The Trump administration is considering a proposal that would require nonprofit organizations to disclose in their annual tax filings whether their top officials have been convicted of certain financial or terrorism-related crimes. According to sources with direct knowledge of the matter, the requirement would be added to the Form 990, the annual return that tax-exempt groups file with the Internal Revenue Service (IRS). The proposal reportedly covers convictions occurring within the last 10 years and is one of at least two revisions to the form currently moving through the Treasury Department.
Federal officials described the effort as a way to ensure donors can make informed decisions and to pressure tax-exempt groups to distance themselves from individuals with criminal records. The types of convictions that would require reporting include providing material support to terrorists, money laundering, fraud, tax evasion, and theft, as well as civil judgments from securities regulators. The proposal would not require organizations to identify specific individuals by name, and it is not currently a violation of federal law for individuals with felony convictions to serve on a nonprofit board.
Internal discussions at the IRS have revealed concerns among some officials regarding the lawfulness of the proposal and how it relates to tax law enforcement. Some officials expressed concern that the measure could lead to legal challenges on free speech grounds or be viewed as political targeting. The Treasury Department stated it is considering a range of measures to strengthen accountability and ensure tax-exempt status is not used to facilitate illicit activity. Legal experts, such as UCLA Law School senior scholar Ellen Aprill, noted that federal law lacks a remedy for the IRS to act on such information, unlike some states like California that already require similar disclosures to prevent fraud.
Nonprofit staff and board members would notice a change in their annual compliance workload. Diane Yentel, president of the National Council of Nonprofits, stated that complying with such a disclosure would divert time and resources away from community service. Furthermore, legal experts suggest the rule could create a "stigma" that affects who is willing to serve on nonprofit boards. For donors, the change would result in public access to information regarding the criminal history of an organization's leadership, which the administration argues is necessary for transparency. Critics, however, argue it could chill freedom of association, citing the Supreme Court's 2021 ruling that protected the privacy of charity donor lists.
The proposal comes amid several high-profile investigations and prosecutions involving the nonprofit sector. These include a federal prosecution of the Southern Poverty Law Center over allegations of misleading donors, and the recent sentencing of eight individuals affiliated with a North Texas group to 30 to 100 years in prison for providing material support to terrorists. Additionally, the administration is citing the "Feeding Our Future" scandal in Minnesota, a scheme involving an estimated $250 million that has resulted in 68 convictions or guilty pleas, as evidence of a need for greater oversight. It is not yet known when a final decision on the Form 990 changes will be reached or when the requirements would take effect.