will be aware of the state's agency in charge of gaming activities enforcement, policy memoranda, and reporting requirements.

§ 7.10 SCHEDULE B

Schedule B of the Form 990 is used to provide information about contributions the filing organization reported in Part VIII, line 1. Every organization must file Schedule B, unless it certifies that it does not meet this filing requirement (by answering “no” on Form 990, Part IV, line 2). When preparing this schedule, the organization must use the same accounting method previously reported (Form 990, Part XI, line 1).

(a) Definitions

The term contributor includes individuals, fiduciaries, partnerships, corporations, associations, trusts, governmental units, and other tax-exempt organizations. The term contribution means contributions, grants, bequests, or devises of money or property, whether or not for charitable purposes (such as political contributions). Contributions do not include fees received for the performance of services.

A cash contribution includes contributions paid by cash, credit card, check, money order, electronic fund or wire transfers, and other charges against funds on deposit at a financial institution. The phrase charitable deduction property means property other than money or certain publicly traded securities.

(b) Reporting Thresholds

Generally, an organization must list, in Part I of Schedule B, every contributor who, during the tax year, gave the organization, directly or indirectly, money or any other type of property aggregating $5,000 or more for the year. In determining this threshold, the organization totals all of the contributor's contributions only if they are $1,000 or more for the year.

If the filing organization is a donative-type publicly supported charity,30 under the general rules (that is, not just pursuant to the facts-and-circumstances test), it lists in Part I only those contributors whose contribution of $5,000 or more is greater than 2 percent of its total support during the public support measuring period (see Form 990, Part VIII, line 1h). Here is an example:

Charity X, a donative-type public charity, reported $700,000 in contributions, grants, and the like for its public support measuring period. Two percent of $700,000 is $14,000. Thus, a contributor who gave $11,000 to X during the year would not be reported on Schedule B of X's Form 990. This is the case even though this contributor's contribution(s) for the year were in excess of $5,000.

In the case of contributions to tax-exempt social clubs, and fraternal beneficiary and domestic fraternal societies, that were not for an exclusively charitable purpose, the organization lists each contributor who, during the year, contributed $5,000 or more, as determined above. In the case of contributions to these organizations that were for exclusively religious purposes, the organization reports each contributor whose aggregate contributions were more than $1,000 during the year (taking into account contributions of all amounts).

These three types of tax-exempt organizations provide further information on these contributions of more than $1,000 during the year in Part III of Schedule B, and show the total amount received in the case of contributions that were for $1,000 or less during the year. If one of these organizations did not receive a contribution of more than $1,000 during the year for exclusively charitable purposes, and thus was not required to complete Parts I–III of Schedule B, it need only check the correct Special Rules box applicable to that organization on the front of Schedule B and enter, in the space provided, the total contributions it received during the year for exclusively charitable purposes.

(c) Group Returns

A central (parent) organization with a group ruling that files a group Form 990 must file a separate Form 990 for itself (unless it is exempt from filing Form 990).31 With respect to Schedule B, however, a central organization has two choices. It may file:

  1. A Schedule B for itself with its Form 990 and a separate Schedule B with the group return, or
  2. A consolidated Schedule B for itself and all included subordinates with the group return.

The same information must be reported, whichever method of reporting is used; the information is just formatted differently and appears in different returns.

The central organization must indicate, in Schedule O, which method of reporting it has adopted. Once a method is used, it cannot be changed without the consent of the IRS.

(d) Disclosure Considerations

Nearly all states have statutory law regulating charitable fundraising in their jurisdiction.32 Several states require charitable organizations that intend to fundraise in their jurisdiction to annually file a copy of their annual information returns, including schedules, with them as part of a registration process. The state of California and at least three other states had law, before it was rendered unconstitutional,33 requiring these filings to include unredacted Schedule Bs.

(i) Litigation Preceding Supreme Court Decision.   This Schedule B filing requirement raised questions about free speech associational rights and the free speech rights of soliciting organizations. For many years, California was not demanding unredacted Schedule Bs. That policy changed in 2010, when the California Department of Justice “ramped up its efforts to enforce charities' Schedule B obligations, sending thousands of deficiency letters to charities that had not complied with the Schedule B [filing] requirement.”34 Litigation was initiated by the Americans for Prosperity Foundation and the Thomas More Law Center alleging free speech violations, contending that disclosure of their Schedule Bs would make their donors less likely to contribute to them and would subject them to the risk of reprisals.

A preliminary injunction was granted in favor of these two organizations, prohibiting the California attorney general from collecting the Schedule B information.35 This decision was vacated and remanded.36 Thereafter, the district court permanently enjoined the attorney general from collecting the petitioners' Schedule Bs, finding that (1) disclosure of the schedules was not narrowly tailored to the state's interest in investigating misconduct by charities, (2) the schedules were rarely used by the attorney general in auditing or investigating charities, (3) even where Schedule B information was used, that information could have been obtained from other sources, (4) the petitioners had suffered from threats and harassment in the past and that their donors were likely to face similar retaliation, and (5) the state was unable to ensure the confidentiality of donors' information.37

Once again, the injunctions were vacated on appeal and the judgments reversed and remanded, with the court of appeals holding that the district court erred by imposing a narrow tailoring requirement and that the disclosure regime satisfied exacting scrutiny because up-front collection of charities' Schedule Bs promoted investigative efficiency and effectiveness.38 The court also addressed the issue of whether the disclosure requirement violates the charities' free speech right of freedom of association. The appellate court wrote that the charities' evidence “shows that some individuals who have or would support the [charities] may be deterred from contributing if the [charities] are required to submit their Schedule Bs to the Attorney General,”39 but that these facts were insufficient to establish a substantial burden on First Amendment rights. The court conceded the “possibility that the plaintiffs' Schedule B contributors would face threats, harassment or reprisals if their information were to become public,” but stated that the charities failed to establish a “reasonable probability of retaliation.”40 Finally, said the court, the “evidence does not support the inference that the Attorney General is likely to inadvertently disclose” Schedule B information in the future.41

A rehearing en banc was denied by the court of appeals, which triggered a vigorous dissent by five of the appellate court's judges.42 The dissent asserted that the appellate court panel had impermissibly overridden the district court's factual findings and evaluated the disclosure requirement under a standard that was too lenient. The dissent surveyed Supreme Court jurisprudence, writing that the Court “has not wavered from the principle that the First Amendment affords organizations and individuals substantial protection where the government tries to force disclosure of ties that could impact their freedom of association.”43 The Supreme Court granted certiorari in the two cases.44

(ii) Supreme Court Decision.   The Supreme Court held (6–3) that California's “blanket demand” for donor information contained in Schedule Bs attached to Forms 990, as part of the state's charitable fundraising regulation process, is facially unconstitutional, inasmuch as the disclosure regime is not narrowly tailored to the ostensible government interest.45 As the Court observed, “California casts a dragnet for sensitive donor information from tens of thousands of charities each year.”46 A concurring opinion referenced “California's blunderbuss approach to charitable disclosures.”47

The Court's opinion addressed the standard of review applicable to First Amendment challenges to compelled disclosure. (The Foundation and Law Center differed as to which standard to apply—exacting scrutiny or strict scrutiny.) The Court stated that the appropriate standard is exacting scrutiny, which requires, in the words of an earlier opinion, a “substantial relation between the disclosure requirement and a sufficiently important governmental interest.”48 The Court wrote that, “[w]hile exacting scrutiny does not require that disclosure regimes be the least restrictive means of achieving their ends, it does require that they be narrowly tailored to the government's asserted interest.”49 The Court added that “[n]arrow tailoring is crucial where First Amendment activity is chilled.”50

The Court stated: “The point is that a reasonable assessment of the burdens imposed by disclosure should begin with an understanding of the extent to which the burdens are unnecessary, and that requires narrow tailoring.”51

The Court decided that California's disclosure regime does not satisfy the narrow tailoring requirement. It did “not doubt that [the state] has an important interest in preventing wrongdoing by charitable organizations.”52 But the Court stated that there is a “dramatic mismatch, however, between the interest that the Attorney General seeks to promote and the disclosure regime that he has implemented in service of that end.”53 It noted that 60,000 charities renew their fundraising registration annually and nearly all of them are required to file a Schedule B. It noted that each schedule contains information about a charity's “top donors,” a small number of donors in some instances but hundreds in others.54 This information, the Court noted, “includes donors' names and the total contributions they have made to the charity, as well as their addresses.”55

The Court observed that, “[g]iven the amount and sensitivity of this information harvested by the State, one would expect Schedule B collection to form an integral part of California's fraud detection efforts,” adding, “[i]t does not.”56 The Court noted that the record “amply supports” the district court's finding that there was not a “single, concrete instance in which pre-investigation collection of a Schedule B did anything to advance the Attorney General's investigative, regulatory or enforcement efforts.”57 The Court admonished the state, explaining that it is “not free to enforce any disclosure regime that furthers its interests.”58 Rather, it “must instead demonstrate its need for universal production in light of any less intrusive alternatives.”59

The Court concluded that, “[i]n reality,” California's interest is “less in investigating fraud and more in ease of administration.”60 This interest, the Court stated, “cannot justify the disclosure requirement.”61 The Court stated that it had “no trouble concluding here that the Attorney General's disclosure requirement is overbroad.”62

The Court accepted the contention that this disclosure regime chills association in violation of the First Amendment. It took note of the petitioner's evidence that “they and their supporters have been subjected to bomb threats, protests, stalking, and physical violence.”63 It added that these “risks are heightened in the 21st century and seem to grow with each passing year.”64 It wrote that “[w]hen it comes to the freedom of association, the protections of the First Amendment are triggered not only by actual restrictions on an individual's ability to join with others to further shared goals,” adding that the “risk of a chilling effect on association is enough.”65 It cited an earlier Court opinion where it was stated that “First Amendment freedoms need breathing space to survive.”66

The role of amicus briefs in this case is enormous (and instructive). The Court wrote that the “gravity of the privacy concerns in this context is further underscored by the filings of hundreds of organizations as amici curiae in support of the petitioners.”67 It observed that, “[f]ar from representing uniquely sensitive causes, these organizations span the ideological spectrum, and indeed the full range of human endeavors.”68 It stated that the “deterrent effect feared by these organizations is real and pervasive, even if their concerns are not shared by every single charity operating or raising funds in California.”69

The Supreme Court stated that it is “left to conclude that the Attorney General's disclosure requirement imposes a widespread burden on donors' associational rights.”70 It added that “this burden cannot be justified on the ground that the regime is narrowly tailored to investigating charitable wrongdoing, or that the State's interest in administrative convenience is sufficiently important.”71 The Court therefore held that the “up-front collection of Schedule Bs is facially unconstitutional, because it fails exacting scrutiny in a substantial number of its applications judged in relation to its plainly legitimate sweep.”72

(iii) Related Federal Tax Law.   This matter of disclosure of information and constitutional law principles in the context of charitable fundraising is not unfolding in a vacuum.

Federal tax statutory law outlines the requirements for annual information returns filed by tax-exempt organizations, including exceptions to the requirements.73 The general elements to be reported are stated,74 as are items to be reported by exempt charitable entities.75 Annual information returns are required to contain “such other information for the purpose of carrying out the internal revenue laws as the [Treasury Department] may by forms or regulations prescribe.”76

One of the elements to be generally reported is the total of the contributions, grants, and similar amounts received by tax-exempt organizations in the reporting year.77 Exempt charitable organizations, however, must also report the names and addresses of their donors.78

The previous version of the tax regulations extended this requirement of disclosing the identity of donors to all tax-exempt organizations. This overreach was corrected by final regulations issued in mid-2020.79

As the Treasury Department and the IRS stated in the preamble to these final regulations, they “sought to balance the IRS's need for the information for tax administration purposes against the costs and risks associated with reporting of the information.”80 The preamble states that the IRS “does not need the names and addresses of substantial contributors to tax-exempt organizations not described in section 501(c)(3) to be reported annually on Schedule B of Form 990 or Form 990-EZ in order to administer the internal revenue laws.”81 The IRS, it is said, can obtain sufficient information from other elements of these returns and can obtain donor information by examination.82

It is also noted in the preamble that “reporting the names and addresses of substantial contributors on an annual basis poses a risk of inadvertent disclosure of information that is not open to public inspection.”83 These regulations reduce the risk of inadvertent disclosure of this information. The preamble takes notice of concerns that supporters of certain causes or organizations “face possible reprisals (such as harassment, threats of violence, or economic retribution) if their status as contributors is revealed publicly” and of “fear of exposure and fear of reprisal [that] may have a ‘chilling effect,’ discouraging or deterring potential contributors from giving to certain tax-exempt organizations and reducing public participation in organizations benefiting social welfare.”84

Many commentators expressed their belief that this “chilling effect,” in the language of the preamble, “implicates constitutional rights such as freedom of speech and freedom of association.”

In the preamble, Treasury and the IRS stated that they “agree with certain commenters that limiting the general requirement to report names and addresses of substantial contributors will reduce costs with respect to federal tax compliance.”85 They determined that “it is valuable to save tax-exempt organizations the administrative burdens of reporting and redacting” donor information.86 Moreover, the “potential burden on the IRS associated with redacting Schedule B information is lessened when fewer organizations are required to report names and addresses on Schedule B.”87

§ 7.11 PREPARATION OF FORM 990 SCHEDULE G

Form 990 or Form 990-EZ, Schedule G, concerns fundraising and/or gaming activities by tax-exempt organizations. This schedule comprises four parts: Part I pertaining to fundraising in general, Part II pertaining to special event fundraising, Part III pertaining to gaming, and Part IV concerning supplemental information.

A tax-exempt organization is required to complete some or all of Schedule G if the organization is answering “yes” to one or more of the following questions:

  • The organization reported payment of more than $15,000 in the form of professional fundraising fees (see Form 990, Part IV, line 17; Form 990, Part IX, line 11e).
  • The organization reported receipt of more than $15,000 in revenue from fundraising events (see Form 990, Part IV, line 18; Form 990, Part VIII, line 8a).
  • The organization reported receipt of more than $15,000 in revenue from gaming (see Form 990, Part IV, line 19; Form 990, Part VIII, line 9a).

(a) Part I (Professional Fundraising Expenses)

Part I of Schedule G must be completed by organizations that reported, for the year, payment of more than $15,000 in professional fundraising expenses. (Filers of Form 990-EZ are not required to complete this Part I.) This requires an understanding of the IRS's definition of the term professional fundraising services. This definition, however, rests on the definition of the term fundraising activities accorded it by the IRS: “activities undertaken to induce potential donors to contribute money, securities, services, materials, facilities, other assets, or time.”

This definition of fundraising activities is too broad. It is nonsensical to include the solicitation of services or time in the definition of fundraising. The fundraising community, long ago, differentiated among contributions of “time, treasure, and talent.” Fundraising pertains to the solicitation of money and/or other property; it does not relate to solicitations of services or time. If a charitable organization's president asks an individual to serve on the charity's board of trustees, the president has not engaged in fundraising. If a charitable organization's executive director asks an individual to volunteer to assist with a particular project (even a fundraising event), the executive director has likewise not engaged in fundraising. The IRS has overlooked the fact that the concept of and the word fundraising not only contains the word fund but is predicated on it.

The IRS instructions also state that fundraising activities include “publicizing and conducting fundraising campaigns; maintaining donor mailing lists; conducting fundraising events; preparing and distributing fundraising manuals, instructions and other materials; professional fundraising services; and conducting other activities involved with soliciting contributions from individuals, foundations, governments, and others.” They add that fundraising activities do not include gaming, the conduct of a business that is regularly carried on, or activities substantially related to the accomplishment of the organization's exempt purposes (other than by raising funds).

The instructions define professional fundraising services as services performed for the reporting organization “requiring the exercise of professional judgment or discretion consisting of planning, management, preparation of materials (such as direct mail solicitation packages and applications for grants and other assistance), provision of advice and consulting regarding solicitation of contributions, and direct solicitation of contributions, such as soliciting restricted or unrestricted grants to provide services to the general public.” They add that professional fundraising does not include services provided by the organization's employees in their capacity as employees, nor does it include “purely ministerial tasks, such as printing, mailing services, or receiving and depositing contributions to a charity, such as services provided by a bank or caging service.”

The organization must indicate (in response to question 1, by checking a box in front of each method of fundraising used) whether it raised funds by means of one or more of the following seven fundraising methods:

  1. Mail solicitations
  2. Email solicitations
  3. Telephone solicitations
  4. In-person solicitations
  5. Solicitation of nongovernment grants
  6. Solicitation of government grants
  7. Special fundraising events

As discussed above, this list is not a complete inventory of the various methods pursuant to which fundraising by tax-exempt organizations takes place. For example, the IRS's list does not include solicitations posted on websites. It is not clear how gifts received as the result of a charitable sales promotion are reported.

The organization is asked whether it has a written or oral agreement with any individual (including trustees, directors, officers, or key employees [see Form 990, Part VII]) or entity in connection with professional fundraising activities (line 2a, ending in “yes” or “no” boxes). The IRS's instructions provide an example of an organization that had a written contract with a business to supply printing and mailing services; that agreement would have to be reported if the business also provided to the organization professional fundraising services such as strategy on mailing. This question does not apply with respect to trustees, directors, officers, or key employees of the organization, such as a development officer.

If the answer to this question is “yes,” the organization must list the 10 highest-paid individuals or entities where the fundraiser is to be compensated at least $5,000 in the year by the organization (question 2b). In this list, the organization must provide the following information:

  • The name of the individual or entity (fundraiser) (column (i)).
  • A summary of the type of fundraising activity with respect to which the fundraiser performed services (column (ii)).
  • Whether the fundraiser has custody or control of contributions (column (iii), “yes” or “no” boxes); custody or control means possession of the funds or the ability to deposit, direct the use of, or use the funds; any such custody or control should be described in Part IV.
  • Gross receipts that the organization collected or the fundraiser collected on behalf of the organization or in connection with the fundraising activity of the organization during the tax year (column (iv)). A professional fundraiser may deliver services during a tax year, yet have no gross receipts to report, such as a fundraiser who conducted a feasibility study for a capital campaign that is conducted in, and produces receipts in, one or more subsequent years.
  • The amount of fees paid to or retained (the instructions use the word withheld) by the fundraiser for its services (column (v)); if the arrangement also provides for the payment by the organization of fundraising expenses (such as printing, paper, envelopes, postage, mailing list rental, and equipment rental), the organization must report those amounts paid during the year in Part IV and describe how the arrangement distinguishes payments for professional fundraising services from expense reimbursements; the organization must also describe in Part IV whether it entered into any arrangements under which payments were made exclusively for such expenses and no payment was made for professional fundraising services.
  • The amount paid to or retained by the organization (column (vi)); this equals the amount in column (v) less the amount in column (iv).

The filing organization must list all states in which it is registered or licensed to solicit funds or has been notified that it is exempt from such registration or licensing (question 3). The IRS's instructions initially stated that, if the filing organization is registered, licensed, or exempted from registration or licensing “in all 50 States, it may answer ‘All 50 States.’” This outcome, however, was impossible inasmuch as not all states have registration, licensing, or exemption laws.88 This portion of the instructions has been deleted.

(b) Part II (Fundraising Events)

Part II of Schedule G must be completed by organizations that reported, for the year, receipt of more than $15,000 in revenue from fundraising events.

The table in Part II is to be completed by listing the two largest fundraising events (#1 and #2), as measured by gross receipts (more than $5,000), in columns (a) and (b) by indicating the name; in column (c), the organization reports the total number of other events that occurred. The organization also reports, as to these two events and the summary of the others (if any), the following:

  • Gross receipts from the event(s) (line 1). The organization enters the total amount the organization received from each of the two largest events during the year (without subtracting any costs or expenses or charitable contributions received in connection with the event) (columns (a) and (b)). The total amount the organization received from all other events during the year (without any offsets) is also reported (column (c)). The sum of line 1, columns (a)–(c) is reported in column (d).
  • Charitable contributions received in connection with the event(s) (line 2). The total amount of contributions and similar amounts (including the total value of any noncash contributions89 received by the organization for the two largest events during the year) is separately reported (columns (a) and (b)). The total amount of contributions and the like received by the organization from the other events during the year is also reported (column (c)). The sum of line 2, columns (a)–(c) is reported in column (d). This amount is also entered in Form 990, Part VIII, line 1c.
  • Gross revenue from the event (gross receipts minus contributions) (line 3). The total amount of gross revenue received by the organization from the two largest events during the year (without reduction for catering, entertainment, cost of goods sold, compensation, fees, or other expenses) is separately reported (columns (a) and (b)). The total amount of gross revenue received by the organization from the other events during the year is also reported (column (c)). The sum of line 3, columns (a)–(c) is reported in column (d). This amount is also entered in Form 990, Part VIII, line 8a.
  • The total amount of cash prizes paid out (line 4). The prize amounts for the two largest events are separately reported (columns (a) and (b)). The prize amounts for the other events are also reported (column (c)). The sum of line 4, columns (a)–(c) is reported in column (d).
  • The total amount (fair market value) of noncash prizes paid out (line 5). The prize amounts for the two largest events are separately reported (columns (a) and (b)). The prize amounts for the other events are also reported (column (c)). The sum of line 5, columns (a)–(c) is reported in column (d).
  • Total expenses paid or incurred for the rental of property and/or other facilities (line 6). The rent/facility costs for the two largest events are separately reported (columns (a) and (b)). The rent/facility costs for the other events are also reported (column (c)). The sum of line 6, columns (a)–(c) is reported in column (d).
  • Total expenses paid or incurred for food and beverages, including expenses for catering (line 7). These expenses for the two largest events are separately reported (columns (a) and (b)). These expenses for the other events are also reported (column (c)). The sum of line 7, columns (a)–(c) is reported in column (d).
  • Total expenses paid or incurred for entertainment, including direct expenses for labor and wages (line 8). These expenses for the two largest events are separately reported (columns (a) and (b)). These expenses for the other events are also reported (column (c)). The sum of line 8, columns (a)–(c) is reported in column (d).
  • Total other direct expenses (line 9). This is the sum of other direct expense items not included on lines 4–8. The other direct expenses for the two largest events are separately reported (columns (a) and (b)). The prize amounts for the other events are also reported (column (c)). The sum of line 9, columns (a)–(c) is reported in column (d).
  • The IRS, in its instructions, requires the filing organization to retain in its records a schedule providing an itemized listing of all other direct expenses not included on lines 4–8. For labor costs and wages, the organization should include the total amount of compensation paid to special event workers or paid to independent contractors for labor costs.
  • A summary of direct expenses for all reported events (line 10). This is the sum of line 8, columns (a)–(c), reported in column (d). The organization should enter this amount in Form 990, Part VIII, line 8b.
  • A net income summary for all reported events (gross revenue less direct expenses) (line 11). This amount (reported in line 9, column (d)) is the difference between the amount on line 3, column (d), and the amount on line 8, column (d). The organization should enter this amount on Form 990, Part VIII, line 8c.

(c) Part III (Gaming)

Part III of Schedule G must be completed by organizations that reported (Form 990, Part VIII, line 9a), for the year, receipt of more than $15,000 in revenue from gaming. This part differentiates among bingo (column (a)), pull-tabs/instant bingo/progressive bingo (column (b)), and other forms of gaming (column (c)). There is no monetary threshold in connection with the reporting of discrete gaming operations.

For each gaming operation, the organization must report:

  • Gross revenue (line 1). The amount of gross revenue from gaming activities for each type gaming conducted is reported (columns (a)–(c)), with the total in column (d). This amount should not be reduced by any amount of cash or noncash prizes, cost of goods sold, compensation, fees, or other expenses.
  • Total amount of cash prizes paid out (line 2). This must be reported for each of the types of gaming reported on line 2 (columns (a)–(c)) and totaled (column (d)).
  • Total fair market value of noncash prizes provided (line 3). This must be reported for each of the types of gaming reported on line 3 (columns (a)–(c)) and totaled (column (d)).
  • Expenses paid or incurred for the rental of property and/or other facilities (line 42). These expenses must be reported for each of the types of gaming reported on line 4 (columns (a)–(c)) and totaled (column (d)).
  • Other direct expenses (line 5). The organization must report the amount of other direct expenses (expenses not included on lines 2–4).
  • The IRS, in its instructions, requires the organization to retain in its records a schedule providing an itemized listing of all other direct expenses. This schedule should include labor costs and wages (including the total amount of compensation paid to gaming workers or independent contractors for labor costs), employment taxes (including the amount of federal, state, and local payroll taxes). These expenses must be reported for each of the types of gaming reported on line 5 (columns (a)–(c)) and totaled (column (d)).
  • Gaming activities may be subject to a wagering excise tax, imposed on the amount of the wager (see IRS Form 730, Tax on Wagering), and an occupational tax, imposed on the persons engaged in receiving wagers (see IRS Form 11C, Tax and Registration Return for Wagering). These taxes should be reported on the schedule.
  • Use of any volunteer labor, by “yes” or “no” boxes (if there is such labor, the percentage of it must be reported) (line 6). If the organization uses volunteer labor, where substantially all of the work is performed without compensation, to conduct gaming, one or more of the appropriate “yes” boxes is to be checked and the percentage of total labor performed by volunteers for each type of gaming conducted is to be reported. This percentage is determined by comparing the number of individuals who receive direct compensation for their services provided in the conduct of the gaming activity with the total number of workers used by the organization, whether paid or unpaid. For this purpose, the word compensation includes tips and noncash benefits. These answers and percentages (if any) must be reported for each of the types of gaming reported on line 6 (columns (a)–(c)); column (d) is to be left blank.
  • A summary of direct expenses for all gaming (line 7). This amount is the sum of the amounts on lines 2, column (d), through 5, column (d), and reported on line 7, column (d).
  • A summary of net gaming income for all gaming (line 8). This amount is the difference between the amount on line 1, column (d), and on line 7, column (d).

The organization must identify the states in which it operated gaming activities during the tax year (question 9); if additional space is needed, the organization should utilize Part IV. The organization is asked whether it is licensed to operate gaming activities in each of these states (question 9a, “yes” or “no” boxes); if the answer to this question is “no,” the organization must provide a narrative statement of explanation, using Part IV (question 9b).

The organization is asked whether any of its gaming licenses were revoked, suspended, or terminated during the year (question 10a, “yes” or “no” boxes). If the answer to this question is “yes,” the organization must provide a narrative statement of explanation for each state in which there was a revocation or the like during the tax year, using Part IV (question 10b). The organization is asked whether it operates gaming activities with nonmembers (question 11, “yes” or “no” boxes). The organization is asked whether it is a grantor, beneficiary, or trustee of a trust or a member of a partnership or other entity formed to administer charitable gaming (question 12, “yes” or “no” boxes).

Part III of Schedule G seeks additional information in connection with gaming activities:

  • The percentage of gaming activity operated in the organization's facility and/or an outside facility (question 13).
  • The name and address of the person who prepares the organization's gaming/special events books and records (question 14).
  • Whether the organization has a contract with an entity from whom it receives gaming revenue (question 15a, “yes” or “no” boxes). If the answer to this question is “yes,” the organization must report the amount of gaming revenue it received and the amount of gaming revenue retained by the entity (question 15b). Also, if the answer to this question is “yes,” the organization must provide the entity's name and address (question 15c). Part IV is available if additional space is needed, such as where there is more than one third-party operator.
  • Gaming manager information, that is, information about the person who has overall supervision and management of the gaming operation (question 16). Generally, this person has responsibilities that may include record-keeping, money counting, hiring and firing of workers, and making bank deposits for the gaming operation. The information to be reported is the manager's name, compensation, services provided, and whether the manager is, with respect to the organization, a director, officer, employee, and/or independent contractor. If more than one person shares these responsibilities, Part IV is available to report that information.
  • Whether the organization is required under state law to make charitable distributions from the gaming proceeds in order to retain its state gaming license (question 17a, “yes” or “no” boxes).
  • The amount of distributions required under state law to other tax-exempt organizations or spent in furtherance of the organization's exempt activities during the year (question 17b). A breakdown of required distributions, by each state, must be provided in Part IV.

§ 7.12 PREPARATION OF OTHER PARTS OF FORM 990

In addition to Schedule G, other parts of Form 990 pertain to fundraising reporting.

(a) Part I, Line 16a (Professional Fundraising Expenses)

On line 16a of Part I, the filing organization reports its professional fundraising expenses. This is the amount that also appears in Part IX, line 11e, column (A).

(b) Part IV, Line 14b (Fundraising Outside United States)

On line 14b of Part IV, the filing organization reports whether it has aggregate revenues or expenses of more than $10,000 from fundraising activities outside the United States.

(c) Part VIII, Lines 1c, 8a, and 9a (Fundraising Events)

On line 1c of Part VIII, the filing organization reports the amount of contributions received from fundraising events. On line 8a of Part VIII, the filing organization reports the amount of revenue derived from fundraising events, other than contributions. On line 9a of Part VIII, the filing organization reports the amount of its gross income from gaming activities. (See Part IV, lines 18 and 19.)

(d) Part IX, Line 11e (Professional Fundraising Expenses)

On Part IX, line 11e, the filing organization reports the amount of its professional fundraising expenses. (See Part IV, line 17.)

(e) Schedule B (Information about Contributions)

Schedule B, a schedule of contributors, that accompanies the new Form 990 (and Forms 990-EZ and 990-PF) is the same as the Schedule B that accompanied the prior Form 990. A contributor (or grantor) is any donating person, whether it is an individual, fiduciary, corporation, trust, partnership, or tax-exempt organization.

(i) Part I.   Generally, an organization must list in Part I of Schedule B every contributor who, during the year, gave the organization, directly or indirectly, money, securities, or other type of property aggregating $5,000 or more. In determining the $5,000 threshold, the organization totals all of the contributor's gifts only if they are $1,000 or more for the year. For a donative-type publicly supported charity, however, a contributor of $5,000 or more is listed in Schedule B only where the contribution is greater than 2 percent of the total amount of gifts and grants it has received as of the close of the reporting year. Special rules apply in the case of contributions or bequests for use exclusively for charitable purposes received by tax-exempt social clubs and fraternal organizations.

Three pages for Part I are provided. If needed, additional pages may be photocopied. Each page should be consecutively numbered.

In Part I of Schedule B, contributors are to be numbered consecutively (column (a)). The contributor's name and address (column (b)), aggregate contributions for the year (column (c)), and the type of contribution (column (d)) must be reported. If a cash contribution came directly from a contributor, the “person” box is to be checked. The “payroll” box is to be checked if an employer forwarded an employee's contributions. The “noncash” box is to be checked in an instance of a contribution of property other than cash. The checking of a “noncash” box triggers the requirement to file Part II of Schedule B.

(ii) Part II.   Two pages of Part II are provided. Additional pages may be photocopied. These pages should be consecutively numbered. In column (a) of Part II, the filing organization shows the number that corresponds to the contributor's number in Part I. Column (b) is used to describe the noncash contribution received by the organization.

The fair market value of the contributed property is reported in column (c). If the organization immediately sells gifted securities, the contribution nonetheless must be reported as a gift of property (with the value being the net proceeds of the sale plus any broker's fees and other expenses). If contributed securities are not immediately sold, and they are marketable securities registered and listed on a recognized securities exchange, the market value is measured by the average of the highest and lowest quoted selling prices (or the average between the bona fide bid and asked prices) on the contribution date.

When fair market value of an item of contributed property cannot be readily determined, the filing organization is to use, according to the IRS's instructions, an “appraised or estimated” value. To determine the amount of a noncash contribution that is subject to debt, the organization subtracts the amount of the debt from the property's fair market value.

The date the property was received by the organization is reported in column (d) (assuming the transaction is, in fact, a completed gift).

If the organization received a partially completed Form 8283 from a donor, the organization should complete it and return it to the donor to enable the donor to obtain a charitable contribution deduction. The organization should retain a copy of this form for its records. Original and successor donee organizations must file Form 8282 if they sell, exchange, consume, or otherwise dispose of charitable deduction property within three years after the date the original donee received the property.90

(iii) Part III.   Tax-exempt social welfare and fraternal organizations that received contributions for exclusively charitable purposes must complete Parts I–III of Schedule B for those persons whose contributions totaled more than $1,000 for the year. The filing organization must also show, in the heading of Part III, total gifts to these organizations that were $1,000 or less for the year and were for an exclusively charitable purpose. This latter item of information is to be completed only on the first Part III page.

If an amount is set aside for an exclusively charitable purpose, the filing organization must describe, in column (d), how the amount is held. For example, a set-aside amount may be commingled with amounts held for other purposes. If the organization transferred the gift to another organization, the filing organization should report the name and address of the transferee organization, and explain the relationship between the two organizations, in column (e).

§ 7.13 PREPARATION OF FORM 990 SCHEDULE M

Schedule M consists of many questions pertaining to contributions to public charities and other categories of tax-exempt organizations of types of property other than money (noncash contributions). This schedule must be completed by exempt organizations that report, as revenue, more than an aggregate of $25,000 of noncash contributions on Form 990 (Part IV, line 1g). This schedule must also be filed by organizations that received during the year any contributions of art, historical treasures, or other similar assets, or qualified conservation contributions. At the top of this schedule, the filing organization must enter its name and employer identification number.

(a) Introduction

Organizations filing this schedule are likely to be charitable entities, namely, entities that may receive deductible noncash contributions:

  • Charitable organizations (other than private foundations or organizations that test for public safety)
  • Domestic fraternal organizations that use charitable contributions exclusively for charitable purposes
  • Cemetery companies
  • Qualified veterans' organizations

The Schedule M filing requirement is applicable to all exempt organizations that received one or more noncash gifts and does so irrespective of the availability of a charitable contribution deduction.

Questions 1–24 of Schedule M pertain to specific types of contributed property. Contributed items that are not identified on the schedule by category of property must be reported separately as other items beginning with line 25.

In Schedule M, Part I, column (a), the filing organization must check each box that relates to the type of property referenced in the schedule (even if the number of contributions need not be reported).

In Schedule M, Part I, column (b), the filing organization must enter, for each type of property received during the year, the number of contributions or the number of items, interests, collections, properties, and the like received during the year, determined in accordance with the organization's record-keeping practices. The organization must explain in Schedule M, Part II, whether the organization is reporting the number of contributions or the number of items received.

For each security, the organization must treat each separate gift (rather than each share received) as an item for this purpose. For all other types of property, the organization must provide the number of items contributed to it. If precise numbers are not regularly kept by the organization, a good-faith estimate will suffice. This requirement, however, is inapplicable (because of the record-keeping burdens) with respect to contributions of books and publications, clothing, and household goods.

In Schedule M, Part I, column (c), the organization must enter any revenue as reported elsewhere on Form 990 (Part VIII, line 1g) for the appropriate type of property. Museums and other organizations, however, often do not report contributions of art, historical treasures, and similar items as revenue, as is permitted under generally accepted accounting principles. Organizations in this circumstance should enter “0” in column (c). A museum, for example, may explain in Part II of Schedule M that a zero amount was reported because, as allowed by accounting principles, it does not capitalize its collections.

In Schedule M, Part 1, column (d), the organization must describe the method it used to determine revenue amount (such as cost or selling price of the contributed property, sale of comparable properties, replacement cost, or an opinion of an expert). An organization that is permitted to enter “0” in column (c) should leave the accompanying column (d) blank.

The IRS's instructions provide two examples of these processes:

(b) Questions 1–3 (Works of Art)

Questions 1–3 of Schedule M pertain to contributions to tax-exempt organizations of types of works of art. These questions concern gifts of historical treasures, gifts of fractional interests in art, and all other types of art. Art does not include collectibles, which are reported on line 18 (see below). For each of these types of art, the filing organization must check the box in column (a) if applicable, and report the number of the works of art contributed (column (b)), the amount of any of these gift(s) reported as revenue (Form 990, Part IV, line 1g) (column (c)), and (if applicable) the method of determining revenues.

In the case of a contribution of a fractional interest in a work of art, in the column (b) reporting, the organization should report the fractional interest received in each year with respect to the underlying work of art.

It should be reiterated that Form 990 inquires as to whether the filing organization maintains collections of works of art, historical treasures, or other similar assets for “public exhibition, education, or research in furtherance of public service rather than for financial gain” (Part VII, line 5). If the answer to this question is “yes,” the filing organization must complete a portion of another schedule (Schedule D, Part X). In this schedule, the organization must indicate whether it reported as revenue any contributions of art and whether it capitalized any contributions of art in the reporting or prior years and reported those amounts on Form 990 (Part VI), and provide the text of the footnote to the organization's audited financial statements that discusses the organization's holdings of art, historical treasures, and other similar assets.

(c) Question 4 (Books and Publications)

Question 4 of Schedule M pertains to contributions to tax-exempt organizations of books and publications. Books and other publications may be contributed to a charitable organization and the gift may give rise to a charitable contribution deduction. Rare books and manuscripts are treated as works of art (see above); they may also be collectibles (see below). For these contributions, the filing organization must check the line 4 box. The number of these contributions need not be reported. If applicable, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g) and the method of determining revenues must be reported.

(d) Question 5 (Clothing and Household Goods)

Question 5 of Schedule M pertains to contributions of clothing and/or household goods that were in good used condition or better. For these two categories of items, the filing organization must check the box. The number of these contributions need not be reported. If applicable, the organization must report the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g) and the method of determining revenues. Clothing items and/or household goods that were not in good used condition or better are reported as other (see below).

(e) Questions 6 and 7 (Vehicles)

Questions 6 and 7 of Schedule M concern contributions of vehicles, such as automobiles, boats, and airplanes.91 Vehicles that constitute inventory are to be reported as such. For these types of vehicles, the filing organization must check the box, and report the number of the vehicles contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

The response to the question on line 6 should include contributions only of motor vehicles manufactured primarily for use on public streets, roads, and highways.

The organization is required to file Form 1098-C for certain of these contributions reported on these lines. (See Form 990, Part V, line 7h.)

(f) Question 8 (Intellectual Property)

Question 8 of Schedule M pertains to charitable and other contributions of intellectual property.92 For this type of property, the filing organization must check the box, and report the number of the intellectual properties contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

Certain contributions of intellectual property may require the organization to file Form 8899 with the donor and the IRS with respect to the contribution. (See Form 990, Part V, line 7g.)

(g) Questions 9–12 (Securities)

Questions 9–12 of Schedule M pertain to charitable and other contributions of securities, differentiating among publicly traded securities, closely held stock, securities in the form of partnership or trust interests, and other types of securities. For each of these categories of securities, the filing organization must check the box, and report the number of securities contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues. For each security, the filing organization should treat each separate gift (rather than each share received) as a contribution for this purpose.

(h) Questions 13 and 14 (Qualified Conservation Contributions)

Questions 13 and 14 of Schedule M pertain to qualified conservation contributions, distinguishing between gifts involving historic structures and other conservation contributions. For each of these types of contributions, the filing organization must check the box, and report the number of the properties contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

On line 13, the filing organization should enter information about contributions of a qualified real property interest that is a restriction with respect to the exterior of a certified historic structure. Line 14 is used to report information about qualified conservation contributions other than those referenced in connection with line 13; this includes conservation easements to preserve land areas for outdoor recreation by or for the education of the public, to protect a relatively natural habitat or ecosystem, to preserve open space, or to preserve a historically important land area.

(i) Questions 15–17 (Real Estate)

Questions 15–17 of Schedule M concern charitable and other contributions of real estate, differentiating among gifts of residential real estate, commercial real estate, and other categories of real estate. For each of these types of properties, the filing organization must check the box, and report the number of the properties contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

On line 15, the filing organization enters information about contributions of residential real estate. This entry should include any information about contributions (not in trust) of a remainder interest in a personal residence that was not the donor's entire interest in the property. On line 16, the organization enters information about contributions of commercial real estate, such as a commercial office building. This entry should include any information about contributions (not in trust) of a remainder interest in a farm that was not the donor's entire interest in the property. Line 17 is used to enter information about any real estate interests not reported on lines 15 or 16.

(j) Question 18 (Collectibles)

Question 18 of Schedule M pertains to charitable and other contributions of collectibles. For this type of gift, the filing organization must check the box, and report the number of the collectibles contributed, the amount of the gift(s) reported as revenue (Form 990, Part IV, line 1g), and the method of determining revenues.

(k) Question 19 (Food Inventory)

Question 19 of Schedule M pertains to charitable and other contributions of food items, including food inventory contributed by corporations and other businesses. For this type of gift, the filing organization must check the box, and report the number of the inventory propert(ies) contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

(l) Question 20 (Drugs and Medical Supplies)

Question 20 of Schedule M concerns charitable and other contributions of drugs, medical supplies, and similar items contributed by businesses that manufactured or distributed these items. For this type of gift, the filing organization must check the box, and report the number of the drugs or supplies contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

(m) Question 21 (Taxidermy)

Question 21 pertains to contributions of taxidermy. For this type of gift, the filing organization must check the box, and report the number of taxidermy items contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

(n) Question 22 (Historical Artifacts)

Question 22 of Schedule M pertains to contributions of historical artifacts. For this type of gift, the filing organization must check the box, and report the number of historical artifacts contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues. This entry should not include works of art or historical treasures (see above) or archeological artifacts (see below).

(o) Question 23 (Scientific Specimens)

Question 23 of Schedule M pertains to contributions of scientific specimens. For this type of gift, the filing organization must check the box, and report the number of scientific specimens contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

(p) Question 24 (Archeological Artifacts)

Question 24 of Schedule M pertains to contributions of archeological ethnological artifacts. For this type of gift, the filing organization must check the box, and report the number of archeological artifacts contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues. This entry should not include information about works of art, historical treasures, or historical artifacts (see above).

(q) Questions 25–28 (Other Types of Property)

Questions 25–28 of Schedule M enable the filing organization to report as to any other types of noncash contributions received. For each of these types of gift, the filing organization must check the box, and report the number of the property(ies) contributed, the amount of the gift(s) reported as revenue (Form 990, Part VIII, line 1g), and the method of determining revenues.

(r) Question 29 (Forms 8283)

The filing organization is required, pursuant to question 29 of Schedule M, to report the number of Forms 8283 that it received during the reporting year for contributions as to which the organization completed Part IV of the form(s). If the organization does not keep complete records of these forms, it should not provide an estimate but rather leave line 29 blank.

(s) Question 30 (Contribution Holding Period)

The filing organization must, in response to question 30a of Schedule M, report (“yes” or “no”) whether, during the reporting year, it received a contribution of property, reported in Part I of the schedule, that it is required, by the terms of the gift or otherwise, to hold for at least three years from the date of the initial contribution, where it is not required that the property be used for exempt purposes for the entire holding period. If the answer to this question is “yes,” the arrangement must be described in Schedule M, Part II (line 30b).

Tax-exempt organizations should be cautious when considering acceptance of property with this condition. The IRS will assume that the purpose of the condition is to sidestep the three-year reporting requirement rule.

(t) Question 31 (Gift Acceptance Policy)

The filing organization must, in response to question 31 of Schedule M, report (“yes” or “no”) whether it has a gift acceptance policy that requires the review of any nonstandard contributions.

(u) Question 32 (Service Providers)

The filing organization must, in response to question 32a of Schedule M, report (“yes” or “no”) whether it hired or otherwise used third parties or related organizations to solicit, process, or sell contributed noncash property. If the answer to this question is “yes,” the matter must be described in Schedule M, Part II (line 32b).

(v) Question 33 (Explanation of Nonrevenue Treatment)

The filing organization must, if it did not report revenues in Part I, column (c) for a type of property for which column (a) is checked, explain the matter, in response to question 33 of Schedule M, in Schedule M, Part II.

§ 7.14 ANNUAL FILING REQUIREMENT AND TAX-EXEMPT STATUS

If a tax-exempt organization that is required to file an annual information return or annually submit a notice to the IRS fails to file or submit for three consecutive years, the organization's tax-exempt status is revoked by operation of law.93 If, however, an organization fails to make such a filing or submission for two consecutive years, the IRS is required to notify the organization about the deficiency and provide information about how to come into compliance.94

If tax exemption is revoked pursuant to this law, to again be recognized as exempt, an organization in these circumstances must apply to the IRS for recognition of exemption irrespective of whether the organization was originally required to make an application for recognition of exemption in order to acquire exemption.95 If, on application for recognition of exemption after a revocation under these rules, the organization demonstrates to the satisfaction of the IRS reasonable cause for failing to file the required returns or submit the required notice, the organization's exempt status may, at the discretion of the IRS, be reinstated retroactively to the date of revocation.96

NOTES

  1. 1.  See Tax-Exempt Organizations, § 27.3.
  2. 2.  See Tax-Exempt Organizations §§ 27.2(a), 27.4.
  3. 3.  See § 7.1(e).
  4. 4.  See § 6.7.
  5. 5.  IRC § 4966.
  6. 6.  IRC § 501(r)(2).
  7. 7.  IRC § 512(b)(13)(D).
  8. 8.  IRC § 509(a)(3).
  9. 9.  See Tax-Exempt Organizations, § 27.7.
  10. 10. IRC § 6033(j)(3).
  11. 11. IRC § 6033(i).
  12. 12. IRC § 6652(c)(1)(A).
  13. 13. Id.
  14. 14. Id.
  15. 15. See § 6.45.
  16. 16. IRC § 6104(d)(1)(A)(ii).
  17. 17. Reg. § 301.6104(d)-1 et seq.
  18. 18. See, e.g., §§ 6.50, 6.63.
  19. 19. See, e.g., Form 990, Part VI. See § 6.4(f).
  20. 20. In general, Tax-Exempt Organizations, Chapter 5, Hopkins and Gross, Nonprofit Governance: Law, Practices & Trends (Hoboken, NJ: John Wiley & Sons, 2009).
  21. 21. See § 6.40.
  22. 22. The balance of this chapter is based on the Form 990 for tax year 2020.
  23. 23. See § 6.4.
  24. 24. See § 7.11.
  25. 25. See § 7.12(a).
  26. 26. See § 7.12(b).
  27. 27. See § 7.12(c).
  28. 28. See § 7.14.
  29. 29. See § 5.8(a)(vi).
  30. 30. See § 5.11(b).
  31. 31. See § 6.1(b).
  32. 32. See Chapter 4.
  33. 33. See § 7.10(d)(ii).
  34. 34. Americans for Prosperity Found. v. Becerra, 903 F.3d 1000, 1006 (9th Cir. 2018).
  35. 35. Americans for Prosperity Found. v. Harris, 2015 WL 769778 (C.D. Cal. 2015).
  36. 36. Americans for Prosperity Found. v. Harris, 809 F.3d 536 (9th Cir. 2015), relying on Center for Competitive Politics v. Harris, 784 F.3d 1307 (9th Cir. 2015). Also, Americans for Prosperity Found. v. Harris, 809 F.3d 536 (9th Cir. 2015); Citizens United and Citizens United Found. v. Schneiderman, 115 F. Supp. 3d 457 (S.D.N.Y. 2015), aff'd, 882 F.3d 374 (2d Cir. 2018).
  37. 37. Americans for Prosperity Found. v. Harris, 182 F. Supp. 3d 1049 (C.D. Cal. 2016); Thomas More Law Center v. Harris, 2016 WL 6781090 (C.D. Cal. 2016).
  38. 38. Americans for Prosperity Found. v. Becerra; Thomas More Law Center v. Becerra, 903 F.3d 1000 (9th Cir. 2018).
  39. 39. Id. at 1014.
  40. 40. Id. at 1017.
  41. 41. Id. at 1019.
  42. 42. Americans for Prosperity Found. v. Becerra; Thomas More Law Center v. Becerra, 919 F.3d 1177 (9th Cir. 2019).
  43. 43. Id. at 1179.
  44. 44. Americans for Prosperity Found. v. Bonta; Thomas More Law Center v. Bonta, 141 S. Ct. 2373 (2021).
  45. 45. Id.
  46. 46. Id.
  47. 47. Id.
  48. 48. Id. The earlier opinion is Doe v. Reed, 561 U.S. 186, 196 (2010).
  49. 49. Americans for Prosperity Found. v. Bonta; Thomas More Law Center v. Bonta, No. 19-255 (2021).
  50. 50. Id.
  51. 51. Id.
  52. 52. Id.
  53. 53. Id.
  54. 54. Id.
  55. 55. Id.
  56. 56. Id.
  57. 57. Id.
  58. 58. Id.
  59. 59. Id.
  60. 60. Id.
  61. 61. Id.
  62. 62. Id.
  63. 63. Id.
  64. 64. Id.
  65. 65. Id.
  66. 66. Id. at ___. The earlier opinion is NAACP v. Button, 371 U.S. 415, 433 (1963).
  67. 67. Americans for Prosperity Found. v. Bonta; Thomas More Law Center v. Bonta, No. 19-255 (2021).
  68. 68. Id.
  69. 69. Id.
  70. 70. Id.
  71. 71. Id.
  72. 72. Id.
  73. 73. IRC § 6033.
  74. 74. IRC § 6033(a); Reg. § 1.6033-2(a)(2)(ii).
  75. 75. IRC § 6033(b).
  76. 76. IRC § 6033(a)(1).
  77. 77. Reg. § 1.6033-2(a)(2)(ii)(F).
  78. 78. IRC § 6033(b)(5); Reg. § 1.6033-2(a)(2)(ii)(F). This disclosure is on Schedule B accompanying the annual information return. See § 7.10.
  79. 79. T.D. 9898.
  80. 80. 85 Fed. Reg. 103 (2020).
  81. 81. Id.
  82. 82. E.g., Form 990, Schedules J, L, and R.
  83. 83. 85 Fed. Reg. 103 (2020).
  84. 84. Id.
  85. 85. Id.
  86. 86. Id.
  87. 87. Id.
  88. 88. See Chapter 3.
  89. 89. See § 7.13.
  90. 90. See § 5.11(b).
  91. 91. See § 6.7(j).
  92. 92. See § 6.7(m).
  93. 93. IRC § 6033(j)(1)(B).
  94. 94. IRC § 6033(j)(1)(A).
  95. 95. IRC § 6033(j)(2).
  96. 96. IRC § 6033(j)(3). In general, Tax-Exempt Organizations § 27.5.
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