WASHINGTON— Treasury has announced the Internal Revenue Service (IRS) plans to revise the Form 990 to improve “transparency, strengthen tax administration,” and, of most interest to credit unions, to “provide clearer reporting on certain activities of tax-exempt organizations described in section 501(c)(3) of the Internal Revenue Code, including government contracts, government grants, and fiscal sponsorship arrangements.”
Treasury added the changes are intended to detect misconduct and hold wrongdoers accountable.
In response, America’s Credit Unions President and CEO Scott Simpson said in a statement, “Government grants and contracts can involve substantial public funds. Clearer reporting in these areas can help the IRS and the public better understand the sources and uses of that funding, support proper revenue classification, and reduce the risk of fraud, abuse, and misuse of taxpayer dollars.”
What Recent Oversight Has Revealed
In its announcement, Treasury noted that fiscal sponsorship is an umbrella term for several longstanding and lawful structures through which a tax-exempt organization may support charitable projects and initiatives.
“Recent congressional oversight has raised concerns that some fiscal sponsorship arrangements may be used to obscure who is operating a project, who controls project funds, and how those funds are being used. Increased reporting can help address those concerns and make it harder for rogue organizations to hide behind opaque arrangements,” according to Treasury.
‘Scrutiny & Liability’
“Public money and tax-exempt status demand public accountability,” Treasury Secretary Scott Bessent said in a statement. “We are ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. When bad actors misuse charitable structures, directors and officers should understand that transparency can lead to scrutiny, accountability, and liability under the law.”
The Timetable
While not releasing a specific timetable, Treasury and the IRS said they expect to publish proposed regulations and provide an opportunity for public comment before any reporting changes are finalized. Treasury and the IRS will consider administrative feasibility, proportionality, and reporting burden as the proposal is developed.
