Share with your friends

Federal district court strikes down donor disclosure change

Court strikes down donor disclosure change

A federal district court (for Montana) determined that guidance relieving certain tax-exempt organizations of donor disclosure requirements is “unlawful” and is to be “set aside” because the IRS failed to follow notice-and-comment procedures before promulgating the guidance.


Related content

The case is: Bullock v. IRS, No. 4:18-CV-00103-BMM (D. Mont. July 30, 2019). Read the court’s order [PDF 289 KB]


Until recently, IRS regulations had required most tax-exempt organizations to report on Schedule B of Form 990 the “names and addresses of all persons who contributed . . . $5,000 or more” during the tax year. See Reg. section 1.6033-2(a)(2)(ii)(f).

However, on July 17, 2018, the IRS and Treasury released Rev. Proc. 2018-38, announcing that the IRS would no longer require tax-exempt organizations (other than organizations described in section 501(c)(3) or section 527) to report the names and addresses of their contributors on their Schedules B. The revised reporting requirements applied to information returns for tax years ending on or after December 31, 2018. Read TaxNewsFlash

In response to this change, Montana Governor Stephen Bullock (in his capacity of representing the State of Montana) filed suit in the U.S. District Court for the District of Montana, asserting that Rev. Proc. 2018-38 was promulgated in violation of the Administrative Procedure Act (the “APA”).

On March 13, 2019, the State of New Jersey joined the lawsuit. The federal district court held a hearing on cross-motions seeking dismissal and summary judgment on June 5, 2019, and addressed: (1) whether the plaintiffs lacked standing to bring suit; and (2) whether the government was required to comply with the APA in promulgating Rev. Proc. 2018-38. 


The federal district court—recognizing that federal law permits states and their tax agencies to collect and use federal return information gathered by the IRS—determined that Montana and New Jersey had standing to bring suit because the states would have to expend significant additional resources to obtain the donor information that was available prior to the change.

Regarding compliance with the APA’s notice-and-comment requirement, the court observed that Rev. Proc. 2018-38 “explicitly upends” and “effectively amends” a long-standing rule, and concluded that the revenue procedure was a “legislative rule” for which notice and comment is required under the APA (as opposed to an “interpretative rule” that is excepted from the requirement).


For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 |

Preston Quesenberry | +1 202 533 3985 |

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal