On April 23, 2026, U.S. Department of the Treasury announced that the Internal Revenue Service (IRS) plans to revise the Form 990. The new compliance initiative is aimed to improve transparency, strengthen tax administration, and provide clearer reporting on certain activities of tax-exempt organizations. The press release from the U.S. Treasury indicates the IRS plans to require enhanced reporting by organizations described in Section 501(c)(3) – including government contracts, government grants, and fiscal sponsorship arrangements.
You can read the full press release here.
Suggested Nonprofit Form 990 Updates
The primary focus of the proposed revisions will be to make changes intended to detect misconduct and hold wrongdoers accountable. Treasury indicates we can expect clearer reporting around government contracts, government grants, and fiscal sponsorship arrangements. The updates will allow the IRS and the public to understand the sources and use of such funding and also improve revenue classification to reduce the the risk of fraud or abuse. The Treasury notes that these categories often rely on significant public funding and complex organizational structures, which can make it difficult to track how money flows and to maintain effective oversight. The planned enhanced reporting is meant to improve transparency around where funds come from and how they are used.
This initiative also reflects growing concern among policymakers about fiscal sponsorship. A fiscal sponsorship agreement is a contract where an established 501(c)(3) nonprofit acts as a sponsor and provides fiduciary oversight, financial management, and administrative services to a project that lacks tax-exempt status. This allows the project to accept tax-deductible donations and grants, usually for a fee. Although these arrangements are lawful, recent congressional oversight has raised concerns that some of these arrangements may hide who is running a project, who controls its funds, and how those funds are spent. The upcoming changes will likely require more detailed disclosures to help regulators and the public better understand how tax-exempt organizations function and allocate resources.
Treasury and the IRS expect to publish proposed regulations and provide an opportunity for public comment before any reporting changes are finalized. Treasury and the IRS will consider administrative feasibility, proportionality, and reporting burden as the proposal is developed.
No date has been released indicating when the proposed Form 990 will be shared. Tax-exempt organizations, especially those that receive government funding, should pay attention to these developments. If adopted, the proposed changes could broaden disclosure requirements and heighten enforcement risk.
Avizo specializes in supporting nonprofits. If your team is concerned about how pending changes may affect your compliance obligations, please contact us. We’ll continue to keep you informed as these developments evolve.
Taylor Clinkenbeard, CPA
Taylor is a Manager in our tax and client accounting services teams. She has developed specific expertise in software, accounting processes, and tax laws to serve our clients.
