Proposed Form 990 Changes and Increased Reporting Expectations
In April 2026, the U.S. Treasury Department recently announced plans to revise IRS Form 990, the annual information return filed by most tax-exempt organizations. The initiative is intended to enhance transparency, strengthen tax administration, and improve accountability for certain activities of Section 501(c)(3) organizations. According to Treasury, key areas of focus will include reporting related to government grants and contracts and fiscal sponsorship arrangements.
Why This Matters
Treasury's proposal reflects increased regulatory scrutiny of how nonprofit organizations receive, manage, and deploy funds. Enhanced reporting requirements are expected to provide the IRS and the public with greater visibility into:
- Sources and uses of government funding
- Classification of grant and contract revenue
- Oversight and governance of fiscal sponsorship arrangements
- Internal controls designed to prevent fraud, abuse, and misuse of funds
Treasury has indicated that proposed regulations will be released for public comment before any final reporting changes take effect.
What Nonprofits Should Do Now
Although specific Form 990 revisions have not yet been released, nonprofit organizations can take proactive steps today:
- Review all government grant and contract funding sources
- Evaluate fiscal sponsorship arrangements and supporting documentation
- Assess whether internal controls clearly track funding sources, restrictions, approvals, and expenditures.
- Ensure governance records demonstrate who controls funds and how funds are ultimately used
- Consider whether existing Form 990 disclosures and supporting schedules could withstand increased IRS and public scrutiny
Holsinger Insight
At Holsinger, we believe strong governance, transparent reporting, and well-documented internal controls are essential for maintaining donor confidence and regulatory compliance. Organizations that strengthen documentation and oversight processes now will be better positioned to adapt to future Form 990 reporting requirements while demonstrating accountability to stakeholders.
Our nonprofit assurance and tax professionals can help evaluate current reporting practices, strengthen internal controls over grants and sponsored programs, and prepare organizations for evolving IRS transparency expectations.
For more information about how these proposed changes may affect your organization, contact the nonprofit specialists at Holsinger, PC.
