Required Disclosures Course
Page 1 – Welcome
Welcome to the Required Disclosures course. This course is presented by the Exempt
Organizations division of the IRS.
Page 2 – Introduction
Leagle: Hi. I’m Leagle, the StayExempt Eagle, and I’ll guide you through the courses here at
This course includes questions and activities to test your knowledge. The scores are for your
reference only. They’re designed to help you understand the material better.
Page 3 – Objectives
Leagle: In this course, you’ll learn to identify which records are open to public inspection. I’ll
also show you how to determine the fair market value of goods or services given in exchange
for contributions, and we’ll ensure you understand that donors should receive accurate, written
acknowledgments of their contributions so they’ll donate again.
First, let’s cover the basic Public Inspection Rules.
Page 4 – Sudden Request
Clarence: Hi, I’m Clarence. I’m president of the local Big Band Jazz Society. A complete
stranger asked me for a copy of my organization’s annual return. She said if I didn’t give her a
copy right away, she’d complain to the IRS and I’d get fined. Is she right? What do I do?
Leagle: Hi Clarence. It’s okay. As the proprietor of a Section 501(c)(3) organization, you DO
have a responsibility to keep certain documents on hand and available for public viewing. The
Internal Revenue Code has rules about this, which we refer to as Required Disclosures.
Let’s take a look at which documents should be kept on hand, and the rules for disclosing them.
Page 5 – Public Inspection Rules
Clarence: So, what documents do I have to share?
Leagle: In return for being tax exempt and receiving tax deductible contributions, Congress
requires Section 501(c)(3) organizations to disclose information about their organization to the
public. You’re required to share the following documents with the public when requested:
• Annual returns for three years after the due date. This includes returns like your Form
990, 990-EZ, 990-PF, and any Forms 990-T filed after August 17, 2006, including your
• All Form 990 schedules (except portions of Schedule B), attachments and supporting
• Your application for exemption and all supporting documents, like Form 1023, if you filed
it on or after July 15, 1987.
• And the determination letter from the IRS that shows your organization has tax-exempt
Certain documents must be made available immediately, while others can take you some time
to gather and reproduce.
Page 6 – Timely Response to Requests
Clarence: So, how quickly do I need to make the documents available?
Leagle: Normally, it’s the day you’re asked for them.
Clarence: That would be difficult because I don’t have a permanent office. I run my organization
out of my home.
Leagle: No problem, Clarence. If your organization has no office or has limited hours during
certain times of the year, the requested information should be made available within two weeks.
Some people might want copies to take with them.
Page 7 – Making Copies
Clarence: If someone asks for copies to keep, do I have to provide them?
Leagle: Yes, you do, whether the request is made in person or in writing.
Clarence: But I don’t have a copy machine. Do I have to pay for the copies myself?
Leagle: Actually, you can charge a reasonable fee to cover the cost of the copies.
But there’s a simple solution. Just use the Internet! If you post your information online, you can
refer requesters to the website and consider the job done. There are, however, several
documents you don’t have to provide.
Page 8 – You are Not Required to Share…
Clarence: The rules seem rather broad, so are we really required to provide all documents?
Leagle: No, you’re NOT required to share all business documents. For instance, you don’t have
to disclose some information found on Schedule B of Form 990 or Form 990-EZ, documentation
for unfavorable rulings or certain types of information that the IRS approved.
• Portions of Schedule B of Form 990/990-EZ – You don’t have to identify your
contributors by name, only the amounts and natures of the contributions.
• Unfavorable rulings – An earlier denial of tax-exempt status is an example of an
• 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.
Remember that there are accumulating penalties associated with not providing this information.
They are $20 for each day of noncompliance, up to a maximum of $10,000.
To stop the penalties from accruing, you’ll need to send the requested annual returns within two
weeks. If the returns are available on a website, direct the person to that site instead.
Page 13 – Progress Check
Leagle: Great job! You’ve learned to identify which records are open to public inspection. Next,
we’ll show donors how much they can deduct based on goods or services they receive for their
Page 14 – Quid Pro Quo
Clarence: Aside from documents, what other kind of disclosures are there?
Leagle: Well, there are also Quid pro quo disclosures. Quid pro quo is Latin for “something for
something,” as in, you give something to get something. When a donor makes a contribution to
an organization and they receive a good or service in return for their donation, they’ve made a
quid pro quo contribution. If that donation is greater than $75 and you give the donor something
in return, you must disclose the value of that item or service to the donor.
Clarence: So, why do quid pro quo donations matter?
Leagle: Well, donors can only claim a deduction for the amount they contributed above the
amount of the goods or services they received, for example:
• A Donor gives $100, then he receives a $40 concert ticket. The Donor can claim $60 for his
• Any receipts or written statements must capture the attention of donors. You should never
user fine print for this.
Next, let’s talk more about the receipts.
Page 15 – Donors Care about the Math!
Clarence: What happens if the documentation I provide isn’t correct?
Leagle: Well, if you give a donor inaccurate documentation, they’ll likely deduct the wrong
amount on their tax returns. If a donor claims the wrong amount as a charitable deduction and
gets audited, you can probably assume he or she won’t make more donations to your
Read the letter below. When you’re done, let’s talk about the consequences of not providing
You should have given me a written statement disclosing the value of the concert ticket
you gave me as a “thank you” for my contribution at your last fundraiser. Because I didn’t
know the value of the ticket, I deducted too much as a charitable contribution on my
personal income tax and now I may be in hot water. Consider that my last donation!
Disgruntled “Previous” Donor
Page 16 – Another Reason to Comply!
Clarence: What kinds of penalties result from supplying the wrong documentation?
Leagle: Well, you could be fined $10 per contribution, up to $5,000 per fundraising event (or
mailing) if you fail to provide a written disclosure statement at the time of solicitation or upon
receiving the contribution.
Next let’s talk about some exceptions.
Page 17 – Exceptions to the Rule
Clarence: Do I need to provide documentation for every single donation?
Leagle: Actually, there are some exceptions.
“Tokens” are insubstantial goods or services that you provide to donors in exchanges for
contributions. These are so small, you don’t have to document them separately. For tax year
2014, the amount is $10.40 or less.
Also, annually-recurring rights or privileges provided as membership benefit don’t need
documentation if the payment is $75 or less.
Finally, intangible religious benefits don’t need to be documented either.
Goods and services are considered insubstantial tokens if these three things are true:
1. The donor gave at least $51* and
2. The item bears the organization’s name or logo (think calendars, mugs or posters) and
3. The item does not cost more than $10.40*
* These dollar amounts are for 2014. Guideline amounts are adjusted for inflation. Contact IRS
Exempt Organizations Customer Account Services at (877) 829-5500 for annual inflation
Examples of membership benefits you don’t need to disclose are:
• Free or discounted admissions to the organization’s facilities or events
• Discounts on purchases from the organization’s gift shop
• Free or discounted parking
Examples of religious benefits you do not need to disclose:
• Admission to a religious ceremony
• Very small tangible benefits, such as wine used in a religious ceremony
Page 18 – Contents of the Quid Pro Quo Disclosure Statement
Clarence: What can I do to prevent any problems with Quid Pro Quo?
Leagle: You need to tell the donor that he or she can only claim the contribution amount that
exceeds the fair market value of the goods or services provided.
Here’s a sample of what you can use:
Thank you for your cash contribution of $150 to the Tribal Cancer Awareness Society on
10/24/2012. In exchange for your contribution, we gave you a cookbook worth an
estimated fair market value of $25. Therefore, for federal income tax purposes, your
contribution deduction is limited to $125. Thank you again.
If you or your contributors would like more information on what individuals can deduct for
contributions, you should take the Can I Deduct my Charitable Contributions? course here on
Next, let’s talk about the other types of acknowledgements you might have to give to your
Page 19 – Non-Quid Pro Quo Acknowledgments
Clarence: But what if I don’t give the donors anything for their donation?
Leagle: Technically, if you don’t give a donor something in return for his or her contribution, you
don’t have a disclosure requirement. However, donors can’t claim a tax deduction for any
contribution unless they maintain a record of the contribution in the form of either a bank record
(such as a canceled check) or a written communication from the charity showing the name of
the charity, the date of the contribution, and the amount of the contribution.
In addition, without a written acknowledgment from you, donors can’t claim a tax deduction for
any single contribution of $250 or more. Although it’s a donor’s responsibility to obtain a written
acknowledgment, your organization can assist the donor by providing a timely written statement.
Next, let’s review the details you need to include in a written acknowledgement.
Page 20 – Written Acknowledgment Details
Clarence: Is there anything else I need to include in written acknowledgements?
Leagle: Here is a detailed list:
The name of the organization and date of the contribution;
The cash contribution amount; the description (but not value) of any noncash contributions;
• A statement that no goods or services were provided by the organization in return for the
contribution, if that was the case – or a description and good faith estimate of the value of
goods or services, if any, that an organization provided in return for the contribution;
• And a statement that goods or services, if any, that an organization provided in return for
the contribution consisted entirely of intangible religious benefits, if that was the case.
Below is a sample of what this message could be written like:
Thank you for your cash contribution of $300 that [organization’s name] received on
December 21, 2006. No goods or services were provided in exchange for your
Page 21 – More Acknowledgment Details, cont.
Clarence: So, when do I have to send the acknowledgment to the donor?
Leagle: Generally, organizations send acknowledgments to donors no later than January 31 of
the year following the donation. That’s because donors must receive the acknowledgment by
the earlier of 1) the date on which the donor files his or her individual federal tax returns for the
year of the contribution or 2) the due date of the return (including extensions).
Clarence: Can I send the donor an email acknowledgement?
Leagle: Yes. An organization can either provide a paper copy of the acknowledgment, or it can
provide the acknowledgment electronically, such as an email addressed to the donor.
Page 22 – Acknowledging Donors’ Unreimbursed Expenses
Clarence: One of my volunteers asked me for a receipt for her expenses and I didn’t know I
needed to create one. She said she spent $150 in travel expenses to speak at our gala. What
should I do?
Leagle: Well, if a donor makes a single contribution of $250 or more in the form of
unreimbursed expenses, such as those out-of-pocket transportation expenses, you are required
to send the donor a written acknowledgment letter, and the donor should keep good records of
the expenses. If the amount is below $250 you can still provide a receipt, but she doesn’t need
one to claim the deduction.
Clarence: What should the acknowledgment letter include?
Leagle: The acknowledgment letter should include a description of the services provided by the
donor, a description and good faith estimate of the value of any goods or services that the
organization provided in return for the contribution and a statement that goods or services
provided in return for the contribution consisted entirely of intangible religious benefits, if that
was the case.
Next let’s talk about one other disclosure.
Page 23 – Other Disclosure Rules
Clarence: So, what other disclosure should I be aware of?
Leagle: Just one more. If your organization offers to sell goods or services that are available
free from the federal government, you must disclose that fact in a conspicuous and easily
Now, let’s talk about the consequence of non-compliance.
Page 24 – Why Comply?
Clarence: Okay, what are the penalties for not providing a receipt for out-of-pocket expenses?
Leagle: The penalty is the greater of $1,000 for each day the failure occurred, or 50 percent of
the total cost of all solicitations made by the organization on the same day it failed to meet the
So, let’s go over what you’ve learned so far.
Page 25 – Recap
Leagle: First, I talked about the Quid Pro Quo rules, which state that if donors gets something in
return for their donations, you must disclose both the amounts of the donations and the fair
market value of the goods or /services given. Even so, some insubstantial goods, membership
benefits or intangible religious benefits don’t need to be documented.
Also, unreimbursed out-of-pocket expenses are considered donations.
Finally, I mentioned that there are monetary penalties for non-compliance with any of the rules.
Let’s try an exercise before moving on to the next section.
Page 26 – Knowledge Check
Leagle: Pause your system and think of the best answer to this question: Which of these four
statements best describes a Quid Pro Quo donation?
A) A donation where the donor volunteers time and had out of pocket expenses.
B) A donation that the organization has solicited through fundraising.
C) A donation of Italian food.
D) A donation where the donor gets something in return for their donation.
If you chose D, that’s correct. A quid pro quo donation is one where the donor receives a good
or service in return for his or her donation.
Page 27 – Knowledge Check
Leagle: Let’s do one more. Pause your system and think of the best answer to this question:
Which of the following four items does NOT need to be included in a written acknowledgement?
A) Statement that no goods or services were provided by the organization in return for the
contribution, if applicable
B) Date of the contribution
C) The estimated value of a non-cash donation
D) Description (but not value) of noncash contribution
If you chose C, you’re correct. Written acknowledgements shouldn’t include the value of a noncash
donation – only a description of the donated item.
Page 28 – Progress Check
Leagle: Great job! You have learned how to explain the fair market value of the goods and
services you provided for contributions and ensure that donors get accurate written
acknowledgements of their donations.
Page 29 – Additional Resources
Leagle: I mentioned several resources during this Required Disclosures course, so feel free to
go back to review them or you can use this list of links.
• Can I Deduct My Charitable Contributions? course here at StayExempt
• Exempt Organization Public Disclosure and Availability Requirements
• Pub 1771, Charitable Contributions: Substantiation and Disclosure Requirements
• Chapter 2 (page 9) of Pub 557, Tax-Exempt Status for Your Organization
Page 30 – Conclusion
Leagle: On behalf of everyone in the IRS Exempt Organizations division, thank you for taking
this Required Disclosures Course.
Before you leave, please take a minute to send us your feedback using this email link. The
information you provide will ensure that this and other courses at StayExempt provide a
valuable learning experience for future participants.
After you’ve sent your feedback, you can print out a Certificate of Completion as recognition for
attending this course.
Required Disclosures Course