Upon Request: IRS Form 990 Disclosures – Or Not?

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What happens when a reporter calls your nonprofit and asks for its most recent IRS Form 990 information return?  Must you provide it to the reporter?  A complete version?  How soon? And what if you refuse the request?

Under Section 6104 of the Internal Revenue Code, tax-exempt nonprofits are legally required to make their three most recent IRS Form 990 annual information returns publicly available for inspection by others.  This requirement may be satisfied through Form 990s’ availability through the IRS’s own website and Guidestar.org.[1]  Notably, the IRS Form 990 disclosure need not be complete; a nonprofit can, and likely should, redact its Schedule B donor information.[2]  Form 990s contain other important information such as amounts and types of revenues, categories and amount of expenses, executive compensation, leadership and governance, program activities, and issues of note such as conflicts of interest or political activity.

If the publicly available Form 990s do not pertain to the most recently completed tax year, or to the full three-year time period, then the nonprofit must provide them separately to those who request them, such as reporters, interested constituents, or even total strangers.  For legal compliance, the nonprofit must provide the requested Form 990s, if not otherwise available through the IRS or Guidestar websites, within thirty days of the request.

What happens if a nonprofit fails to comply?  Notably, no legal private right of action exists for a requesting party to compel the nonprofit’s Form 990 production.  A federal district court in California recently rejected such a claim squarely in Pardeux v. The US Mendicant Buddhist Congregation (E.D. Cal. Case No. 2:19-cv-0881-JAM-AC). The plaintiff in that case sought information about this religious organization through a motion to compel production of the Form 990, along with a monetary sanction of $45,000 for the organizations’ recalcitrance.  Rebuffing him, the court instructed that "the fact that a federal statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person." Further, "courts considering Section 6104 have uniformly determined that there is no private right of action under the statute."  Further, any monetary penalty may be imposed only by the IRS, as an administrative remedy collected by the IRS – not any private person.

The applicable IRS penalty is $20 per day for as long as the Form 990 nondisclosure continues, but with a maximum penalty of $10,000. One cautionary note and potential zinger: a spurned Form 990 requester may file a complaint with the IRS through its Form 13909 referral process.  Based on such complaint, the IRS may then initiate an investigation or even an audit of the tax-exempt organization.  Whether the IRS will actually follow up or not is another matter, but conscientious nonprofits are wise to stay out of any legal controversy and timely provide Form 990s as requested (albeit with Schedule B redacted therefrom).

 

[1] For more information about public access requirements and related IRS Form 990 reporting consideration, see here.

[2]For legal developments regarding the California Attorney General’s additional efforts to seek Form 990 Schedule B information, see here.