Disclosure Requirements for
Charities
Lisa
Nachmias Davis - Attorney at Law
Phone
Fax
davis@sharinglaw.net
Section
6104 of the Internal Revenue Code requires tax-exempt organizations to disclose
their annual informational returns (990 or 990PF) and (in most cases) exemption
applications to the public upon request and to provide copies of them if asked, or
otherwise make them available for public inspection. Final regulations, issued in 1999, impose
penalties for failure to comply with this obligation. The regulations are published at Title 26 of
the Code of Federal Regulations, Section
(1) Documents required to be disclosed:
$
Application for recognition of tax exemption and
supporting documents. This
includes any letter or other
document issued by the Internal Revenue Service concerning the application
(such as a favorable determination letter or a list of questions from the
Internal Revenue Service about the application). If no form of application is required, the
"application" means the letter to the
$
Exemption:
(1) pending applications; (2) any application for tax exemption filed
before
$
Three years of annual information returns with all
supporting documents and schedules, including amendments. Returns covered are Forms 990, 990PF, 990-EZ,
990-BL, Form 1065. A central or parent
organization with a group exemption may be required to produce documents
related to subordinate or satellites; those offices are also subject to less
stringent disclosure requirements.
$ Exemptions: (1) for parts of the return that identify names and addresses of contributors to the organization, but this exemption does not apply to Form 990PF, the return filed by private foundations; (2) Form 990-T; (3) K-1 of religious or apostolic organizations described in section 501(d)
(2) Where Must Documents Be "Publicly
Available"
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Must be made available at organization's principal
office and at certain regional or district offices.
$
Exception for "service providers":
if not the
organization's principal office, documents are not required to be available at
offices "where the only services provided further exempt purposes (such as
day care, health care or scientific or medical research)."
(3) Requirement
to Provide Copies.
$
Copying
Charges Permitted. Organizations must comply with requests, made
either in person or in writing, for copies of this information, which must be
fulfilled without charge, other than a reasonable fee for reproduction and
postage. "Reasonable fee" is defined by regulation to mean the amount
the
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Time
Limits. If the request for copies is made in person, the organization generally
must provide the requested copies immediately. In unusual circumstances, the organization
may delay until the next business day following day the unusual circumstances
"cease to exist," but in no event more than five days. (Presumably, an example would be that the
photocopier is broken or the office is locked.)
If
the request for copies is made in writing, the organization must provide the
copies within 30 days.
$
Harassment Campaign Exemption.
Section 6104(d)
exempts organizations from disclosure if the disclosure requests are part of a
"campaign of harassment." The
regulations require an organization to file an application for a
"harassment determination" within 10 days after suspending compliance
with the regulations. However, no
application is needed to reject requests for information of more than two per
month or four per year by a single individual or from a single address.
(4) Internet Publication Exception.
$
Copying and disclosure are excused if the
organization has made the requested documents "widely available"
through publication on the Internet, which currently means, in PDF format. The
$
Currently, the
website www.guidestar.org publishes all 990 returns filed with the
(5) Enforcement and penalties.
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How Much: The
penalty for failure to make disclosure of annual returns is $20 for each day
during which such failure continues, with a maximum penalty (for failures with
respect to any 1 return) not to exceed $10,000.
The penalty for failure to make
disclosure of exemption applications is $20 for each day -- with no ceiling. Exception: if failure to disclose is shown to be
due to reasonable cause.
$ Who Pays: The penalty is paid by the responsible person, not the organization; defined as "any officer, director, trustee, employee, or other individual who is under a duty to perform the act in respect of which the violation occurs." However, Connecticut law requires that the organization must indemnify any director or officer in cases in which "(1) the individual conducted himself or herself in good faith; and (2) the individual reasonably believed (A) in the case of conduct in an official capacity with the corporation, that the conduct was in the corporation's best interests, and (B) in all other cases, that the conduct was at least not opposed to its best interests; and (3) in the case of a criminal proceeding, the individual had no reasonable cause to believe the conduct was unlawful." Conn. Gen. Stat. sections 33‑1117, 33-1122(1).
$
How Imposed: If
the person who is denied copies or access provides to the
(6) Rules for Corporate Documents.
·
For the Public?
The
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For Members.
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In General. Connecticut
law also requires that corporate records be maintained at the "principal
office": (1) certificate of
incorporation or restated certificate of incorporation and all amendments to it
currently in effect; (2) its bylaws or restated bylaws and all amendments to
them currently in effect; (3) the minutes of all members' meetings, if any, and
records of all action taken by members, if any, without a meeting for the past
three years; (4) the financial statements prepared for the past three years;
(5) a list of the names and business addresses of its current directors and
officers; and (6) its most recent annual report delivered to the Secretary of
the State.
For further information, contact
Lisa Nachmias Davis -
Attorney at Law
fax
davis@sharinglaw.net
www.sharinglaw.net