IRS Plans Form 990 Overhaul to Boost Nonprofit Transparency

A routine nonprofit return is about to become a lot less routine for KPMG teams that work on tax-exempt clients. The Treasury Department said it plans to revise Form 990 to improve transparency, strengthen tax administration, and give clearer reporting on government contracts, government grants, and fiscal sponsorship arrangements for section 501(c)(3) organizations.

Treasury announced the initiative on April 23, and Treasury Secretary Scott Bessent framed the change in blunt terms: “Public money and tax-exempt status demand public accountability.” Treasury said clearer reporting should help the IRS and the public better understand where the money comes from and where it goes, support proper revenue classification, and reduce the risk of fraud, abuse, and misuse of taxpayer dollars.

For KPMG tax, audit, and nonprofit advisory professionals, the burden would likely show up first in client data gathering and disclosure mapping. Form 990 is not just an information return filed with the Internal Revenue Service; it is also a public-facing document read by donors, regulators, journalists, and boards. A change in what gets disclosed can force clients to revisit how they track grants, contracts, and sponsorship relationships, and to document governance decisions more carefully.

That matters because the current filing regime already carries real compliance risk. The IRS says most tax-exempt organizations must file an annual information return or notice unless an exception applies, and Form 990 is required under section 6033 for tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations. The IRS also says exempt organizations generally must make annual returns available for public inspection for three years. Contributor names and addresses generally do not have to be publicly disclosed for exempt organizations other than private foundations. Failure to file for three consecutive years can automatically revoke tax-exempt status.

The focus on fiscal sponsorship could create some of the most immediate process work. A Chronicle of Philanthropy report said Form 990 does not ask organizations to identify as fiscal sponsors, and some sponsors do not publicly identify that way. The same report cited a 2023 survey finding that 100 fiscal sponsors managed more than $3.1 billion in philanthropic and government funding for more than 12,000 projects nationwide. That kind of scale is why the new disclosures could ripple through nonprofit finance teams, audit files, and board reporting.

Public accountability pressure is also already baked into the ecosystem. ProPublica’s Nonprofit Explorer uses digitized Form 990 data and has become a major tool for investigative reporting and sector oversight. If the IRS tightens the form, the effect will not stop at filing season. It will reach the internal controls, review cycles, and client conversations that KPMG teams handle long before a return is signed.