NYS Charities Bureau clarifies Form 990 Schedule B is required with annual filings
For the Office of the New York State Attorney General - Charities Bureau
Issue date: November 2019
ORGANIZATIONS REGISTERED WITH THE CHARITIES BUREAU MUST FILE
COMPLETE SCHEDULE B TO IRS FORM 990, INCLUDING NAMES AND ADDRESSES OF CONTRIBUTORS
The Attorney General’s Charities Bureau has received inquiries asking whether organizations that register with the Charities Bureau must submit a copy of the complete Schedule B (List of Contributors) to their Internal Revenue Service Form 990. This guidance confirms that there has been no change to the New York filing requirements for organizations that also file a federal Form 990: New York registrants must attach complete copies of all schedules to their federal form as part of their annual, New York CHAR 500 filing, including (if applicable) a Schedule B that lists the names and addresses of the organization’s substantial contributors and the amounts they contributed. The recent federal developments that highlighted this issue are described below.
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In July 2018, the United States Treasury Department issued Revenue Procedure 2018-38, which provided that “tax-exempt organizations required to file the Form 990 or Form 990-EZ, other than those [exempt from taxation pursuant to §501(c)(3) of the Internal Revenue Code], will no longer be required to provide names and addresses of contributors on their Forms 990 or Forms 990-EZ and thus will not be required to complete these portions of their Schedules B.” The Revenue Procedure was announced without any prior public notice or opportunity for comment, and its text indicated that the new filing standards would take effect in December 2018. Some organizations began citing the Revenue Procedure to claim that they were no longer required to include the names and addresses of their contributors on the copy of their Form 990 Schedule B that they filed in New York.
In July of this year, the U.S. District Court for the District of Montana held in Bullock, et al. v. IRS, No. 4:18–cv–00103–BMM (D. Mont. July 30, 2019), that the adoption of Revenue Procedure 2018-38 by the Internal Revenue Service was unlawful because it failed to satisfy Administrative Procedure Act standards that require public notice-and-comment for substantive agency rule-making. The Bullock decision set aside Revenue Procedure 2018-38: the Revenue Procedure is therefore not in effect and all organizations that file a Schedule B with the IRS must include complete contributor information on that form. Organizations registering with the
Charities Bureau in New York MUST include the same complete Schedule B – with names and addresses of contributors - in their annual financial reports.
Since July, the Treasury Department has taken steps to address the Bullock decision with a formal rule-making. On September 10, 2019, the Department of the Treasury issued a
Notice of Proposed Rule-making that included the full text of new, proposed regulations modeled after Revenue Procedure 2018-38. These regulations, if adopted, would continue to require 501(c)(3) organizations to file a complete Schedule B but would exempt other 501(c) tax-exempt organizations (such as 501(c)(4) social welfare organizations) from including the names and addresses of their substantial contributors in Schedule B to IRS Form 990.
Unless and until new Form 990 filing rules are adopted by the Internal Revenue Service after review and analysis of all public comments, all organizations required to register with the Attorney General’s Charities Bureau must continue to file all of the following documents as their required Annual Financial Report:
New York Form CHAR500
IRS Form 990, 990EZ of 990PF, with complete copies of all schedules, including Schedule B (NOTE - Schedule B is exempt from public disclosure by the Office of the Attorney General)
A Certified Public Accountant’s Review or Audit Report if required based on gross revenue.
Additional guidance for charities as well as information about
registration and annual financial filings are posted at www.charitiesnys.com
IRS Issues Fiscal Year 2020 Program Letter for Exempt Organizations
TABLE OF CONTENTS: FISCAL YEAR 2020 COMPLIANCE PROGRAM
Compliance Strategies
Data-Driven Approaches
Referrals, Claims and Other Casework
Compliance Contacts
Determinations
Voluntary Compliance and Other Technical Programs
https://www.irs.gov/pub/irs-tege/tege-fy2020-program-letter.pdf
NYS Charities Bureau sues NYCharities.org and Its Board of Trustees
Attorney General James Sues NYCharities.org for the missing funds that the organization failed to turn over to New York charitable organizations..
Read full document here: NYS vs. NYSCHARITIES.ORG
Here is an example of the power of the Attorney General in its role of oversee all charitable organizations on behalf of the people of New York. As is usually the case, the suit extends to the board members of the organization for breaches of fiduciary duties in overseeing the organization.
NY Charities Bureau issues new guidance on solicitation disclosure requirements
The New York State Charities Bureau’s recent guidance details some of the disclosure requirements of section 172-b of the Executive Law. This guidance does little more than restate the language already in the Executive Law. Also worth mentioning, there was an update to 174-b of the Executive Law, that became effective on March 21, 2019. This update mainly added this disclosure requirement: “a statement identifying the website and telephone number of the New York state office of the attorney general where an individual can receive information on charitable organizations.” It also seems the only thing being clarified in this guidance is the phone number of the Attorney General. (“Include the phone number of the Attorney General - (212) 416-8686 - where an individual may get information about charities.”)
In any case, this guidance may be the bureau’s way to emphasizing these requirements. Little, if any, enforcement of disclosure requirements have taken place in the past, but that may change. I would advise all charitable organizations to review the disclosure requirements with management to ensure compliance going forward.
The Items in the guidance, as stated by the bureau’s communication, are as follows:
Include a clear description of the programs and activities for which contributions are solicited, or include a statement that such a description may, upon request, be obtained from the organization.
Include a statement that a copy of the organization’s latest annual financial report may be obtained from the organization or from the Attorney General’s Charities Bureau's Website – www.charitiesnys.com – or from the organization and include the address of the organization to which a request should be addressed.
Include the phone number of the Attorney General - (212) 416-8686 - where an individual may get information about charities.
If the solicitation is conducted by a Professional Fund Raiser; or a Professional Solicitor, such as an individual employed by a Professional Fund Raiser to solicit contributions by phone or door-to-door, the solicitation must also include:
The name of the Professional Fund Raiser, as registered with the Charities Bureau, and a statement that the solicitation is being conducted by a Professional Fund Raiser, and
If applicable, the name of the Professional Solicitor, as registered with the Charities Bureau, conducting the solicitation and a statement that the solicitor is being paid to solicit contributions.
If a solicitation is in writing, the above disclosures must be placed conspicuously in the solicitation material in at least ten-point bold face type or, in the alternative, typeface that is no smaller than the size of the print used for most of the words in the disclosures.
You can see the original communication from the Bureau here