Since 1987, tax-exempt organizations, including private foundations, have been required to allow public inspection of their exemption applications (Form 1023). Also since 1987, tax-exempt organizations, other than private foundations, have been required to allow public inspection of the three most recent annual returns (Forms 990).

The regulations apply to all organizations that are tax exempt under Code §§ 501(c) or (d). Therefore, the regulations apply to the following kinds of organizations, among others: charitable organizations, hospitals, schools, educational organizations, museums, zoos, scientific organization, and religious organizations exempt under § 501(c)(3); social welfare organizations exempt under § 501(c)(4); unions exempt under § 501(c)(5); trade associations exempt under § 501(c)(6); clubs exempt under § 501(c)(7); fraternal organizations exempt under § 501(c)(8) or § 501(c)(10); voluntary employees' beneficiary organizations exempt under § 501(c)(9); cemeteries exempt under § 501(c)(13); and credit unions exempt under § 501(c)(14).

The documents required to be disclosed are (1) the exemptions application (Form 1023) that the organization filed with the IRS and (2) the annual returns (Forms 990) that the organization filed for the last three years.

The exemption application includes all documents that the organization submitted in support of the application and all documents issued by the IRS in response, including the determination letter and requests for additional information. Not included is any exemption application filed before July 15, 1987, unless the organization had a copy of it on that date. Also not included is information permitted by statute to be withheld from public disclosure (information contained in the application that relates to any trade secret, patent, process, style of work, or apparatus of the organization, if the IRS determined that public disclosure of the information would adversely affect the organization).

The annual returns include not just the Forms 990 but also all schedules and attachments, even parts showing compensation paid to specific persons. Not included are Forms 990-T or information permitted by statute to be withheld from public disclosure (names and addresses of contributors to the organization).

An organization is required to make the documents available for public inspection without charge at the organization's principal, regional, and district offices during regular business hours. A regional or district office is any office (other than the principal office) with employees who, in aggregate, are normally paid for at least 120 hours of work per week. The organization may have an employee present in the room during the inspection but must allow the individual to take notes freely during the inspection.

If the organization does not maintain a permanent office, the organization is required to make the documents available for inspection within a reasonable period (normally not more than 2 weeks) after receipt of the request, at a reasonable time of day at a reasonable location of the organization's choice. In lieu of allowing an inspection, such an organization may, within 2 weeks after receipt of the request, mail a copy of the documents to the requester and charge for copying and actual postage costs only if the requester consents to the charge.

If any individual requests, in person or in writing, a copy of all or any part of the documents that must be made available for public inspection, then the organization is required to provide the copy, without charge, other than a reasonable fee for copying and actual postage.

Nevertheless, an organization may disregard any request for copies of all or part of any document beyond the first 2 requests 2received in any 30-day period (or the first 4 received in any 1-year period) from the same individual or the same address.

For providing copies, the organization may charge a reasonable fee, not exceeding $1.00 for the first page and $.15 for each additional page plus the actual postage. An organization may require prepayment. For requests made in person, an organization must accept cash and money orders. For requests made in writing, an organization must accept certified checks, money orders, and either personal checks or credit cards. If an organization does not require prepayment and received a request without payment, the organization must obtain the requester's consent before charging more than $20.

If the individual requests the copy in person at a principal, regional, or district office, then the organization is required to provide the copy on the day the request is made unless, due to unusual circumstances, fulfilling the request places an unreasonable burden on the organization. In the case of such unusual circumstances, the copy must be provided no later than 1 business day after the unusual circumstances cease to exist or the 5th business day after the request, whichever occurs first. Unusual circumstances may include receipt of more requests than the organization can handle, receipt of requests too close to the end of regular business hours to allow for copying, or receipt of requests on a day the managerial staff is unavailable.

A principal, regional, or district office of an organization may retain a local agent to process copy requests made in person. The local agent must be located within reasonable proximity of the organization's office and must provide the copy within the same time limits that apply to the organization itself. Upon receipt of a copy request in person, the organization must immediately provide the name, address, and telephone number of the local agent.

The organization is required to mail a copy (or part thereof) to any individual who requests the copy (or part thereof) in a writing delivered to a principal, regional, or district office by mail, e-mail, fax, or private delivery service, provided the writing sets forth the address to which the copy is to be mailed. The organization must mail the copy within 30 days after receipt of the request. If the organization requires prepayment, however, the mailing must occur within 30 days after receipt of payment. If the organization requires prepayment but receives a request without sufficient payment, the organization must, within 7 days of receipt of the request, notify the requester of the prepayment requirement and the amount due. In lien of mailing, an organization may provide a copy by e-mail if the requester consents.

An organization may retain an agent to process written requests. The agent must provide the copies within the time limits that apply to the organization itself.

An organization need not comply with a request for a copy of a document that the organization has posted on a World Wide Web page that clearly informs readers of the document's availability and that provides instructions for downloading and printing it, without a fee, in a format (e.g., PDG) that exactly reproduces the image of the document as it was originally filed with the IRS (other than information permitted by statute to be withheld from public disclosure). An organization that receives a request for a copy must then, within 7 days of receiving a copy request, provide the requester with the World Wide Web page address where the document is available.

An organization may suspend compliance with a copy request if the organization reasonably believes that the request is part of a harassment campaign and if, within 10 days after imposing such a suspension, the organization applies to the appropriate IRS district director for a determination that the organization is the subject of such a campaign. A harassment campaign is a single coordinated effort to disrupt the operations of the organization rather than collect information about the organization. If the IRS determines that the organization is not subject to such a campaign, then the organization must provide the documents to the requester within 30 days after the determination. If the IRS further determines that the organization did not have a reasonable basis for believing that it was the subject of harassment, then the usual penalties, described below, will apply for failure to provide the copies. In an example provided by the IRS, an organization that in one month receives 15 copy requests from individuals known to oppose the organization's policies is not subject to a harassment campaign.

The regulations provide that, if an organization denies a request for inspection or a copy of documents, the requester may inform the appropriate IRS district director.

Code § 6652(c)(1)(C) provides that an organization failing to meet the annual return public disclosure requirements shall pay $10 per day while the failure continues, with a maximum penalty of $5,000 for any 1 return. Code § 6652(c)(1)(D) provides that an organization failing to meet the exemption application public disclosure requirements shall pay $10 per day while the failure continues, with no maximum. Therefore, even if a failure is not willful, an organization that fails to provide an exemption application and its annual returns for the last 3 years can be penalized at the rate of $40 per day.

In addition, Code § 6685 provides that, if a failure is willful, an organization failing to comply with the public disclosure requirements shall pay $5,000 for each document.

Every principal, regional, and district office of a tax exempt organization should have a copy of the organization's exemption application (Form 1023) and Form 990 for each of the last 3 years. Every office administrator should be informed of the public disclosure rules. The organization can then satisfy the rules on a timely basis and avoid the penalties and potentially adverse publicity of an inadvertent failure to comply.