IRS Drops Schedule B for 501(c)(4) Organizations

IRS Drops Schedule B for 501(c)(4) Organizations

Yesterday, the IRS announced that section 501(c)(4) organizations will no longer be required to submit Schedule B with their annual Form 990 tax form. This means section 501(c)(4) organizations will not disclose their donor information to the IRS. The change applies to tax years ending on or after December 31, 2018.  

The new guidance requires section 501(c)(4) organizations to maintain donor information and disclose as needed to the IRS for tax administration.  

Previously, section 501(c)(4) organizations were required to submit donor information to the IRS on Schedule B, but the schedule was not required to be made public.  

Section 501(c)(4) organizations include many different types of organizations, such as Health Management Organizations, but the controversy around the IRS announcement centers on advocacy groups, which participate in political and lobbying activity. Critics charge that the donor disclosure requirement allowed the IRS to "follow the money" between organizations, but now this transparency will be lost unless the IRS specifically requests donation records for an organization.

The timing of the announcement is curious, as it has recently come to light that the National Rifle Association (NRA) accepted millions in Russian funding during the 2016 election cycle.  Without Schedule B, it may be harder for such facts to come to light or be investigated.  

Click here for a link to the new IRS Guidance (Revenue Procedure 2018-38).

Click here for a link to a Rolling Stone article about Russian funds and the NRA. The NRA is a section 501(c)(4) tax-exempt organization.

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