Preventing IRS Abuse and Protecting Free Speech Act

Mystery gift picturePreventing IRS Abuse and Protecting Free Speech Act: What this means for the Filing of Your IRS Form 990, Schedule B

On June 14th, 2016, the U.S. House of Representatives passed a bill, H.R. 5053 “Preventing IRS Abuse and Protecting Free Speech Act.”

Most 501(c) organizations are required to report the names of individuals who contribute more than $5,000 on a Form 990, Schedule B.

The bill would prohibit the IRS from collecting the identity of people who donate to tax-exempt organizations. This would eliminate the Schedule B, and provide the much sought after anonymity for your organization’s donors who wish to keep their giving private.

Donations of more than $5,000 from the organization’s officers, directors, or five highest compensated employees (including compensation paid by related organizations) would still be required to be disclosed by the organization.

The bill is a response to several actions by the IRS, including but not limited to, the scandal surrounding the targeting of nonprofit applicants with the key word search such as “tea party” or “patriots” in their names. This resulted in an extra level of scrutiny between the years 2010 and 2012, as well as  leaks of donor information tied to advocacy groups, hence the key word scandal.

It is important to note that many states require this information to be reported on their annual registration returns. It is unclear what, if any, affect this legislation would have at the state level should it be enacted into law, as this would only apply to federal requirements. This legislation will go before the Senate to be voted on. It is not yet a law.

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