- The IRS is weighing a new annual disclosure for nonprofits whose leaders have criminal convictions.
- The proposal targets offenses including terrorism, fraud, and tax evasion within a ten-year lookback period.
- Nonprofits would report the existence of a record without naming the specific individual involved.
The Internal Revenue Service is weighing a new annual disclosure for nonprofits whose senior leaders have recent convictions for terrorism-related offenses, fraud, money laundering, securities fraud, tax evasion or theft.
The question would appear on Form 990, the annual return used by tax-exempt organizations. The reported lookback period is 10 years.
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The proposal remains under review at the Treasury Department. It was not finalized as of August 18, 2026, and no effective date has been set.
The filing would ask whether a covered official had a qualifying record. It would not require the nonprofit to identify which specific officer, director or trustee was convicted.
That distinction is central. The proposal would create disclosure without creating a federal ban on board service.
Treasury Secretary Scott Bessent presented the effort as an accountability measure for organizations receiving public benefits.
“Public money and tax-exempt status demand public accountability. We are ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. When bad actors misuse charitable structures, directors and officers should understand that transparency can lead to scrutiny, accountability, and liability under the law.”
Bessent’s statement places the proposal within an administrative campaign, not a court ruling or enacted statute. The review could still change before officials issue final text.
The filing would warn donors without naming the official
The contemplated question would cover officers, directors and trustees, as well as other top officials identified in the proposal. It would ask whether any person in those categories had a conviction within the reported 10-year period.
The listed offenses span terrorism-related conduct, financial crimes and property crimes. Securities-related civil judgments would also be included under the proposal described in the research.
| Proposed disclosure category | Conduct or action covered |
|---|---|
| Terrorism-related offense | Providing material support to terrorists |
| Financial offenses | Fraud, money laundering, securities fraud and tax evasion |
| Property offense | Theft |
| Regulatory action | Civil judgments from the Securities and Exchange Commission or state securities regulators |
The organization would report the existence of a covered record, rather than the official’s name. That could give donors and other reviewers a warning while withholding the identity of the person involved.
The proposal does not currently require nonprofits to explain which individual triggered the disclosure.
Tom Jones, president of the American Accountability Foundation, said organizations should be prepared to defend the presence of convicted directors on their boards.
“No one has a right to privacy of their criminal record. If your board members are convicted criminals, I am hard pressed to understand why you have a problem with that being publicized. You should have to explain why those people are on your board.”
A public answer could affect donor decisions and an organization’s reputation.
The proposal would add pressure without barring board service
Federal law does not prohibit people with felony convictions from serving on nonprofit boards. The contemplated disclosure would not change that rule.
Instead, the filing requirement could pressure organizations to review board appointments before the rule takes effect. Donors, grantmakers and government funders could consider the answer when evaluating an organization.
The proposal also would not itself establish that a nonprofit committed a crime. It would require reporting about the records of certain leaders and the civil judgments described in the measure.
That difference separates governance consequences from criminal liability. A nonprofit could face reputational scrutiny even where board service remains lawful.
The wider initiative includes a separate transparency proposal announced in April 2026. That measure would impose new disclosure requirements on nonprofits receiving government funding and organizations using fiscal sponsorship arrangements.
The administration’s policy direction also follows National Security Presidential Memorandum 7, issued on September 25, 2025. The memorandum directed the IRS to ensure tax-exempt entities were not “directly or indirectly financing political violence or domestic terrorism.”
Gary Shapley, an adviser to Bessent and former acting IRS commissioner, is reportedly leading an overhaul of the IRS Criminal Investigation division focused on nonprofit misconduct. The reported effort would shift attention toward enforcement involving charitable organizations.
The agency launched a separate reporting channel in March 2026 for suspected nonprofit fraud. Whistleblowers could receive awards of 15% to 30% of collected proceeds.
Congress has also considered nonprofit due-process protections. On July 30, 2026, the Senate Finance Committee passed the Taxpayer Assistance and Service Act.
The bill included a bipartisan amendment from Senators James Lankford and Raphael Warnock. The amendment would ensure nonprofits have a right to appeal determinations of tax-exempt status.
Those measures address different parts of the nonprofit system. The proposed filing question concerns leader records, while the Senate amendment concerns appeals over tax-exempt status.
Nonprofit advocates question how new scrutiny would be used
Diane Yentel, president and CEO of the National Council of Nonprofits, has warned against investigations lacking evidence of wrongdoing.
“mobilizing the FBI and IRS to investigate nonprofits without evidence of wrongdoing is another step in a pattern of attempts by the administration to silence nonprofit voices”
The Electronic Frontier Foundation has raised a related due-process concern about proposals that could let the Treasury secretary target groups based on perceived ties to “terrorist organizations” without sufficient judicial oversight.
Those objections concern the broader enforcement approach, not only the proposed annual question. The reporting requirement would still create a new point of review for nonprofits and the people who fund them.
The absence of names could also shape how the disclosure works in practice. A donor could see that a covered official has a qualifying record but would need other information to determine who it was.
The organization, meanwhile, could face questions about its board without a mandatory public identification of the person. That tension is built into the proposal as described.
The proposal is moving through internal review, according to people with direct knowledge of the process. Its core elements remain reported rather than final: a 10-year period, specified criminal categories, certain securities-related civil judgments and no requirement to name the official.
No final text has been issued. Until the IRS and Treasury complete the review, the precise wording and operation of the question remain subject to change.
The legal baseline is unchanged for now. A convicted felon may serve on a nonprofit board under federal law, while the proposed disclosure could make that board’s leadership subject to additional public scrutiny.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
