• Unfavorable rulings – An earlier denial of tax-exempt status is an example of an
unfavorable ruling.
• Certain types of information that the IRS said could be withheld – This could include
trade secrets, patents, processes, styles of work and national defense material.
Remember that there are consequences to not complying with these rules.
Page 9 – Penalties
Clarence: You mentioned consequences. How severe are they?
Leagle: You or employees of your organization can be fined $20 for each day of
noncompliance, up to a maximum of $10,000. If the failure to comply was deemed willful, the
employee could face a penalty of $5,000 per return or application!
So, let’s review what you’ve learned so far.
Page 10 – Recap
Leagle: So, you’ve learned that there are certain documents you must disclose to the public
upon request. They include your annual returns, like the Form 990, Form 990-EZ, or Form 990-
PF; any Form 990-Ts filed after August 17, 2006; all Form 990 schedules, attachments, and
supporting documents; Form 1023; and your determination letter.
Remember that you’re not required to disclose the donors listed in Schedule B of Form 990 or
990-EZ, any unfavorable rulings or anything the IRS said you could withhold.
And don’t forget to provide the information in a timely manner and provide copies upon request.
Finally, penalties for noncompliance can be severe.
So, let’s try an exercise before moving on to the next section.
Page 11 – Knowledge Check
Leagle: Let’s look at an example. A woman requested that you email her a list of contributors.
Should you do it, yes or no? Pause your system to think about it.
If you said no, you’re correct. You don’t have to disclose the names of your contributors, only
the amounts and natures of the contributions.
Page 12 – Knowledge Check
Leagle: Let’s look at another scenario.
Suppose your organization has a parent organization and a man asks you to mail him copies of
your parent organization's annual returns for the past three years. He says he'll pay for the
copies. Should you do it, yes or no? Pause your system to think about it.
If you said yes, you’re right. You’re required to disclose three years of annual returns. If the
returns are available on a website, direct the person to that site. Otherwise, send the returns
within two weeks.