Labyrinth, Inc. and Harbor Compliance Are Now OneOctober 6, 2021
California Assembly Bill 488December 2, 2021
New York Eliminates Additional Reporting Requirements for Soliciting Nonprofit Organizations
On November 12, 2021, Governor Hochul signed S4817/A1141 which repealed the new Department of State filing requirement for nonprofits that solicit or operate in New York. Prior to Exec. Law 172-B, unless otherwise exempt, charitable organizations that were incorporated, formed, or engaged in charitable activities in the state of New York were required to register and file annual financial reports with the Attorney General’s Charities Bureau. Organizations were required to file the New York Charitable Registration Form (CHAR500) along with the following supporting documents:
- Schedule 4A of CHAR500 to report any applicable contracts with professional fundraisers, fundraising counsels, and commercial co-venturers.
- Schedule 4B of CHAR500 to report any government grants received
- An equivalent copy of the organization’s information report, and if applicable IRS Form 990-T
- Schedule B from the IRS Form 990
- Audited statement if gross receipts exceed $750,000, or a reviewed financial statement if annual gross receipts fall between $250,000 and $750,000.
- A $25 filing fee, if required to register under 7A and up to $1500 if registering under the EPTL.
New York Consolidated Executive Law 172-B
Exec. Law 172-B added an additional filing requirement. Charitable organizations were required to also file financial reports with the New York Department of State (DOS). Qualifying organizations that exceeded certain earning, spending, and donation thresholds during a designated time period were required to file the following documents with DOS:
- Annual financial disclosure reports
- Funding disclosure reports
- Financial disclosure reports
IRS Schedule B of Form 990
Some argue that the principal reason behind this additional filing with DOS is to compel 501(c)(4) organizations to disclose the list of their most significant donors as reported on their IRS donor disclosure form Schedule B. Whereas the Charities Bureau does not make the information available to the public, per Exe Law 172-B the NYS DOS had no obligation to keep the information confidential.
Americans for Prosperity Foundation vs. Bonta
Under federal law, nonprofit organizations are required to attach Schedule B “Schedule of Contributors” with the filing of their Form 990 annual information return. While most of the information return is available to the public, donor name and address information disclosed on Schedule B is treated as sensitive information. As such, Schedule B is not made available to the public and is only shared with the states if the need is urgent. This was established by Congress following the NAACP v. Alabama, 357 U.S. 449 (1958) decision to protect the privacy of donors to nonprofit organizations.
In 2010, the state of California began to require nonprofit organizations to include Form 990 Schedule B with their charitable state registration, or be considered non compliant in the state. While many nonprofits complied, some fought against it. The challenge eventually made its way to the U.S. Supreme Court, which recently ruled in Americans for Prosperity Foundation v. Bonta against the state of California and re-established the rights of nonprofits to keep their donor list private. Subsequently, the New York Attorney General’s Charities Bureau suspended its collection of IRS Form 990 Schedule B.
Relief from Double Filing Requirement S4817a/A1141a
Regardless of the reason why NYS passed Exec. Law 172, which required nonprofit organizations to also file with the NYS Department of State, the Supreme Court ruling also addressed this additional filing requirement.
Thanks to the lobbying efforts of Lawyers Alliance of New York, Governor Hochul signed S4817a/A1141a, repealing the redundant new double filing requirement to the NYS Department of State of nonprofit organizations. Exec. Law Bill Number S4817 amends §§172 & 172-b, Exec L, by prohibiting the disclosure of the names, addresses, and telephone numbers of contributors and the amounts contributed that are reported on financial disclosure reports of certain nonprofit organizations.
What Does This Mean for Nonprofit Organizations Going Forward?
Your nonprofit organization no longer has to file annual charitable registration materials with the NYS Department of State. Even though nonprofits are also now not obligated to file Schedule B with the NYS Charities Bureau, nonprofits must continue to comply with New York charitable organization filing requirements. If you have any questions or need any clarification on how to move forward, please do not hesitate to contact one of our registration specialists.
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Labyrinth, Inc. does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Labyrinth, Inc. is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.
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On November 12, 2021, Governor Hochul signed S4817/A1141 which repealed the new Department of State filing requirement for nonprofits that solicit or operate in New York. Prior to Exec. Law 172-B, unless otherwise exempt, charitable organizations that were incorporated, formed, or engaged in charitable activities in the state of New York were required to register and file annual financial reports with the Attorney General’s Charities Bureau. Organizations were required to file the New York Charitable Registration Form (CHAR500) along with the following supporting documents