Nonprofit Tax Returns Public Record: Everything You Need to Know
A nonprofit that fails to provide financial information when requested runs the risk of losing its legal status. 3 min read updated on September 19, 2022
Making nonprofit tax returns public record is a requirement of forming this type of legal entity. A nonprofit that fails to provide financial information when requested runs the risk of losing its legal status.
Are the Finances of a Nonprofit Public Record?
Nonprofits are required to provide the IRS several pieces of information to maintain their status. In addition to submitting financial statements, nonprofits must report the salaries of important employees such as officers and directors. The public is allowed to request financial information about nonprofits by submitting Form 990. Both the nonprofit itself and the IRS are legally required to provide this information once it has been requested.
During normal business hours, nonprofits must allow any member of the public who asks to inspect their records. The financial information of nonprofits should be public record for many important reasons. First, and most importantly, nonprofits should be scrutinized closely, despite their charitable works.
Many investigations have found nonprofits working contrary to their mission, using the donations that the receive for purposes other than charities by:
- Transferring donations to fundraisers in pay-for-profit schemes.
- Making questionable contributions to political campaigns with donations.
- Gaining improper access to taxpayer funds by bribing officials with donations.
Making nonprofit tax returns public record allows watchdog organizations to detect corruption so that bad actors can be held accountable. Although the tax records of nonprofit organizations are generally required to be made available to the public, the IRS will not post this information on its site. These documents are only provided after a request has been made.
On the IRS website, it is possible to find a complete list of tax-exempt entities. Financial documents, however, must be accessed elsewhere. Subscription services are available that will allow people to access years' worth of nonprofit financial reports. You could also choose one of the many free solutions for accessing these records:
- Visiting the nonprofit in person and inspecting their records.
- Using the ProPublica Nonprofit Explorer.
- Contacting the IRS and requesting copies of the documents.
By filing Form 990, it's possible to learn the compensation for different people in a nonprofit, including directors and trustees. It's also possible to learn which officer in the nonprofit is the most highly compensated. In nonprofit filings, there will also be information about the donations and grants that the organization has provided.
Other information that can be found in these filings includes the nonprofit's expenses, what investments the organization has made, and whether the nonprofit holds any property. Before 2015, the IRS was reluctant to publish the tax returns of nonprofit organizations. After a court ruling required the IRS to publish this information publicly, however, these 990 forms were published electronically in a format that is machine readable.
It's important to note that this information isn't actually hosted on the IRS website. Instead, the agency decided to publish this data via Amazon Web Services. By giving the public access to nonprofit tax returns, the IRS was able to comply with a component of the U.S. National Action Plan for Open Government.
Where to Find Form 990 for a Nonprofit
IRS rules for disclosure dictate that nonprofit organizations must make available their annual Form 990 returns for the most recent three years. This disclosure requirement also applies to Form 1023. A nonprofit must file this form to achieve its status as a tax-exempt organization.
If you wish to inspect a nonprofit's Form 990, there are several options you can choose. You should be aware, however, that there is typically a delay between the end of a fiscal year and when the tax return will be published online. This delay can be from a year to 18 months.
The simplest solution for accessing Form 990 returns is to visit the Attorney General or Secretary of state website for the state where the nonprofit was originally formed. In some states, these documents are published online as soon as they are available. In other states, you will need to request these forms individually.
If you live in the same state as the nonprofit, you may want to request their 990 returns directly. If you make a request in person, the nonprofit is required to comply right away. Written request will be fulfilled in 30 days.
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