Dan Brecher
Counsel
212-286-0747 dbrecher@sh-law.comAuthor: Dan Brecher|June 16, 2021
In the height of the COVID-19 pandemic, the State of New York quietly amended Sections 172-B, 172-E, and 172-F of the state’s Executive Law to establish heightened reporting requirements for charitable tax-exempt organizations. Effective January 1, 2021, certain New York nonprofits must file an annual financial report, a funding disclosure report, and/or a financial disclosure report.
To implement the amended laws, the Department of State issued a notice of proposed rulemaking on February 3, 2021. Below is a brief summary of the new disclosure obligations:
The Annual Financial Report must be filed with the Department of State on or before the fifteenth day of the fifth calendar month after the close of the charitable organization’s fiscal year. So, if a covered entity’s fiscal year ends on August 31, that entity is required to file its Annual Financial Report on or before the following January 15. If the covered entity’s fiscal year ends on December 31, the entity is required to file its Annual Financial Report on or before the following May 15.
The Funding Disclosure Reports and Financial Disclosure Reports must be filed with the Department of State within 30 days of the close of a reporting period. “Reporting period” is defined as the six-month period within a calendar year starting January 1st and ending June 30 or the six-month period within a calendar year starting July 1 and ending December 31.
Reports must be filed online through the Department of State’s Charitable Organization Financial Reporting System. The fee for filing a financial report with the Department of State is $25. Filers need a NY.Gov account to file a report through the Department’s Charitable Organization Financial Reporting System. A new NY.Gov account may be created at the following website: https://my.ny.gov.
If the funding or financial activity described in a covered entity’s Financial Disclosure Report is inconsistent with the charitable purposes of the entity, the report will be published on the Department of State’s website. The published materials will not include the names and addresses of individual donors to covered entities, or the covered entity’s IRS Form 990 Schedule B. The published report may not be made public pursuant to Executive Law Section 172-f if, based upon a review of the relevant facts presented by the covered entity, such disclosure may cause harm, threats, harassment, or reprisals to the source of the donation or to individuals or property affiliated with the source of the donation. The covered entity may appeal the Department’s determination.
Executive Law Section 93-a provides that whenever the Secretary of State, in consultation with the Department of Taxation and Finance or the Department of Law, determines that the nature and extent of a covered entity’s in-kind support to other entities or the nature and extent of a covered entity’s spending on covered communications is inconsistent with the charitable purposes of such covered entity, the Secretary must publish the financial reports, including Annual Financial Reports, on the Department of State’s website. However, any published materials may not include the names and addresses of individual donors to covered entities or covered entity’s IRS Form 990 Schedule B.
If you have questions or if you would like to discuss the matter further, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Counsel
212-286-0747 dbrecher@sh-law.comIn the height of the COVID-19 pandemic, the State of New York quietly amended Sections 172-B, 172-E, and 172-F of the state’s Executive Law to establish heightened reporting requirements for charitable tax-exempt organizations. Effective January 1, 2021, certain New York nonprofits must file an annual financial report, a funding disclosure report, and/or a financial disclosure report.
To implement the amended laws, the Department of State issued a notice of proposed rulemaking on February 3, 2021. Below is a brief summary of the new disclosure obligations:
The Annual Financial Report must be filed with the Department of State on or before the fifteenth day of the fifth calendar month after the close of the charitable organization’s fiscal year. So, if a covered entity’s fiscal year ends on August 31, that entity is required to file its Annual Financial Report on or before the following January 15. If the covered entity’s fiscal year ends on December 31, the entity is required to file its Annual Financial Report on or before the following May 15.
The Funding Disclosure Reports and Financial Disclosure Reports must be filed with the Department of State within 30 days of the close of a reporting period. “Reporting period” is defined as the six-month period within a calendar year starting January 1st and ending June 30 or the six-month period within a calendar year starting July 1 and ending December 31.
Reports must be filed online through the Department of State’s Charitable Organization Financial Reporting System. The fee for filing a financial report with the Department of State is $25. Filers need a NY.Gov account to file a report through the Department’s Charitable Organization Financial Reporting System. A new NY.Gov account may be created at the following website: https://my.ny.gov.
If the funding or financial activity described in a covered entity’s Financial Disclosure Report is inconsistent with the charitable purposes of the entity, the report will be published on the Department of State’s website. The published materials will not include the names and addresses of individual donors to covered entities, or the covered entity’s IRS Form 990 Schedule B. The published report may not be made public pursuant to Executive Law Section 172-f if, based upon a review of the relevant facts presented by the covered entity, such disclosure may cause harm, threats, harassment, or reprisals to the source of the donation or to individuals or property affiliated with the source of the donation. The covered entity may appeal the Department’s determination.
Executive Law Section 93-a provides that whenever the Secretary of State, in consultation with the Department of Taxation and Finance or the Department of Law, determines that the nature and extent of a covered entity’s in-kind support to other entities or the nature and extent of a covered entity’s spending on covered communications is inconsistent with the charitable purposes of such covered entity, the Secretary must publish the financial reports, including Annual Financial Reports, on the Department of State’s website. However, any published materials may not include the names and addresses of individual donors to covered entities or covered entity’s IRS Form 990 Schedule B.
If you have questions or if you would like to discuss the matter further, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
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