IRS proposal would require nonprofits to disclose leader convictions

The Trump administration is considering a proposal that would require nonprofit organizations to disclose whether their top officials have been convicted of specific financial or terrorism-related crimes in their annual Form 990 tax filings.

Under the proposed rule, organizations would need to report convictions occurring within the last 10 years, including offenses such as money laundering, securities fraud, tax evasion, theft, and providing material support to terrorists. The proposal also includes civil judgments from the Securities and Exchange Commission or state regulators. While the requirement would mandate disclosure of such convictions, it would not require the nonprofit to identify the specific individual involved.

Federal officials suggest the measure aims to help donors make informed decisions and encourage tax-exempt groups to distance themselves from individuals with criminal records. This is one of at least two proposed revisions currently moving through the Treasury Department and the IRS, the other involving new disclosure requirements for nonprofits receiving government funding.