This IRS video course explains why your chartable organization should NOT include Social Security numbers on publicly-disclosed IRS documents such as the Form 990.
Identity theft is a major concern whenever any type of financial or personal identifying information is involved. A recent study suggests that some nonprofits and tax-exempt organizations should be careful about accidentally providing Social Security numbers that can become public.
This happens when tax-exempt organizations include Social Security numbers on any of the annual Form 990s sent to the IRS. That includes Form 990, 990EZ and 990PF.
It may not seem that filing a form with the IRS increases the risk of identity theft. But remember, when an organizations applies for tax-exempt status, or files an annual 990 series return, the law requires that both the IRS and the exempt organization make those forms available to the public. And the law does not permit the IRS to remove social security numbers from those forms before making them available to the public.
So anyone who looks at Form 990 will see those social security numbers, increasing the risk of identity theft.
A study by the Chronicle of Philanthropy found that almost one of every five exempt organizations has included social security numbers on their returns. Most of those numbers belong to donors, trustees, employees, directors and scholarship winners.
Another large group is paid tax preparers who use their social security number instead of their Preparer Tax Identification Number also known as PTINs.
Be especially careful with attachments, too, such as a list of scholarship winners. That attachment also will be made public.
Here’s how to prevent this accidental disclosure. Don’t put social security numbers on any version of a Form 990. There is no reason for your organization to include them The IRS doesn’t ask for it and we don’t want them.
Here are the forms that should not include social security numbers:
- Forms 990, 990EZ, 990N-and 990PF – the annual returns for charities and private Foundations
- Form 990T filed by charities
- Form 5227- filed by split interest trusts
- Forms 1023 and 1024 – applications to the IRS for tax-exempt status
- Forms 8871 and 8872 – filed by political organizations
The forms and their instructions are available at www.irs.gov under the Forms and Pubs.