New Tax Regulations for Certain Tax-Exempt
Organizations
Effective June 8, 1999, organizations tax-exempt under 26
U.S.C. §§501(c) and (d), other than private foundations, will be required to
comply with new IRS regulations implementing the public disclosure requirements
of the Internal Revenue Code. The
public disclosure provisions of 26 U.S.C. §6104(d) require tax-exempt
organizations to make available their applications for tax-exemption and three
most recent annual information returns without charge, except for reasonable
copying and postage charges, to members of the public who make a request for
the documents either in person or in writing.
The new regulations provide guidance regarding the time, place and
manner by which an organizations should make its documents available to
requesters; the means by which an organization may make its documents widely
available by posting them on the Internet and thus avoid the requirement of
making copies in response to individual requests; and the standards to be used
in determining whether an organization is the subject of a harassment campaign
designed to disrupt its business rather than procure information. The final regulations can be found at 64
Fed. Reg. 17279-17291 (April 9, 1999).
Under the new regulations and applicable law, a tax-exempt
organization must make available to the public, and provide copies of, its
application and any documents filed in support, as well as its three most
recent information returns, with all schedules, except the parts of the return
that identify contributors. These
documents must be made available at the organization’s principal office and at
certain regional and district offices.
Under the new regulations, an organization need not make its documents
available at any location “where the only services provided further exempt
purposes.” This provision avoids the
burden to an organization of making copies at a site where it has no management
or administrative staff available to comply with a request. Copies of documents must be made available
to those who request them in person on the day of the request, except where
unusual circumstances (such as the absence of the organization’s staff) prevent
compliance, in which case copies are to be provided no later than the next
business day following the cessation of the unusual circumstances, with the
total delay not to exceed five business days.
When an organization receives a written request, it must mail copies
within thirty days from receipt of the request or receipt of payment if the
organization requires payment in advance.
The regulations also specify that a reasonable charge for copies cannot
exceed the fees that the IRS charges for copies of tax-exempt organization related
documents. The regulations permit an
organization to request payment in advance of providing copies, require an
organization to obtain the requester’s consent before incurring more than $20
in copying and postage charges, and require organizations to accept in payment
cash, money orders, and, unless the organization accepts payment by credit
card, personal checks.
The regulations provide that an organization need not comply with requests for copies if it makes returns widely available by posting them to its Internet web site or to another organization’s web site as part of a database of like materials. The regulations set forth criteria for posting, which include that a user be able to access information 1) in a format that exactly reproduces the image of the original document; and 2) without charge and without special hardware or software.
The regulations state the criteria for determining when an
organization may suspend response to requests for documents on the grounds that
it is the target of a harassment campaign.
A harassment campaign exists where the purpose of a group of requests is
to disrupt the organization’s business rather than to obtain information. An organization can suspend compliance with
the requests if it reasonably suspects that it is the target of a harassment
campaign, but must file an application for a harassment campaign determination
with an IRS district office within ten days after suspending compliance.
The new regulations do not apply to private foundations. The Department of the Treasury intends to issue a proposed regulation dealing with similar requirements for private foundations in the near future.
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