May 31, 2007 | Read Time: 1 minute
The Internal Revenue Service has released rules that explain how charities should put into practice a new law that requires them to publicly report income they receive that is not related to their missions.
Under the Pension Protection Act, which became law last August, all charities for the first time are required to publicly disclose their “Exempt Organization Business Income Tax Return,” known as the Form 990-T. The law covers forms filed with the revenue service after August 17, 2006.
The unrelated-income disclosure requirement applies to all organizations classified under Section 501(c)(3) of the Internal Revenue Code, even those that are exempt from filing federal informational tax returns. Thus, churches and organizations with annual revenue of less than $25,000 are required to disclose their unrelated-business income to the public, even though they do not have to file annual informational returns. The requirement also applies to churches that have not applied for tax-exempt status.
Charity employees who refuse to provide the forms, or to allow them to be copied, can be fined $20 per day, up to a maximum of $10,000. The penalty will be paid by each employee who refuses to disclose the information.
Charities that make copies of their Form 990-T widely available, for example through a Web site, are not required to provide a separate copy of the return to those who ask for it.
A copy of the guidelines, “Notice 2007-45,” is available online.
