Internal Revenue Service Required Disclosures

A complete stranger asks for a copy of our annual tax return. They said if we didn’t give them a copy right away, they’d complain to the IRS and we’d get fined. Are they right? What do I do?

Yes, we must make certain documents available to the public. The Internal Revenue Service and the State of Texas both have disclosure requirements for nonprofit corporations. A Section 501(c)(3) has a responsibility to keep certain documents on hand and available for public viewing. The Internal Revenue Code has rules about this, which we refer to as Required Disclosures.

In return for being tax exempt and receiving tax deductible contributions Section 501(c)(3) organizations must disclose information about their organization to the public. Annual tax returns for three years after the due date, including extensions. All Form 990 schedules (except portions of Schedule B), attachments and supporting documents. The determination letter from the IRS that shows our organization has tax- exempt status. Certain documents must be made available immediately, while others can take you some time to gather and reproduce.

How quickly do I need to make the documents available?  Normally, it’s the day you’re asked for them.  If the organization has limited hours during certain times of the year, the requested information should be made available within two weeks. Can we charge for copies?  Yes, a reasonable fee can be charged.

Are any other options available for making the required documents available to the public?  Yes, the Internet! Post the information online & refer requesters to the website and consider the job done.

You are Not Required to Share…  We don’t have to identify our contributors by name, only the amounts and natures of the contributions.

 $20 for each day of noncompliance, up to a maximum of $10,000  If the failure to comply was deemed willful the penalty could be $5,000 per return or application! IRS Penalties

State of Texas Required Disclosures

Chapter 22 Business Organizations Code Nonprofit Corporations A corporation shall maintain current and accurate financial records.  Income  Expenditures  Statement of changes in fund balances  A balance sheet for each fund.  In accordance with generally accepted accounting principles  A annual report shall be prepared based on the above information

Business Organizations Code AVAILABILITY OF FINANCIAL INFORMATION FOR PUBLIC INSPECTION  The corporation shall make the records, books, and reports available to the public for inspection and copying

Business Organizations Code FAILURE TO MAINTAIN FINANCIAL RECORD OR PREPARE ANNUAL REPORT  Failure to maintain a financial record  Failure to prepare an annual report  Failure to make a record or report available to the public Class B misdemeanor  180 days in jail  $2,000 fine  Or both