Religious and Charitable Organizations
A nonprofit organization that applies for recognition of exemption by filing Form 1023 or that files Form 990 series information returns1 should make good-faith determinations regarding any highly sensitive information that should be redacted from public copies of those forms for the safety and protection of the organization, its workers, or others. Filing organizations should not abuse any provision in the law that prohibits the IRS from publicly disclosing such information.
We recommend that the IRS modify Forms 1023 and 990 series information returns and their instructions to permit a filing organization to clearly identify, in good faith, highly sensitive information that should be redacted from public disclosure. We recommend that the IRS create a new schedule for Form 990 series information returns and Form 1023 (e.g., "Schedule X"), along with related instructions, and that a filing organization be permitted to respond to any question in the forms—where the organization has made a good-faith determination that public disclosure of the information would threaten the safety of the organization, the organization’s property, or any person or entity working with or served by the organization, wherever located—by stating "See Schedule X" and including the required information on Schedule X. Schedule X should be a free-form disclosure schedule. The instructions to the forms should require an organization utilizing Schedule X to disclose to the IRS on Schedule X the justification for avoiding public disclosure. The IRS should give appropriate deference to good-faith determinations by filing organizations of their assessment of risk. However, reasonable anti-abuse rules should apply. Schedule X should be redacted entirely from public inspection copies of Forms 1023 and 990.
In the interest of the safety and well-being of religious and charitable workers and the people they serve, we request that Congress adopt legislation prohibiting public disclosure by the IRS of highly sensitive information in Forms 1023 and 990 series information returns that could threaten the safety of the organization, the organization’s property, or any person or entity working with or served by the organization, wherever located. The law should require the IRS to permit a filing organization to identify in good faith the highly sensitive information to be redacted, subject to reasonable anti-abuse provisions.
1 References to "Form 990 series information returns" in the recommendations are intended to include all variations of Form 990, including, but not limited to, Form 990, Form 990-EZ, and Form 990-PF.