Louis E. Michelson, A Professional Corporation

Providing Legal and Tax Advisory Services to Nonprofit Organizations

Public Charities, Schedule B and California Attorney General

July 16th, 2015 · No Comments · California Attorney General, California nonprofit law, Registry of Charitable Trust, state compliance

To maintain registered status with the California Attorney General/Registry of Charitable Trusts, nonprofit organizations must file an annual report with that office. Charities also must include a copy of the tax return filed with the IRS.

Schedule B is an attachment to Form 990. A nonprofit identifies on Schedule B the names of its major donors. Even though this sensitive information is provided to Uncle Sam, the IRS redacts this information and does not make it public. The IRS keeps this donor information confidential for public charities pursuant to Internal Revenue Code Section 6104(d)(3)(A).

If a public charity does not provide Schedule B with the Form 990 to the California Attorney General/Registry of Charitable Trusts, the charity risks suspension of its registration. Under recently proposed amendments to the enforcement regulations, suspension of registration can have very serious consequences for a nonprofit.

The Attorney General now has judicial approval of its requirement that public charities furnish Schedule B to maintain registered status. The Ninth Circuit recently affirmed the California Attorney General’s right to require charities to file a complete (unredacted) Form 990, which includes Schedule B.  See Center For Competitive Politics v. Kamala D. Harris, Attorney General of California.  See the following link for this case.

One should be aware that Form 990s received by the California Attorney General/Registry of Charitable Trusts, are posted on the Registry’s website. Historically it appears that Schedule B information for public charities has been excluded and not posted on the Registry’s website.

Charities should be aware that the California Attorney General is serious about requiring Schedule B. What does that mean in terms of continuing confidentiality of donors for charities operating in California?

Word to the wise: a prudent public charity may want to check the Form 990s that are posted by the Registry of Charitable Trusts on its website.

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