The U.S. Department of the Treasury has announced that the Internal Revenue Service plans to revise Form 990 to require clearer reporting on fiscal sponsorship arrangements, government grants, contracts, and related funding flows for tax-exempt organizations.
The changes aim to improve transparency, strengthen oversight of public funds, and reduce the potential for fraud, abuse, or misuse of tax-exempt status, according to an April 23 press release from the U.S. Department of the Treasury. Treasury officials highlighted concerns that some fiscal sponsorship structures have obscured control over funds and operations.
Fiscal sponsorship allows a tax-exempt 501(c)(3) organization to provide administrative and legal cover for projects or initiatives that may not yet have their own exempt status. While lawful, recent congressional oversight has raised questions about whether certain arrangements hide funding sources or control over projects.
“Public money and tax-exempt status demand public accountability,” said Treasury Secretary Scott Bessent in the announcement. “We are ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. When bad actors misuse charitable structures, directors and officers should understand that transparency can lead to scrutiny, accountability, and liability under the law.”
The Treasury noted that government grants and contracts involve substantial taxpayer dollars. Better reporting on these areas would help the IRS and the public track sources and uses of funds more effectively.
“Tax-exempt status is not immunity from scrutiny,” said Treasury Assistant Secretary and Acting IRS Chief Counsel Ken Kies. “If an organization receives public funds or tax-deductible donations, it should be prepared to show who controls the money and where it goes.”
The IRS and Treasury expect to publish proposed regulations and solicit public comment before finalizing any changes. Officials said they will consider administrative feasibility, proportionality, and reporting burdens during development.
The announcement follows congressional hearings and reports examining nonprofit transparency, including the use of fiscal sponsors by large networks, reported Thomson Reuters. Organizations such as Tides and those affiliated with Arabella Advisors have drawn scrutiny for managing billions in pass-through funding with limited public disclosure of project-level details.
This initiative builds on prior efforts to modernize Form 990. No immediate filing changes apply; affected organizations will receive notice once proposed rules are issued.
The Treasury Department described the move as part of broader efforts to ensure accountability for entities receiving tax-deductible contributions and public funds.
