New regs ease reporting for some tax-exempts

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The Treasury and the IRS have issued final regulations clarifying the reporting requirements generally applicable to tax-exempt organizations.

Among other provisions, the regs incorporate the existing exception from having to file an annual return for certain organizations that normally have gross receipts of $50,000 or less. The regulations also provide that the requirement to report contributor names and addresses on annual returns generally applies only to returns filed by Section 501(c)(3) organizations and Section 527 political organizations.

Opponents say the regs facilitate contributions to politically active groups from big donors who then don’t have to be divulged to the IRS.

“The Trump administration has opened the floodgates to dark money pouring into our election system just months before Donald Trump is on the ballot,” said Senate Finance Committee ranking member Ron Wyden, D-Oregon. “We’re in the midst of a global pandemic and once-in-a-lifetime economic crisis and the Trump administration is prioritizing boosting the president’s political prospects with shady cash. In finalizing this rule, the Treasury Department ignored the concerns of election security experts – anything to allow hostile foreign interests and groups like the [National Rifle Association] to further undermine our democracy.”

All tax-exempts must continue to maintain the names and addresses of their substantial contributors in their books and records. This change will have no effect on transparency, the IRS said in an announcement, as contributor information open to public inspection will be unaffected.

The final regulations allow tax-exempts to apply the regs to returns filed after Sept. 6, 2019.

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IRS Tax regulations