IRS Issues Proposed Regulations to Support Reduced Donor Reporting Rule

October 2, 2019

In July 2018, the IRS issued Revenue Procedure (“Rev. Proc. “) 2018-38, which announced that tax-exempt organizations, other than those described in section 501(c)(3), were no longer required to report the names and addresses of major donors in Schedule B (Schedule of Contributors) of their annual information returns.

In July 2019, a Montana District Court determined that this Rev. Proc. was a legislative rule that effectively amended established donor reporting requirements under Treasury Regulation §1.6033-2(a)(2)(ii)(f), and therefore the IRS was required to follow the notice-and-comment procedures under the Administrative Procedure Act. Since those procedures were not undertaken, the Court set aside Rev. Proc. 2018-38 and directed the IRS to follow proper notice-and-comment procedures.

The IRS has responded by issuing proposed regulations this month to implement the guidance previously provided in Rev. Proc. 2018-38. The regulations propose allowing applicable organizations to apply the guidance in the regulations to returns filed after September 6, 2019. Additionally, Notice 2019-47 was issued to provide penalty relief for certain exempt organizations that did not report the names and addresses of major donors in their annual returns for tax years ending on or after December 31, 2018, which were filed on or before July 30, 2019.

If you have questions about this guidance or how it may affect your reporting, please contact Amanda Adams.