Form 990 Updates: Treasury Transparency Initiative Signals Expanded IRS Oversight

In an April 23, 2026 press release, the U.S. Department of the Treasury announced that the Internal Revenue Service plans to revise Form 990. The proposed updates are intended to improve transparency, enhance oversight, and require clearer reporting of organizational activities. The broader goal is to help identify misconduct and support accountability.

Areas of Focus in Proposed Form 990 Updates

Government Grants and Contracts

The IRS is considering more detailed reporting for tax-exempt organizations that receive government funding. Proposed updates may require expanded disclosure around the source and use of funds along with more defined revenue classifications. Organizations with public funding may need to revisit how this activity is tracked and presented.

Fiscal Sponsorship Transparency

Fiscal sponsorship arrangements—typically between an established 501(c)(3) and a sponsored project or emerging nonprofit—remain lawful and widely used. The Treasury’s release highlights concerns around clarity in these structures, including who operates the project, who controls funds, and how those funds are used. Future changes may place greater emphasis on transparency in these areas.

What to Expect from Treasury and IRS Rulemaking

The Treasury and IRS plan to issue proposed regulations and invite public comment before finalizing any changes. They have indicated that administrative feasibility, proportionality, and reporting burden will be considered as part of that process.

What This Means for Your Organization

If your organization receives government funding or contracts, now is a good time to review how those funds are documented and reported, including clarity around sources and usage.

For organizations involved in fiscal sponsorships, consider revisiting agreements, governance structures, and recordkeeping practices to ensure roles, responsibilities, and control of project funds are clearly defined and well documented.

If you have questions about how these developments may affect your organization—or how to prepare for potential Form 990 changes, AAFCPAs can help you stay informed and ready as guidance evolves.

Putting This Into Practice: Nonprofit Compliance

For more than 50 years, AAFCPAs has partnered with nonprofit organizations as they navigate complexity, steward resources, and advance their missions. Our nonprofit practice brings together audit, tax, outsourced accounting, fractional CFO, and advisory services to support organizations operating in increasingly regulated environments. We work alongside executive teams and boards to strengthen financial reporting, governance, and decision making across funding, compliance, and growth initiatives. With extensive experience across sectors including healthcare, education, human and social services, and affordable housing, our teams provide practical guidance grounded in how nonprofit organizations operate today. The result is clarity that supports stronger decisions and sustained mission impact.

These insights were contributed by Chris Consoletti, Esq., Consulting Attorney, Director.

Questions? Reach out to our authors directly or your AAFCPAs partner.

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