Disclosure
Requirements for Charities
Lisa Nachmias Davis
Davis O'Sullivan & Priest LLC
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, and 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) 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.
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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
$
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 the
following 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
Davis O'Sullivan & Priest
LLC
203-776-4400
fax 203-774-1060
davis@sharinglaw.net
www.sharinglaw.net