Friday, September 6, 2019
New Proposed Regulations on Donor Disclosure
Treasury just released Proposed Regulations under Code Section 6033 regarding donor disclosure (technically, it is filed but not yet published - it is scheduled to be published on September 10), which addresses the issue of what information an exempt organization must disclose about its donors.
If you are late to the story, a little recap is in order:
- Section 6033(b)(5) provides Section 501(c)(3) organizations must provide donor information for "substantial contributors."
- Treasury Regulation 1.6033-2(a)(2)(ii)(f) states that any organization required to file an annual information return must provide information regarding donors who give more than $5,000 during the year.
- On July 17, 2018, Treasury issued Revenue Procedure 2018-38, which states that, effective as of Dec. 31, 2018, exempt organizations that are not exempt under Section 501(c)(3) do not have to file the Schedule B with donor information, but they should keep the information and make it available upon IRS request. Section 501(c)(3) organizations must still provide this information as required by Section 6033(b)(5). See a more detailed description from KPMG here.
- Not everyone was particularly pleased about this and, not surprisingly, litigation ensued.
- On July 30, 2018, in Bullock v. IRS, the U.S. District Court for Montana (Bullock being the Governor of Montana; the state of New Jersey also was a plaintiff) determined that Treasury did not follow proper procedure under the APA in issuing the Rev Proc. The District Court held that the Rev. Proc. was really an amendment to Treasury Regulation 1.6033-2(a)(2)(ii)(f), and therefore was a "change in existing law or policy" (i.e., it was a legislative rather than interpretive rule) that required APA notice and comment. Accordingly, it was set aside.
- These new regs specifically respond to the Bullock v. IRS (in fact, it mentions it by name on page 10) by issuing these Proposed Regulations, which are subject to notice and comment.
While I've not held the proposed regulations and the Rev Proc up to each other side by side quite yet, it does appear that the Proposed Regulations are essentially similar to the Rev. Proc, expect for the request for notice and comment. Because the Proposed Regs are not yet officially published, there is no official due date for the comments, other than 90 days from the date of publication. If they hold true to their word, it would be 90 days from Sept. 10.