Tax Exempt and Government Entities
EXEMPT ORGANIZATIONS

                                  Compliance Guide  

                                  ( )( )
                                  for 501(c)(3)  

501c 3,
                                  Public Charities

                                                                        i
                                  Inside:

                                  Activities that may jeopardize  
                                  a charity’s exempt status,

                                  Federal information returns, tax  
                                  returns or notices that must be filed,

                                  Recordkeeping—why, what, when,

                                  Governance considerations,

                                  Changes to be reported to the IRS,,

                                  Required public disclosures ,

                                  Resources for public charities ,

Contents,

What Activities May Jeopardize a Public Charity’s Tax-Exempt Status?  . . . . . . . . . . . . . . . . . . . . . . 4,

Private Benefit and Inurement ,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,
Political Campaign Intervention,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,
Legislative Activities,    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,

What Federal Information Returns, Tax Returns and Notices Must Be Filed?  . . . . . . . . . . . . . . .  . 8,

Form 990, Return of Organization Exempt From Income Tax, Form 990-EZ,  
Short Form Return of Organization Exempt From Income Tax and Form 990-N,  
Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required  
To File Form 990 or 990-EZ,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . 9,
Form 990 and Form 990-EZ,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . 11,

Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations  
not Required To File Form 990 or 990-EZ,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .12,
Form 990-T, Exempt Organization Business Income Tax Return,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .14,                                                                 1
Employment Tax Returns,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .     15,

Why Keep Records?   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .16,

Evaluate Charitable Programs,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .           16,
Monitor Budgetary Results,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,
Prepare Financial Statements,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,
Prepare Annual Information and Tax Returns,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,
Identify Sources of Receipts,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,

Substantiate Revenues, Expenses and Deductions for Unrelated Business  
Income Tax (UBIT) Purposes,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . 17 , 
Comply with Grant-Making Procedures,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .                         18,
Comply with Racial Nondiscrimination Requirements,   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  18,

What Records Should Be Kept? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .18,

Accounting Periods and Methods,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .20,
Supporting Documents,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .20,

Contents (cont’d),

How Long Should Records Be Kept?   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,

Record Retention Periods,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,

What Governance Procedures and Practices Should 
an Organization Consider Adopting or Have in Place?  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,

Mission Statement & Organizational Documents,    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,
Governing Body,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,
Governance and Management Policies   ,    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,
Financial Statement and Information Reporting,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,
Transparency,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,

How Should Changes Be Reported to the IRS?  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        23,

Reporting Changes on the Annual Information Return,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .23,
Determination Letters and Private Letter Ruling Requests,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .23,

What Disclosures are Required?   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .24,                                         2

Public Inspection of Annual Returns and Exemption Applications,  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .                                                                                     24,
Sale of Free Government Information,    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .26,
Charitable Contributions—Substantiation And Disclosure,    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .26,

How to Get IRS Assistance and Information,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,

Specialized Assistance for Tax-Exempt Organizations,   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .28,
Tax Publications for Exempt Organizations,   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .29,
Forms for Exempt Organizations,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .29,
General IRS Assistance,  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .30,

Compliance Guide for 501(c)(3) Public Charities,
                                        ( )( )

501c 3

       ederal tax law provides tax benefits to nonprofit organizations recognized as exempt  
   from federal income tax under section 501(c)(3) of the Internal Revenue Code (Code). 
FThe Code requires that tax-exempt organizations must comply with federal tax law to maintain 
tax-exempt status and avoid penalties.

In this publication, the IRS addresses activities that could jeopardize a public charity’s  
tax-exempt status. It identifies general compliance requirements on recordkeeping, reporting,  3
and disclosure for exempt organizations (EOs) described in section 501(c)(3) of the Code  
that are classified as public charities. Content includes references to the statute, Treasury  
regulations, IRS publications and IRS forms with instructions. Publication 4221-PC is neither 
comprehensive nor intended to address every situation.

To learn more about compliance rules and procedures that apply to public charities exempt 
from federal income tax under section 501(c)(3), see IRS Publication 557, Tax-Exempt Status  
for Your Organization, and the Life Cycle of a Public Charity on www.irs.gov/eo. Stay abreast 

of new EO information, also on this Web site, by signing up for the EO Update, a free  
newsletter for tax-exempt organizations and practitioners who represent them. For further 
assistance, consult a tax adviser.

What Activities May Jeopardize a  
Public Charity’s Tax-Exempt Status?
 
Once a public charity has completed the application process and has established 
that it is exempt under section 501(c)(3), the charity’s officers, directors, trustees 
and employees must ensure that the organization maintains its tax-exempt status 
and meets its ongoing compliance responsibilities.

A 501(c)(3) public charity that does not restrict its participation in certain activities 
and does not absolutely refrain from others, risks failing the operational test and 
jeopardizing its tax-exempt status. The following summarizes the limitations on the 
activities of public charities.

Private Benefit and Inurement ,

A public charity is prohibited from allowing more than an insubstantial accrual 
of private benefit to individuals or organizations. This restriction is to ensure that 
a tax-exempt organization serves a public interest, not a private one. If a private 
benefit is more than incidental, it could jeopardize the organization’s tax-exempt 
status.
                                                                                          4
No part of an organization’s net earnings may inure to the benefit of an insider.  
An insider is a person who has a personal or private interest in the activities of the 
organization such as an officer, director, or a key employee. This means that an 
organization is prohibited from allowing its income or assets to accrue to insiders.  
An example of prohibited inurement would include payment of unreasonable  
compensation to an insider. Any amount of inurement may be grounds for loss  
of tax-exempt status.

If a public charity provides an economic benefit to any person who is in a position  
to exercise substantial influence over its affairs (that exceeds the value of any 
goods or services provided in consideration), the organization has engaged in an  
excess benefit transaction. A public charity that engages in such a transaction 
must report it to the IRS. Excise taxes are imposed on any person who engages in 
an excess benefit transaction with a public charity, and on any organization man-
ager who knowingly approves such a transaction. (See Reporting Excess Benefit 
Transactions on page 12).

A public charity that becomes aware that it may have engaged in an excess benefit 
transaction should consult a tax advisor and take appropriate action to avoid any 
potential impact it could have on the organization’s continued exempt status. Go 
to www.irs.gov/eo for details about inurement, private benefit, and excess benefit 
transactions.

Political Campaign Intervention ,

Public charities are absolutely prohibited from directly or indirectly participating  
in, or intervening in, any political campaign on behalf of (or in opposition to) a  
candidate for public office. Contributions to political campaign funds or public 
statements of position made on behalf of the organization in favor of or in  
opposition to any candidate for public office clearly violate the prohibition against 
political campaign activity. Violation of this prohibition may result in revocation of 
tax-exempt status and/or imposition of certain excise taxes. 

Certain activities or expenditures may not be prohibited depending on the facts 
and circumstances. For example, the conduct of certain voter education activities 
(including the presentation of public forums and the publication of voter education 
guides) in a non-partisan manner do not constitute prohibited political campaign 
activity. Other activities intended to encourage people to participate in the electoral  
process, such as voter registration and get-out-the-vote drives, would not constitute 
prohibited political campaign activity if conducted in a non-partisan manner. On 
the other hand, voter education or registration activities with evidence of bias that 
would favor one candidate over another, oppose a candidate in some manner,  
or have the effect of favoring a candidate or group of candidates, will constitute 
campaign intervention.

                                                                                         5
The political campaign activity prohibition is not intended to restrict free expression  
on political matters by leaders of public charities speaking for themselves as  
individuals. However, for their organizations to remain tax exempt under section 
501(c)(3), organization leaders cannot make partisan comments in official organi-
zation publications or at official functions. When speaking in a non-official capacity,  
these leaders should clearly indicate that their comments are personal, and not 
intended to represent the views of the organization. 

Some section 501(c)(3) organizations take positions on public policy issues, 
including issues that divide candidates in an election for public office. However, 
section 501(c)(3) organizations must avoid any issue advocacy that functions as 
political campaign intervention. Even if a statement does not expressly tell an 
audience to vote for or against a specific candidate, an organization delivering the 
statement is at risk of violating the political campaign intervention prohibition if 
there is any message favoring or opposing a candidate. A statement can identify  
a candidate not only by stating the candidate’s name but also by other means 
such as showing a picture of the candidate, referring to political party affiliations, 
or other distinctive features of a candidate’s platform or biography. All the facts 
and circumstances need to be considered to determine if the advocacy is political 
campaign intervention.

The IRS considers the following factors that tend to show an advocacy  
communication is political campaign activity: 
n whether the statement identifies one or more candidates for a given public office, 
n whether the statement expresses approval or disapproval for one or more  
 candidates’ positions and/or actions, 
n whether the statement is delivered close in time to the election, 
n whether the statement makes reference to voting or an election, 
n whether the issue addressed in the communication has been raised as an issue 
 distinguishing candidates for a given office, 
n whether the communication is part of an ongoing series of communications by 
 the organization on the same issue that are made independent of the timing of 
 any election, and ,
n whether the timing of the communication and identification of the candidate are 
 related to a non-electoral event such as a scheduled vote on specific legislation 
 by an officeholder who also happens to be a candidate for public office.

A communication is particularly at risk of political campaign intervention when 
it makes reference to candidates or voting in a specific upcoming election. 
Nevertheless, the commu-nication must still be considered in context before  
arriving at any conclusions.
                                                                                     6
Political candidates may be invited to appear or speak at organization events in 
their capacity as candidates, or individually (not as a candidate). Candidates may 
also appear without an invitation at organization events that are open to the public.
 
When a candidate is invited to speak at a public charity’s event as a candidate, 
factors in determining whether the organization participated or intervened in a 
political campaign include the following: 
n whether the public charity provides an equal opportunity to the political  
 candidates seeking the same office, 
n whether the public charity indicates any support of or opposition to the  
 candidate, and ,
n whether any political fundraising occurs.

When a candidate is invited to speak at a public charity’s event in an individual 
(non-candidate) capacity, factors in determining whether the organization  
participated or intervened in a political campaign include the following:
n whether the individual is chosen to speak solely for reasons other than  
 candidacy for public office,
n whether the individual speaks in a non-candidate capacity or references his or 
 her candidacy or the election,

n whether the organization maintains a nonpartisan atmosphere on the premises 
  or at the event where the candidate is present, and  ,
n whether the organization clearly indicates the capacity in which the candidate  
  is appearing and does not mention the individual’s political candidacy or the 
  upcoming election in the communications announcing the candidate’s atten-
  dance at the event.

In determining whether candidates are given an equal opportunity to participate, 
a public charity should consider the nature of the event to which each candidate 
is invited, in addition to the manner of presentation. For example, a public charity 
that invites one candidate to speak at its well attended annual banquet, but invites 
the opposing candidate to speak at a sparsely attended general meeting, will likely 
be found to have violated the political campaign prohibition, even if the manner of 
presentation for both speakers is otherwise neutral. 

Sometimes a public charity invites several candidates to speak at a public forum. 
A public forum involving several candidates for public office may qualify as an 
exempt educational activity. However, if the forum is operated to show a bias for or 
against any candidate, then the forum would be prohibited campaign activity, as it 
would be considered intervention or participation in a political campaign. When an 
organization invites several candidates to speak at a forum, it should consider the 
following factors:                                                                   7
n whether questions for the candidate are prepared and presented by an  
  independent nonpartisan panel, 
n whether the topics discussed by the candidates cover a broad range of issues 
  that the candidates would address if elected to the office sought and are of inter-
  est to the public, 
n whether each candidate is given an equal opportunity to present his or her views 
  on the issues discussed, 
n whether the candidates are asked to agree or disagree with positions, agendas, 
  platforms or statements of the organization, and whether a moderator comments 
  on the questions or otherwise implies approval or disapproval of the candidates.

Read Revenue Ruling 2007-41 at www.irs.gov/eo for additional information on the 
prohibition against political campaign intervention.

When a 501(c)(3) public charity participates in political campaign activity, it  
jeopardizes both its tax-exempt status and its eligibility to receive tax-deductible 
contributions. In addition, an excise tax may be imposed in addition to, or instead 
of, revocation. 

Legislative Activities,

A public charity is not permitted to engage in substantial legislative activity  
(commonly referred to as lobbying). An organization will be regarded as attempting 
to influence legislation if it contacts, or urges the public to contact, members or 
employees of a legislative body for purposes of proposing, supporting or opposing 
legislation, or advocates the adoption or rejection of legislation.

If lobbying activities are substantial, a 501(c)(3) organization may fail the opera-
tional test and risk losing its tax-exempt status and/or be liable for excise taxes. 
Substantiality is measured by either the substantial part test or the expenditure test. 
The substantial part test determines substantiality on the basis of all the pertinent 
facts and circumstances in each case. The IRS considers a variety of factors, 
including the time and expenditures devoted by the organization to the activity, 
when determining whether the lobbying activity is substantial. 

As an alternative, a public charity (other than a church) may elect to use the  
expenditure test by filing Form 5768, Election/Revocation of Election by an Eligible 
Section 501(c)(3) Organizations to Make Expenditures to Influence Legislation. 
Under the expenditure test, a public charity’s lobbying activity will not jeopardize 
its tax-exempt status provided its expenditures related to lobbying do not normally 
exceed a set amount specified in section 4911 of the Code. This limit is generally 
                                                                                        8
based on the size of the organization and may not exceed $1 million. 

Also, under the expenditure test, a public charity that engages in excessive lobby-
ing activity over a four-year period may lose its tax-exempt status, making all of its 
income for that period subject to tax. Should the organization exceed its lobbying 
expenditure dollar limit in a particular year, it must pay an excise tax equal to 25 
percent of the excess. Read the Life Cycle of a Public Charity at www.irs.gov/eo for 
additional information about the rules against substantial legislative activities. 

Public charities that engage in lobbying activities must report lobbying activities on 
Form 990, Schedule C, Political Campaign and Lobbying Activities.

What Federal Information Returns,  
Tax Returns and Notices Must Be Filed?

While 501(c)(3) public charities are exempt from federal income tax, most of these 
organizations have information reporting obligations under the Code to ensure that 
they continue to be recognized as tax-exempt. In addition, they may also be liable 
for employment taxes, unrelated business income tax, excise taxes, and certain 
state and local taxes.

Form 990, Return of Organization Exempt From Income Tax,  
Form 990-EZ, Short Form Return of Organization Exempt From  
Income Tax and Form 990-N, Electronic Notice (e-Postcard) for  
Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ,

Public charities generally file either a:
n Form 990,    Return of Organization Exempt from Income Tax, 
n Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, or,
n Form 990-N,    Electronic Notice (e-Postcard) for Tax-Exempt Organizations not 
 Required To File Form 990 or 990-EZ,

The type of Form 990 series return a public charity must file is generally  
determined by the organization’s gross receipts and total assets. 

The chart below explains which Form 990 an organization is required  
to file.

Filing Dates ,
Forms 990, 990-EZ, and 990-N must be filed by the 15th day of the fifth month 
after the end of the organization’s annual accounting period. The due date for 
the Forms 990 and 990-EZ may be extended for three months, without showing 
                                                                                  9
cause, by filing Form 8868, Application for Extension of Time To File an Exempt 
Organization Return, before the due date. An additional three-month extension may 
be requested on Form 8868 if the organization shows reasonable cause why the 
return cannot be filed by the extended due date.

An organization cannot request an extension for filing the Form 990-N; however, 
there is no penalty for filing it late.

See Filing Penalties and Revocation of Tax-Exempt Status on page 13.

                                                 Form
Gross Receipts Thresholds ,                      to File,
Gross receipts normally ≤ $50,000,                990-N,
Gross receipts > $50,000 and < $200,000          990-EZ 
and Total assets < $500,000,                      or 990,
Gross receipts  ≥ $200,000, or                      990 ,
Total assets   ≥ $500,000,

Filing Exceptions,
Public charities that are not required to file Forms 990 or 990-EZ include:
n churches and certain church-affiliated organizations,
n certain organizations affiliated with governmental units,
n subordinate organizations included in a group return filed by the parent  
 organization, and,
n organizations whose annual gross receipts are normally $50,000 or less  
 (see Form 990-N  , Electronic Notice (e-Postcard) for Tax-Exempt Organizations  
 not Required To File Form 990 or 990-EZ on page 12).

If a public charity is excepted from filing a Form 990 or Form 990-EZ because 
annual gross receipts are normally $50,000 or less, and it elects to file the Form 
990 or Form 990-EZ, it must complete the entire return; otherwise, it must file  
the e-Postcard, Form 990-N, electronically. An organization that only completes 
those items of information on the Form 990 or Form 990-EZ that are required  
to be provided on an electronic Form 990-N will not be deemed to have met its  
electronic notice requirement. See Form 990-N, Electronic Notice (e-Postcard) for 
Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ on page 12.

Special Requirements for Supporting  
Organizations and Donor Advised Funds,
                                                                                     10
Public charities that are supporting organizations described in section 509(a)(3) 
are generally required to file Form 990 or Form 990-EZ even if their gross receipts 
are normally $50,000 or less. Supporting organizations of religious organizations 
need not file Form 990 or Form 990-EZ if their gross receipts are normally $5,000 
or less. Such organizations will, however, be required to file the Form 990-N. 

Supporting organizations will be required to indicate whether they are a Type 1, 
Type 2, a Type 3-Functionally Integrated or Type 3-Other supporting organiza-
tion, identify their supported organizations, and annually certify that they are not 
controlled by a disqualified person. See the instructions for Schedule A (Form 990 
or Form 990-EZ), Public Charity Status and Public Support   and Notice 2006-109 
to determine an organization’s appropriate supporting organization type for infor-
mation return purposes. Learn about new requirements applicable to supporting 
organizations on the IRS Nonprofits and Charities Web site at www.irs.gov/eo. 

Sponsoring organizations of donor advised funds (defined as organizations that 
maintain one or more donor advised funds), and organizations that have controlled 
entities are required to file Form 990 rather than Form 990-EZ or 990-N.

Form 990 and Form 990-EZ ,

Form 990 consists of a core form and schedules. Each organization that files the 
form must complete the entire core form. The core Form 990 includes a Summary 
Page that provides a “snapshot” of the organization’s key financial and operating 
information for the current and prior year.

All Form 990 filers will provide information about their program service accom-
plishments, compensation of certain officers, directors and key employees as well 
as information about governance practices and procedures and financial information. 

Each organization that files Form 990 must complete Part IV of Form 990, 
Checklist of Required Schedules, to determine which schedules it must complete 
based on its activities. See the instructions for Form 990-EZ for information about 
which schedules 990-EZ filers must complete. 

Schedule A, Public Charity Status and Public  
Support, and Schedule B, Schedule of Contributors,
Public charities that file Form 990 or Form 990-EZ must file Schedule A of that 
return. Schedule A is used to report information about the organization’s public 
charity status and public support. 
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A new organization will be classified as a public charity, and not a private founda-
tion, for its first five years if it can show that it can reasonably be expected to be 
publicly supported. If the organization can make this showing, it will be a public  
charity for its first five years regardless of the public support it actually receives.

The IRS will monitor a new organization’s public charity status after the first five 
years of existence based on the public support information reported annually by 
the organization on Schedule A of Form 990 based on a five year computation 
period that consists of the current year and the four years immediately preceding 
the current year. 

Beginning with the organization’s sixth year and for all succeeding years, if an 
organization meets the public support test on Schedule A, the organization will 
remain a public charity for that current year and the next year.

If a publicly supported charity fails the public support test for two consecutive 
years, it will be reclassified as a private foundation.

An organization that received an advance ruling determining it a publicly supported  
organization on or after June 9, 2008, will automatically be classified as a publicly 
supported organization and need not file Form 8734 at the end of the advance  
ruling period.

See Publication 4220, Applying for 501(c)(3) Tax-Exempt Status, for details on  
the distinctions between public charities and private foundations. Also go to  
www.irs.gov/eo for additional information on the elimination of the advance ruling 
process.

Most public charities that received contributions of $5,000 or more from any one 
contributor must file Schedule B, Schedule of Contributors. See Part IV, line 2 of 
Form 990 and the instructions to Schedule B (Form 990, 990-EZ) for complete 
instructions.

Also see www.irs.gov/eo for additional information about other schedules that a 
public charity may be required to complete based on the nature of its activities. 

Reporting Excess Benefit Transactions,
If a public charity believes it provided an excess benefit to a person who is in a 
position to exercise substantial influence over the organization’s affairs, it must 
report the transaction on Form 990 or Form 990-EZ. Excess benefit transactions 
are governed by section 4958 of the Code. See Appendix G of the Form 990 
Instructions for a discussion of section 4958, and Schedule L, Part I, regarding 
reporting of excess benefit transactions.

                                                                                     12
Form 990-N,  Electronic Notice (e-Postcard) for Tax-Exempt 
Organizations Not Required to File Form 990 or 990-EZ,

Any public charity that is not required to file Form 990 or 990-EZ because its 
annual gross receipts are normally $50,000 or less must instead file Form 990-N, 
Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File 
Form 990 or Form 990-EZ. Only churches, their integrated auxiliaries, and con-
ventions or associations of churches, and subordinate organizations included in a 
group return filed by a parent organization are excused from filing Form 990-N. 

The Form 990-N is due by the 15th day of the fifth month after the close of your tax 
period. For example, if your organization’s tax period ends on December 31, 2013, 
the Form 990-N is due May 15, 2014. The e-Postcard cannot be filed until the  
organization’s tax year ends.

You can access the e-Postcard filing system through the IRS Charities and 
Nonprofits Web site, www.irs.gov/eo or by going directly to the filing system Web 
site at http://epostcard.form990.org.

The form must be completed and filed electronically. There is no paper form.

   An organization is required to provide the following information on Form 990-N:
   n the organization’s legal name,
   n any other names the organization uses,
   n the organization’s mailing address,
   n the organization’s Web site address (if applicable),
   n the organization’s employer identification number (EIN), also known  
    as a taxpayer identification number (TIN),
   n name and address of a principal officer of the organization, 
   n the organization’s annual tax period,
   n confirmation that the organization’s annual gross receipts are still normally 
    $50,000 or less, and,
   n if applicable, a statement that the organization has terminated or is terminating 
    (going out of business). 

   Read           Filing Penalties and Revocation of Tax-Exempt Status below on the  
   consequences for failure to file this annual electronic notice and www.irs.gov/eo 
   for information about the Form 990-N.

FILING PENALTIES AND REVOCATION OF TAX-EXEMPT STATUS,                                                            13

If a Form 990 or Form 990-EZ is not filed, the IRS may assess penalties on the organization of $20 per 
day until it is filed. This penalty also applies when the filer fails to include required information or to show 
correct information. The penalty for failure to file a return or a complete return may not exceed the lesser 
of $10,000 or 5 percent of the organization’s gross receipts. For an organization that has gross receipts of 
over $1 million for the year, the penalty is $100 a day up to a maximum of $50,000. The IRS may impose 
penalties on organization managers who do not comply with a written demand that the information be filed. 
Section 6033(j) of the Code provides that failure to file Form 990, Form 990-EZ, or Form 990-N for 3  
consecutive years results in revocation of tax-exempt status as of the filing due date for the third return.  
An organization whose exemption is revoked under this section must apply for reinstatement by filing a  
new application and paying a user fee, whether or not the organization was originally required to file for  
exemption. Reinstatement of exemption may be retroactive if the organization shows that the failure to  
file was for reasonable cause. Information with respect to the implementation of Section 6033(i) is available 
at www.irs.gov/eo.

   e-Filing Requirements   ,
   Public charities with $10 million or more in total assets and that also file at least 
   250 returns in a calendar year (including income, excise, employment tax, and 
   information returns such as Forms W-2 and 1099) are required to electronically file 
   Form 990. Other public charities are given a choice to file Form 990 electronically. 
   Click on the “IRS e-file” logo on the IRS Web site to get the facts on e-filing. 

Form 990-T, Exempt Organization Business Income Tax Return,

A public charity must file a Form 990-T,  Exempt Organization Business Income  
Tax Return, if it has $1,000 or more of gross income from an unrelated trade or 
business during the year. Net income from income-producing activities is taxable  
if the activities: 

n constitute a trade or business, 
n are regularly carried on, and ,
n are not substantially related to the organization’s exempt purpose. 

Examples of unrelated business income may include income from advertising in 
publications, income from gaming (except for income from traditional bingo under 
certain circumstances), and income from the sale of merchandise unrelated to 
the organization’s exempt purpose. Whether an income-producing activity is an 
unrelated trade or business activity depends on all the facts and circumstances. 
For more information, see IRS Publication 598, Tax on Unrelated Business Income 
of Exempt Organizations.

The public charity must pay quarterly estimated tax on unrelated business income 
if it expects its tax for the year to be $500 or more. Form 990-W, Estimated Tax on 
Unrelated Business Taxable Income for Tax-Exempt Organizations, is a worksheet 
to determine the amount of estimated tax payments required.                                                         14

FORM 990-T FILING PENALTIES,

An organization may be subject to interest and penalty charges if it files a late return, fails to pay tax when 
due, or fails to pay estimated tax, if required, even if it did not expect its tax for the year to be $500 or more. 

Exceptions and Special Rules,
Income from certain trade or business activities is excepted from the definition  
of unrelated business income. Earnings from these sources are not subject to  
the unrelated business income tax. Exceptions generally include business  
income from:
n activities, including fundraisers, that are conducted by volunteer workers, or 
  where donated merchandise is sold; 
n activities conducted by a charitable organization or by a governmental college  
  or university for the convenience of members, students, patients or employees;
n qualified conventions and trade shows;
n qualified sponsorship activities; and  ,
n qualified bingo activities.

Income from investments and other “passive” activities is usually excluded from 
the calculation of unrelated business taxable income. Examples of this type of 
income include earnings from routine investments such as certificates of deposit, 
savings accounts, or stock dividends, royalties, certain rents from real property, 
and certain gains or losses from the sale of property.

Special rules apply to income derived from real estate or other investments  
purchased with borrowed funds. Such income is called “debt-financed” income. 
Unrelated debt-financed income generally is subject to the unrelated business 
income tax. 

To learn about unrelated business income, get Publication 598, Tax on Unrelated 
Business Income of Exempt Organizations, Form 990-T instructions, and Form 
990-W instructions at www.irs.gov.

Employment Tax Returns,

Like other employers, all public charities that pay wages to employees must with-
hold, deposit, and pay employment tax, including federal income tax withholding 
and Social Security and Medicare (FICA) taxes. A public charity must withhold fed-
eral income tax from employee wages and pay FICA on each employee paid $100 
or more in wages during a calendar year. To know how much income tax to with-                15
hold, a public charity should have a Form W-4, Employee’s Withholding Allowance 
Certificate, on file for each employee. Employment taxes are reported on Form 
941, Employer’s Quarterly Federal Tax Return. 

If a small employer (one who has withheld employment taxes of $1,000 or less 
during the year) has been instructed by IRS to file Form 944, Employer’s Annual 
Federal Tax Return instead of Form 941, the employer must do so. The employer 
must file Form 944 even if there is no tax due or if the taxes exceed $1,000 unless 
IRS tells it to file Form 941 (or it is filing a final return). See the instructions to Form 
944 for information on how to have the filing requirement changed from Form 944 
to Form 941. 

Any person that fails to withhold and pay employment tax may be subject to penal-
ties. Public charities do not pay federal unemployment (FUTA) tax. 

Public charities do not generally have to withhold or pay employment tax on 
payments to independent contractors, but they may have information reporting 
requirements. If a charity incorrectly classifies an employee as an independent 
contractor, it may be held liable for employment taxes for that worker. 

The requirements for withholding, depositing, reporting and paying employment 
taxes are explained in Publication 15, Circular E, Employer’s Tax Guide. For help in 
determining if workers are employees or independent contractors, see Publication 

15-A, Employer’s Supplemental Tax Guide. Publication 557, Tax Exempt Status for 
Your Organization, covers the employment tax responsibilities of public charities. 
These IRS publications can be downloaded at www.irs.gov.

Employment Taxes and Churches,
Although churches are excepted from filing Form 990, they do have employment 
tax responsibilities. Employees of churches or church-controlled organizations are 
subject to income tax withholding, but may be exempt from FICA taxes. Like other 
501(c)(3) organizations, churches are not required to pay federal unemployment 
tax (FUTA). In addition, although ministers generally are common law employees, 
they are not treated as employees for employment tax purposes. These special  
employment tax rules for members of the clergy and religious workers are 
explained in Publication 517, Social Security and Other Information for Members 
of the Clergy and Religious Workers. Churches also should consult Publications 
15 and 15-A and Publication 1828, Tax Guide for Churches and Religious 
Organizations.

Why Keep Records?
                                                                                      16
In general, a public charity must maintain books and records to show that it com-
plies with tax rules. The charity must be able to document the sources of receipts 
and expenditures reported on Form 990, Return of Organization Exempt From 
Income Tax  or Form 990-EZ, Short Form Return of Organization Exempt From 
Income Tax, and Form 990-T,   Exempt Organization Business Income Tax Return. 
(See Prepare Annual Information and Tax Returns on page 17.)
 
If an organization does not keep required records, it may not be able to show  
that it qualifies for tax-exempt status or should be classified as a public charity. 
Thus, the organization may lose its tax-exempt status or be classified as a  
private foundation rather than a public charity. In addition, a public charity may be 
unable to complete its returns accurately and, hence, may be subject to penalties 
described under Filing Penalties and Revocation of Tax-Exempt Status on page 13. 
When good recordkeeping systems are in place, a public charity can evaluate the 
success of its programs, monitor its budget, and prepare its financial statements 
and returns.

Evaluate Charitable Programs,

A charity can use records to evaluate the success of its charitable program and 
determine whether the organization is achieving desired results. Good records 
can also help a charity identify problem areas and determine what changes it may 
need to make to improve performance.

Monitor Budgetary Results,

Without proper financial records, it is difficult for a charity to assess whether it has 
been successful in adhering to budgetary guidelines. The ability to monitor income 
and expenses and ensure that the organization is operating within its budget is 
crucial to successful stewardship of a public charity.
 
Prepare Financial Statements,

It is important to maintain sufficient financial information in order to prepare accu-
rate and timely annual financial statements. A charity may need these statements 
when it is working with banks, creditors, contributors, and funding organizations. 
Some states require charities to make audited financial statements publicly available. 

Prepare Annual Information and Tax Returns,

Records must support income, expenses, and credits reported on Form 990 series 
and other tax returns. Generally, these are the same records used to monitor pro-
grams and prepare financial statements. Books and records of public charities 
must be available for inspection by the IRS. If the IRS examines a public charity’s 
returns, the organization must have records to explain items reported. Having a 
complete set of records will speed up the examination.                                   17

Identify Sources of Receipts,

Public charities may receive money or property from many sources. With thorough 
recordkeeping, a charity can identify the sources of receipts. Organizations need 
this information to separate program from non-program receipts, taxable from 
non-taxable income, and to complete Schedule A, as well as other schedules 
of the Form 990 the organization may be required to complete, noted in What 
Federal Information Returns, Tax Returns, and Notices Must be Filed?    on 
page 8. An organization should maintain a list of its donors and grantors and the 
amount of cash contributions or grants (or a description of the noncash contribu-
tions) received from each.

Substantiate Revenues, Expenses and Deductions  
for Unrelated Business Income Tax (UBIT) Purposes ,

An organization needs to keep records of revenues derived from, and expenses 
attributable to, an unrelated trade or business so that it can properly prepare Form 
990-T and calculate its unrelated business taxable income. 

Comply with Grant-Making Procedures (Grants to Individuals),

A public charity that makes grants to individuals must keep adequate records and 
case histories to demonstrate that such grants serve its charitable purposes. Case 
histories on grants to individuals should show names, addresses, purposes of 
grants, manner of selection, and relationship (if any) that the recipient has with any 
members, officers, trustees, or donors of the organization. For more information 
about appropriate records required to report on grants made within the United 
States, see Schedule I of Form 990 and instructions. See also Schedule F of Form 
990 for information about records required to report on foreign grants.

Comply with Racial Nondiscrimination Requirements (Private Schools),

Private schools must keep records that show that they have complied with require-
ments relating to racial non-discrimination, including annual publication of a racially 
nondiscriminatory policy through newspaper or broadcast media to the general 
community served. For more information, see Schedule E of Form 990.

What Records Should be Kept?
                                                                                        18
Except in a few cases, the law does not require a special kind of record. A public 
charity can choose any recordkeeping system, suited to its activities, that clearly 
shows the organ-ization’s income and expenses. The types of activities a public 
charity conducts determines the type of records that should be kept for federal 
tax purposes. A public charity should set up a recordkeeping system using an 
accounting method that is appropriate for proper monitoring and reporting of its 
financial activities for the tax year. If a public charity has more than one program, 
it should ensure that the records appropriately identify the income and expense 
items that are attributable to each program.

A recordkeeping system should generally include a summary of transactions.  
This summary is ordinarily written in the public charity’s books (for example, 
accounting journals and ledgers). The books must show gross receipts, purchases, 
expenses (other than purchases), employment taxes, and assets. For most small 
organizations, the checkbook might be the main source for entries in the books 
while larger organizations would need more sophisticated ledgers and records.  
A public charity must keep documentation that supports entries in the books.

RECORDS MANAGEMENT,

GROSS RECEIPTS,
Gross receipts are the amounts received from all sources, including contributions. A public charity should 
keep supporting documents that show the amounts and sources of its gross receipts. Documents that show 
gross receipts include: donor correspondence, pledge documents, cash register tapes, bank deposit slips, 
receipt books, invoices, credit card charge slips, and Forms 1099-MISC, Miscellaneous Income.

PURCHASES, INCLUDING ACCOUNTING FOR INVENTORY,
Purchases are items bought, including any items resold to customers. If an organization produces items,  
it must account for any items resold to customers. Thus, for example, the organization must account for the 
cost of all raw materials or parts purchased for manufacture into finished products. Supporting documents 
should show the amount paid, and that the amount was for purchases. Documents for purchases include: 
canceled checks, cash register tape receipts, credit card sales slips, and invoices. These records will help 
a public charity determine the value of its inventory at the end of the year. See Publication 538, Accounting 
Periods and Methods, for general information on methods for valuing inventory.

EXPENSES ,
Expenses are the costs a public charity incurs (other than purchases) to carry on its program. Supporting 
documents should show the amount paid and the purpose of the expense. Documents for expenses 
include: canceled checks, cash register tapes, contracts, account statements, credit card sales slips, 
invoices, and petty-cash slips for small cash payments. 

EMPLOYMENT TAXES ,
Organizations that have employees must keep records of compensation and specific employment tax 
records. See Publication 15, Circular E, Employer’s Tax Guide, for details.                                      19

ASSETS & LIABILITIES,
Assets are the property, such as investments, buildings, and furniture that an organization owns and uses 
in its activities. Liabilities reflect the pecuniary obligations of the organization. A public charity must keep 
records to verify certain information about its assets and liabilities. Records should show:
n when and how the asset was acquired,                  n deductions taken for casualty losses, if any, 
n whether any debt was used to acquire the asset, ,      such as losses resulting from fires or storms,
n documents that support mortgages, notes, loans   ,    n how the asset was used,
 or other forms of debt ,,                              n when and how the asset was disposed of,
n purchase price, ,                                     n selling price,
n cost of any improvements,,                            n expenses of sale,
n deductions taken for depreciation, if any ,,

Documents that may show the above information include: purchase and sales invoices, real estate  
closing statements, canceled checks, and financing documents. If a public charity does not have  
canceled checks, it may be able to show payment with certain financial account statements prepared  
by financial institutions. These include account statements prepared for the financial institution by a  
third party. All information, including account statements, must be highly legible. The following defines 
acceptable account statements.

IF payment is by:   THEN statement must show:
check,              check number, amount, payee’s name, and date the check amount was posted  
                    to the account by the financial institution,
electronic          amount transferred, payee’s name, and date the transfer was posted to the  
funds transfer  ,   account by the inancial institution,
credit card,        amount charged, payee’s name, and transaction date,

Accounting Periods and Methods,

A public charity must keep its books and records based on an annual accounting 
period called a tax year in order to comply with annual reporting requirements.

Accounting Periods —   A tax year is usually 12 consecutive months. There are 
two kinds of tax years.
CALENDAR TAX YEAR – This is a period of 12 consecutive months beginning 
January 1 and ending December 31.
FISCAL TAX YEAR – This is a period of 12 consecutive months ending on the last 
day of any month except December.

Accounting Method — An accounting method is a set of rules used to determine 
when and how income and expenses are reported. A public charity chooses 
an accounting method when it files its first annual return. There are two basic 
accounting methods:
CASH METHOD –    Under the cash method, a public charity reports income in the 
tax year received. It usually deducts expenses in the year paid.
ACCRUAL METHOD –       Under an accrual method, a public charity generally records 
income in the tax year earned, (i.e., in the tax year in which a pledge is received, 
even though it may receive payment in a later year.) It records expenses in the tax  20
year incurred, whether or not it pays the expenses that year.

For more information about accounting periods and methods, see Publication 538, 
Accounting Periods and Methods, and the instructions to Form 990 and Form 990-EZ.

Supporting Documents,

Organization transactions such as contributions, purchases, sales, and payroll 
will generate supporting documents. These documents — grant applications 
and awards, sales slips, paid bills, invoices, receipts, deposit slips, and canceled 
checks — contain information to be recorded in accounting records. It is import-
ant to keep these documents because they support the entries in books and the 
entries on tax and information returns. Public charities should keep supporting 
documents organized by year and type of receipt or expense. Also, keep records 
in a safe place.

How Long Should Records be Kept?

Public charities must keep records for federal tax purposes for as long as they 
may be needed to document evidence of compliance with provisions of the Code. 
Generally, this means the organization must keep records that support an item  
of income or deduction on a return until the statute of limitations for that return 
runs. The statute of limitations has run when the organization can no longer amend 
its return and the IRS can no longer assess additional tax. Generally, the statute  
of limi-tations runs three years after the date the return is due or filed, whichever  
is later. An organization may be required to retain records longer for other legal  
purposes, including state or local tax purposes.

Record Retention Periods,

Record retention periods vary depending on the types of records and returns.

Permanent Records –  Some records should be kept per-manently. These 
include the application for recognition of tax-exempt status, the determination  
letter recognizing tax-exempt status, and organizing documents, such as articles  
of incorporation and by-laws, with amendments, as well as board minutes.

Employment Tax Records – If an organization has employees, it must keep                21
employment tax records for at least four years after the date the tax becomes  
due or is paid, whichever is later.

Records for Non-Tax Purposes – When records are no longer needed for tax 
purposes, an organization should keep them until they are no longer needed for 
non-tax purposes. For example, a grantor, insurance company, creditor, or state 
agency may require that records be kept longer than the IRS requires.

What Governance Procedures and Practices Should  
an Organization Consider Adopting or Have In Place?

While federal law does not mandate any particular management structures, oper-
ational policies or administrative practices, it is important that public charities 
be thoughtful about the governance practices that are most appropriate for that 
charity in assuring sound operations and compliance with the tax law. While you 
may not be required to have one policy or another, the IRS is authorized by sec-
tion 6033 to ask for information we consider to be relevant to tax administration, 
including governance.

Mission Statement and Organizational Documents,

The IRS encourages every charity to adopt, establish and regularly review a 
mission statement to explain the organization’s purposes and guide its work. 
Significant changes in your organizational documents should be reported to the 
IRS, as noted below.

Governing Body,

An active and engaged board is important to the success of a public charity and 
compliance with the tax law. A governing board should be composed of persons 
who are informed and active in overseeing a charity’s operations and finances. To 
guard against insider transactions that could result in misuse of charitable assets, 
the governing board should include independent members and should not be 
dominated by employees or others who are not independent because of business 
or family relationships.

Governance and Management Policies,

Although the Internal Revenue Code does not require charities to have particular 
governance and management polices, the IRS does encourage boards of charities 
to consider whether the implementation of policies relating to executive compen-      22
sation, conflicts of interest, investments, fundraising, documentation of governance 
decisions, document retention, and whistleblower claims may be necessary and 
appropriate.

Further, if a public charity has chapters or affiliates, it is encouraged to have pro-
cedures or policies in place to ensure consistency in operations.

Financial Statements and Information Reporting,

Board members are encouraged to regularly review the organization’s financial 
statements and information returns, and consider whether an independent auditor 
is appropriate. 

Transparency ,

Public charities are encouraged to adopt and monitor procedures to ensure that 
information about their mission, activities, finance and governance is made publicly 
available. Go to www.irs.gov/eo for more information about governance.

How Should Changes be Reported to the IRS?

Reporting Changes on the Annual Information Return,

A public charity that is required to file Form 990 or Form 990-EZ must report  
name, address, structural and operational changes on its annual information 
return. Regardless of whether a public charity files an annual information return, 
it may also report these changes to the EO Determinations Office at the mailing 
address set out in How to Get IRS Assistance and Information on page 28;  
however, such reporting does not relieve the organization from reporting the 
changes on its annual information return. For information about informing the IRS 
of a termination or merger see Pub 4779, Facts About Terminating or Merging Your 
Exempt Organization.

Tip: Attach copies of any signed or state certified articles of incorporation or  
association, constitution or trust instrument or other organizing document, or the 
bylaws or other governing document showing changes to your return. If signed  
or state certified copies of a governing document are not available, an authorized 
officer may certify that the governing document provided is a complete and  
accurate copy of the original document.
                                                                                      23
Determination Letters and Private Letter Ruling Requests,

A public charity may request a copy of a lost exemption letter or an updated  
exemption letter that reflects a name or address change from the EO 
Determinations office. A public charity that has had a change in its public charity 
or private foundation status should request a new determination letter from the  
EO Determinations office as well. See How to Get IRS Assistance and Information 
on page 28 for the appropriate address for the EO Determinations office.

An organization may request a determination letter regarding the effect of certain 
changes on its tax exempt status or public charity status. For example, as noted 
above, a determination letter will be issued to classify or reclassify an organiza-
tion as a public charity or a private foundation. A public charity may also request a 
determination letter to approve the treatment of a contribution as an unusual grant, 
or to determine whether an organization is exempt from filing annual information 
returns in certain situations. However, the IRS will not make any determination 
regarding any completed transaction.

If a public charity is unsure about whether a proposed change in its purposes 
or activities is consistent with its status as an exempt organization or as a public 
charity, it may want to request a private letter ruling.

The IRS issues private letter rulings on proposed transactions and on completed 
transactions — if the request is submitted before the return is filed for the year in 
which the transaction was completed. The IRS generally does not issue rulings 
to public charities on any other completed transactions. The IRS will issue letter 
rulings to public charities on matters involving a public charity’s exempt status, its 
public charity status, as well as other matters including issues under sections 501 
through 514, 4911, 4912, 4955, 4958, 6033, 6104, and 6115.

Consult www.irs.gov/eo for the appropriate procedures for preparing and submit-
ting a request for a determination letter, private letter ruling, replacement exemp-
tion letter or a letter reflecting a new name and address. For general information 
about reporting changes, you may contact EO customer service at (877)829-5500.

What Disclosures are Required?

There are a number of disclosure requirements for public charities. Detailed  
information on federal tax law disclosure requirements for 501(c)(3) tax-exempt  
organizations can be found in Publication 557, Tax Exempt Status for Your 
Organization, on the IRS Charities and Nonprofits Web site at www.irs.gov/eo.

                                                                                       24
Public Inspection of Annual Returns and Exemption Applications,

A public charity must make the following documents available for public inspection 
and copying upon request and without charge (except for a reasonable charge  
for copying). The IRS also makes these documents available for public inspection 
and copying. A public charity may place reasonable restrictions on the time, place, 
and manner of in person inspection and copying, and may charge a reasonable 
fee for providing copies. It can charge no more for the copies than the per page 
rate the IRS charges for providing copies. See www.irs.gov/foia/index.html for  
current IRS copying fees. Although the IRS charges no fee for the first 100 pages, 
the organization can charge a fee for all copies. The organization can also charge 
the actual postage costs it pays to provide copies. A tax-exempt organization does 
not have to comply with individual requests for copies if it makes the documents 
widely available. This can be done by posting the documents on a readily accessible  
Web site.

For details on disclosure rules and procedures for public charities, see Life Cycle 
of a Public Charity and the instructions to Forms 990 and 1023 at www.irs.gov/eo.

Because certain forms, by law, must be made publicly available by the IRS and the 
filer, do not include any personal identifying information, such as social security 
numbers not required by the IRS, on these forms. 

Exemption Application – A public charity must make available for public 
inspection its exemption application, Form 1023,  Application for Recognition of 
Exemption Under Section 501(c)(3) of the Internal Revenue Code, along with each 
of the following documents:
n all documents submitted with Form 1023;
n all documents the IRS requires the organization to submit in support  
 of its application; and,
n the exemption ruling letter issued by the IRS.

Annual Information Return – A public charity must make available for public 
inspection its annual information return (Form 990 series) with schedules, attach-
ments, and supporting documents filed with the IRS. However, a public charity 
that files a Form 990 or Form 990-EZ does not have to disclose the names and 
addresses of contributors listed on Schedule B. All other information, including the 
amount of contributions, the description of noncash contributions, and any other 
information provided will be open to public inspection unless it clearly identifies 
the contributor.

Note: If an organization files a copy of Form 990 or Form 990-EZ, and attach-
ments, with any state, it should not include its Schedule B in the attachments for 
the state, unless a schedule of contributors is specifically required by the state. 
                                                                                     25
States that do not require the information might inadvertently make the schedule 
available for public inspection along with the rest of the Form 990 or Form 990-EZ.

Certain information may be withheld from public inspection. A return must be 
made available for a period of three years from the date the return is required to  
be filed or is actually filed, whichever is later.

Form 990-T – A public charity must make Form 990-T available for the three years 
beginning on the last day (including extensions) for filing the return. Schedules, 
attachments and supporting documents filed with Form 990-T that do not relate 
to unrelated business income tax are not required to be made available. Read 
Notice 2007-45 and Notice 2008-49 at www.irs.gov for interim guidance regard-
ing how the returns are to be made public. See Announcement 2008-21 for 
procedures the public may use to request a 501(c)(3) organization’s Form 990-T 
from the IRS. 

Public Inspection and Disclosure Procedures – A public charity may place 
reasonable restrictions on the time, place, and manner of in-person inspection and 
copying, and may charge a reasonable fee for providing copies. It can charge no 
more for the copies than the per page rate the IRS charges for providing copies. 
A tax-exempt organization does not have to comply with individual requests for 
copies if it makes the documents widely available. This can be done by posting the 
documents on a readily accessible Web site. For details on disclosure rules and 

procedures for 501(c)(3) organizations, see the Life Cycle of a Public Charity and 
the instructions to Forms 990, 990-T and 1023 at www.irs.gov/eo.
 
All publicly-available information may be obtained from the IRS for a fee by 
using Form 4506-A, Request for Public Inspection or Copy of Exempt or Political 
Organization IRS Form. An organization may obtain a complete copy of its own 
application by filing Form 4506, Request for Copy of Tax Return.

PENALTIES,

Penalties apply to responsible persons of a tax-exempt organization who fail to provide the documents as  
required. A penalty of $20 per day may apply for as long as the failure continues. A $10,000 maximum penalty  
applies to a failure to provide an information return; no maximum penalty applies to application requests.

Sale of Free Government Information,

If a public charity offers to sell, or solicits money for, specific information or a  
routine service that is available free from the federal government, the organization 
must make an express statement at the time of solicitation about the free service.                            26
An organization that intentionally disregards this requirement is subject to a penalty.

Charitable Contributions—Substantiation and Disclosure,

A public charity should be aware of the substantiation and recordkeeping rules 
imposed on donors who intend to claim a charitable contribution deduction and the  
disclosure rules imposed on charities that receive certain quid pro quo contributions.

Recordkeeping Rules,
A donor cannot claim a tax deduction for any cash, check, or other monetary  
contribution made on or after January 1, 2007, unless the donor maintains a record 
of the contribution in the form of either a bank record (such as a cancelled check) 
or a written communication from the charity (such as a receipt or a letter) showing 
the name of the charity, date, and the amount of the contribution.

Substantiation Rules,
A donor cannot claim a tax deduction for any single contribution of $250 or  
more unless the donor obtains a contemporaneous written acknowledgment of  
the contribution from the recipient public charity. A public charity may assist the 
donor by providing a timely written statement including the name of the public 
charity, date and amount of any cash contribution, and description of any  
non-cash contributions. 

In addition, the acknowledgment should indicate whether any goods or services 
were provided in return for the contribution. If any goods or services were provided 
in return for a contribution, the organization should provide a description and good 
faith estimate of the value of such goods or services.

The public charity may either provide separate acknowledgments for each single 
contribution of $250 or more or one acknowledgment to substantiate several single 
contributions of $250 or more. Separate contributions are not aggregated  
for purposes of measuring the $250 threshold.

There are no IRS forms for the acknowledgment. Letters, postcards, or computer- 
generated forms with the above information are acceptable. An organization can 
provide either a paper copy of the acknowledgment or an electronic acknowledg-
ment, such as an e-mail, to the donor. 

Disclosure Rules That Apply to Quid Pro Quo Contributions,
Contributions are deductible only to the extent that they are gifts and no consid-
eration is received in return. Depending on the circumstances, ticket purchases 
and similar payments made in conjunction with fundraising events may not qualify 
as charitable contributions in full. A contribution made by a donor in exchange for 
goods or services is known as a quid pro quo contribution. A donor may only take 
a charitable contribution deduction to the extent that the contribution exceeds the   27
fair market value of the goods and services the donor receives in return for the 
contribution.

If a public charity conducts fundraising events such as benefit dinners, shows, and 
membership drives, where something of value is given to those in attendance, it 
must provide a written statement informing donors of the fair market value of the  
specific items or services it provided in exchange for contributions. Token items 
and services of intangible religious value need not be taken into account. A public 
charity should provide the written disclosure statement in advance of any event, 
determine the fair market value of any benefit received, and state this information 
in fundraising materials such as solicitations, tickets, and receipts. The disclosure 
statement should be made, at the latest, at the time payment is received. Subject 
to certain exceptions, the disclosure responsibility applies to any fundraising  
circumstance where each complete payment, including the contribution portion, 
exceeds $75.

Read Publication 1771, Charitable Contributions—Substantiation and Disclosure 
Requirements, and Publication 526, Charitable Contributions, for details on the  
federal tax law for organizations such as public charities, including churches,  
that receive tax-deductible charitable contributions and for taxpayers who make 
contributions.

How Do You Get IRS Assistance and Information?

The IRS offers help that is accessible online, via mail, by telephone, and  
at IRS walk-in offices in many areas across the country. IRS forms and  
publications can be downloaded from the Internet and ordered by telephone.

Specialized Assistance for Tax-Exempt Organizations,

Get help with questions about applying for tax-exempt status, annual filing 
requirements, and information about exempt organizations from the IRS Exempt 
Organizations (EO) pages on the IRS website, at www.irs.gov/Charities-&- 
Non-Profits.

EO Web Site   ,                                     www.                irs.gov/eo,

Highlights:
n The Life Cycle of a Public Charity describes the compliance obligations of charities.
n Subscribe to the EO Update, an electronic newsletter with information for  
 tax-exempt organizations and tax practitioners who represent them.
                                                                                       28

EO Web-based Training    ,                      www.stayexempt.irs.gov,

EO Customer Service   ,                             (877) 829-5500           ,

EO Determinations Office Mailing Address,

Internal Revenue Service,
TE/GE, EO Determinations Office,
P.O. Box 2508,
Cincinnati, OH 45201,

Tax Publications for Exempt Organizations,

Get publications via the Internet or by calling the IRS at (800) 829-3676.

Pub 1, Your Rights as a Taxpayer,
Pub 15, Circular E, Employer’s Tax Guide,
Pub 15-A, Employer’s Supplemental Tax Guide,
Pub 463, Travel, Entertainment, Gift, and Car Expenses,

Pub 517, Social Security and Other Information for Members of the Clergy  
and Religious Workers,
Pub 526, Charitable Contributions,
Pub 538, Accounting Periods and Methods,
Pub 557, Tax-Exempt Status for Your Organization,

Pub 571, Tax-Sheltered Annuity Plans (403(b) Plans) for Employees of Public 
Schools and Certain Tax-Exempt Organizations,

Pub 583, Starting a Business and Keeping Records, 
Pub 598, Tax on Unrelated Business Income of Exempt Organizations,
Pub 1771, Charitable Contributions—Substantiation and Disclosure Requirements,    29
Pub 1828, Tax Guide for Churches and Religious Organizations,
Pub 3079, Tax-Exempt Organizations and Gaming,
Pub 3833, Disaster Relief, Providing Assistance Through Charitable Organizations,

Pub 4220, Applying for 501(c)(3) Tax-Exempt Status,
Pub 4221-NC, Compliance Guide for Tax-Exempt Organizations (other than 501(c)(3)  
Public Charities and Private Foundations),
Pub 4221-PF, Compliance Guide for 501(c)(3) Private Foundations,
Pub 4302, A Charity’s Guide to Vehicle Donations,
Pub 4303, A Donor’s Guide to Vehicle Donations,

Pub 4630, Exempt Organizations Products and Services Catalog,
Pub 4779, Facts about Terminating or Merging Your Exempt Organization,

Forms for Exempt Organizations,

Get forms via the Internet or by calling the IRS at (800) 829-3676.

Form 941, Employer’s Quarterly Federal Tax Return,

Form 944, Employer’s Annual Federal Tax Return,

Form 990, Return of Organization Exempt From Income Tax,
Form 990-EZ, Short Form Return of Organization Exempt From Income Tax,

Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt 
Charitable Trust Treated as a Private Foundation,

Form 990-N, Electronic Notice (e-Postcard) For Tax-Exempt Organizations Not 
Required to File Form 990 or 990-EZ (available electronically only),
Form 990-T, Exempt Organization Business Income Tax Return,

Form 990-W, Estimated Tax on Unrelated Business Taxable Income for  
Exempt Organizations,

Form 1023, Application for Recognition of Exemption Under Section 501(c)(3)  
of the Internal Revenue Code,
Form 1024, Application for Recognition of Exemption Under Section 501(a),
Form 1041, U.S. Income Tax Return for Estates and Trusts,

Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the 
Internal Revenue Code,

Form 5578, Annual Certification of Racial Non-Discrimination for a Private School 
Exempt from Federal Income Tax,

Form 5768, Election/Revocation of Election by an Eligible Section 501(c)(3) 
                                                                                            30
Organization to Make Expenditures to Influence Legislation,
Form 8282, Donee Information Return,
Form 8283, Noncash Charitable Contributions,
Form 8868, Extension of Time To File an Exempt Organization Return,

FinCEN Form 114, Report of Foreign Bank and Financial Accounts,

General IRS Assistance,

Get materials on the latest tax laws, assistance with forms and publications, and 
filing information.
IRS Web site,                                                               www.irs.gov,
Federal tax questions,                                                      (800) 829-4933,
Employment tax questions,                                                   (800) 829-4933,
Order IRS forms and publications,                                           (800) 829-3676 ,

                Publication 4221-PC (Rev. 7-2014)  Catalog Number 49829R,,
                    Department of the Treasury  Internal Revenue Service,,  
                             www.irs.gov,