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The U.S. Department of the Treasury recently announced a new compliance initiative aimed at increasing transparency among tax-exempt organizations. In its April 23, 2026 press release, “Treasury Announces Form 990 Transparency Initiative to Expose Hidden Funding and Strengthen Oversight,” Treasury indicated that the Internal Revenue Service plans to revise Form 990 to require enhanced reporting by organizations described in Section 501(c)(3).
The proposed revisions are expected to focus on areas where Treasury and the IRS perceive heightened risk of misuse of funds, including government grants and contracts, as well as fiscal sponsorship arrangements. Treasury emphasized that these categories often involve substantial public funding and complex organizational structures, which can obscure the flow of funds and complicate oversight. Enhanced reporting is intended to provide greater clarity regarding the sources and uses of funds, improve revenue classification, and reduce the risk of fraud or abuse.
The initiative also reflects growing concern among policymakers regarding fiscal sponsorship arrangements, which Treasury acknowledged are often lawful but may, in certain cases, be used to obscure operational control or financial activity. By requiring more detailed disclosures, Treasury aims to ensure that both regulators and the public can better evaluate how tax-exempt organizations operate and deploy resources.
Importantly, Treasury and the IRS indicated that the contemplated changes will be implemented through proposed regulations, with an opportunity for public comment prior to finalization. The agencies also noted that they will consider administrative and reporting burdens in developing the final rules.
Tax-exempt organizations, particularly those receiving government funding, should closely monitor these developments. If adopted, the proposed revisions could expand disclosure obligations and increase enforcement risk.
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