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 important 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……..
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.
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 compensation, 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 procedures 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.
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 Tax Information for Charities & Other Non-Profits
for more information about governance……
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 Tax Information for Charities & Other Non-Profits
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 IRS Freedom of Information
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 Tax Information for Charities & Other Non-Profits
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:
all documents submitted with Form 1023;
all documents the IRS requires the organization to submit in support
of its application; and,
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, attachments, 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.
If an organization files a copy of Form 990 or Form 990-EZ, and attachments, 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. 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 Internal Revenue Service
for interim guidance regarding 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
Tax Information for Charities & Other Non-Profits
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 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.