Thursday, March 25, 2010

Non-Profit Tax Returns are Open for Public Inspection

Q I get several requests each year from charitable organizations? Can I ask to see their financial statements? And how do I know if my contributions will be tax deductible for the IRS?

A You can do one better: you can ask to see their tax returns.

Exempt organizations generally must make their annual returns - Form 990, Return of Organization Exempt From Income Tax - available for public inspection. This also includes the organization’s application for exemption.

These documents must be made available to any individual who requests them, and must be made available immediately when the request is made in person. If the request is made in writing, an organization has 30 days to provide a copy of the information, unless it makes the information widely available.

Another great way to find out information about charitable organizations is the website Many charitable organizations voluntarily post their Form 990s with GuideStar to make their financial information immediately available to all prospective donors.

It is important to know whether an organization is qualified to receive tax deductible contributions.

The easiest way is to ask them. You can ask to see an organization's exemption letter, which states the Code section that describes the organization and whether contributions made to the organization are deductible. You can also search for organizations qualified to accept deductible contributions in IRS Publication 78, Cumulative List of Organizations and its Addendum, available at Taxpayers can also confirm an organization’s status by calling the IRS at 877-829-5000.

Not all exempt organizations are eligible to receive tax-deductible charitable contributions. Organizations that are eligible to receive deductible contributions include most charities described in section 501(c)(3) of the Internal Revenue Code and, in some circumstances, fraternal organizations described in section 501(c)(8) or section 501(c)(10), cemetery companies described in section 501(c)(13), volunteer fire departments described in section 501(c)(4), and veterans organizations described in section 501(c)(4) or 501(c)(19).

If an exempt organization is ineligible to receive tax-deductible contributions, it must disclose that fact when soliciting contributions.