The IRS’s announcement on July 17, 2018 that it will no longer require Form 990 Schedule B donor disclosures sent shock waves through the tax-exempt sector. While such action reflects notable government restraint and certainly affects many tax-exempt organizations, there is no change for Section 501(c)(3) organizations that file Form 990s or for Section 527 “political action committee” (PAC) reporting. So why the change, and what are its implications?
How has the number of tax-exempt nonprofit organizations changed over the past decade? According to IRS data released this year, significant shifts have occurred for Section 501(c)(3) and Section 501(c)(4) organizations, in large part due to new “auto-revocation” consequences for not filing required Form 990s and the introduction of IRS Form 1023-EZ. Author Michael Wyland’s excellent Nonprofit Quarterly article provides substantial data analysis, from which further observations can be made on nonprofit trends.
What is a church? According to materials released early 2018, the venerable Christian radio and publishing ministry Focus on the Family pressed that question with the IRS, successfully garnering official reclassification as a “church.” The IRS’s willingness to accede to Focus’ request, as reflected in recently released IRS documentation, may be surprising and certainly invites further evaluation of what constitutes a “church” for legal purposes.