The International Journal
of Not-for-Profit Law

Volume 1, Issue 4, June 1999

A quarterly publication of the International Center for Not-for-Profit Law

Practice Notes: New Tax Regulations for Certain Tax-Exempt Organizations

Cathy Shea

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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ISSN: 1556-5157