WASHINGTON— The Treasury Department said Thursday the IRS plans to revise Form 990 to require clearer reporting by 501(c)(3) tax-exempt organizations on government contracts, government grants and fiscal sponsorship arrangements, in what Treasury said is aimed at improving transparency, strengthening tax administration and making it easier to detect misconduct.
Treasury said the planned changes are designed to give the IRS and the public a better picture of how tax-exempt groups receive and use public money, with Secretary Scott Bessent saying, “Public money and tax-exempt status demand public accountability.”
Bessent added, “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.”
Treasury and the IRS said they expect to publish proposed regulations and seek public comment before any reporting changes are finalized, while stressing they will consider administrative feasibility, proportionality and reporting burden.
“Tax-exempt status is not immunity from scrutiny,” said Treasury Assistant Secretary and Acting IRS Chief Counsel Ken Kies. “If an organization receives public funds or tax-deductible donations, it should be prepared to show who controls the money and where it goes.”
Americas Credit Unions commented on Treasury's statement.
"Protecting taxpayers from fraud and abuse is important," said Scott Simpson, America's Credit Unions president/CEO. "As not-for-profit financial institutions, credit unions are held to an incredibly high standard. The regular quarterly disclosures they make to the NCUA contain 3,400 fields of data, compared to the 250 fields of data in the current Form 990. But more importantly, credit unions continue to uphold their mission as not-for-profits by providing 146 million Americans with safe, affordable financial services products, saving Americans billions of dollars every year."
The Defense Credit Union Council noted that while the Treasury’s actions on Form 990 disclosures are not directed at credit unions, they do signal a broader policy conversation around tax-exempt organizations that the trade group is watching very closely.
"Credit unions are already subject to rigorous oversight through the NCUA and extensive reporting requirements, making additional filings like Form 990 unnecessary and duplicative," said DCUC Chief Advocacy Officer Jason Stverak. "We’ve seen in the past how discussions around nonprofit transparency can quickly expand to include credit unions, often driven by outside interests seeking to undermine our tax status. That’s why DCUC will remain vigilant and fully engaged with policymakers to ensure these efforts do not inadvertently sweep in credit unions or create new regulatory burdens. Our priority is clear: protect the credit union tax status and ensure defense credit unions can continue delivering critical financial services to servicemembers, veterans, and their families without disruption.”