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Five Things Nonprofits Should Know About: Mandatory Disclosure of DocumentsJuly 9, 2014
Please note that the term “nonprofit” as used here specifically means entities holding 501(c)(3) status under the Internal Revenue Code.
- You Must Provide Certain Documents. Under Federal tax law, nonprofits must make certain documents available for public inspection. The person requesting the information has a right to inspect the documents, take notes, and make copies. The nonprofit can have an employee in the room during the inspection. Copies of the public documents must also be made available upon request (in-person during regular business hours, or in writing). The organization may charge a reasonable amount, set by the IRS, for copies and mailing.
- What Documents You Must Provide. A nonprofit must provide documents such as its Form 990 (for three years), its determination letter from the IRS, and its application for tax-exempt status. Keep in mind that the application for exempt status typically includes other items in addition to the IRS application form (e.g., bylaws, state organization documents, and an attachment containing additional detail). However, Federal tax law does not generally require a public charity to disclose 990-reported donor information if properly reported on a separate schedule.
- Deadlines Apply. If the request is made in person, a copy must generally be provided immediately. If the request is made in writing, including fax or email, the documents must be sent within 30 days of the request. If the organization requires prepayment for copying and any postage costs, it instead has seven days to provide notification and the amount due. The organization then has 30 days from the date of payment to provide the copies.
- You May Not Have to Provide Copies. If a nonprofit makes its public documents “widely available,” it does not have to provide copies (but the public inspection requirement still applies). A document is generally “widely available” if posted on the world-wide-web in PDF format, along with notice that it is available and instructions for downloading. If a person requests copies, the organization can instead point that person to the internet version of the documents. Note that certain websites, such as Guidestar, routinely obtain and post Form 990s of exempt organizations.
- Penalties Apply and the Nonprofit Can Be Reported to the IRS. When a nonprofit denies a request for public documents, the person requesting can report the incident to the IRS. The organization may be subject to daily penalties for failing to comply.