The Trump administration is considering a new IRS requirement that would force nonprofits to disclose whether their top officials have been convicted of financial or terrorism-related crimes, a move supporters say is overdue and critics warn could be weaponized.
The proposed change would add a criminal-conviction disclosure question to IRS Form 990, the annual tax return that most tax-exempt organizations must file. Under the proposal, nonprofits would have to report convictions from the previous ten years for officials in leadership positions. The Treasury Department told CBS News it is exploring "a range of measures to strengthen accountability for nonprofit organizations," though the rule has not been finalized.
The effort comes as the administration steps up scrutiny of fraud and potential illicit activity inside the nonprofit sector, a push that already includes a joint FBI and IRS Criminal Investigation command post examining possible links between tax-exempt groups and terrorism, CBS News reported.
Administration officials have pointed to the Feeding Our Future scandal in Minnesota as a prime example of why tighter oversight is needed. The pandemic-era scheme funneled an estimated $250 million in federal funds through a nonprofit meal program and has produced 68 convictions or guilty pleas so far. The case exposed how little the existing Form 990 does to flag bad actors inside tax-exempt organizations, and how much damage those actors can inflict before anyone catches on.
Tom Jones, president of the American Accountability Foundation, backed the proposal in plain terms:
"If your board members are convicted criminals, you should have to explain why those people are on your board."
That is a hard argument to dismiss. Donors who write checks to a charity have no reliable, centralized way to learn whether the people running it have felony convictions for fraud, money laundering, or terrorism financing. The proposed rule would put that information on a publicly available tax filing.
The criminal-conviction disclosure is only one piece of a wider crackdown. In April, the Treasury Department previewed proposed rules aimed at detecting fraud and abuse in the nonprofit world, Bloomberg reported. Those rules would impose additional reporting requirements around "fiscal sponsorship" arrangements, structures in which an established tax-exempt organization funds charitable projects operated by other groups. Fiscal sponsorships are legitimate and common, but they also create gaps in accountability that bad actors can exploit.
A Treasury spokesperson framed the overall effort as a matter of financial integrity, saying the department would "continue to follow the money to ensure tax-exempt status is not exploited to facilitate illicit activity."
The White House had already directed the IRS last year to refer organizations suspected of financing domestic terrorism to the Justice Department. The joint command post between the FBI and IRS Criminal Investigation grew out of that directive. Together, these moves represent a sustained push to treat nonprofit fraud and terrorism financing as enforcement priorities rather than paperwork problems.
Not everyone inside the government is on board. Some IRS officials have privately questioned how collecting criminal-history information from nonprofit leaders connects to the agency's core mission of tax enforcement. Their concern, in short: the IRS collects tax data, not rap sheets, and blurring that line could create legal and operational headaches.
Outside critics have raised a different objection. They warn the requirement could chill freedom of association or be used for political targeting, forcing organizations to expose personnel information that has nothing to do with their tax-exempt purpose. The concern is that a future administration, of either party, could use the disclosure requirement as a tool to pressure disfavored groups.
Those objections deserve a hearing. But they land differently when set against a quarter-billion-dollar fraud that sailed through existing safeguards. The current system trusts nonprofits to police themselves. Feeding Our Future showed what happens when that trust is misplaced.
The proposal is still taking shape, and significant questions remain unanswered. It is unclear exactly which officials within a nonprofit would be covered, board members, executives, all officers, or some narrower category. The specific crimes triggering disclosure have been described only in broad terms: financial offenses and terrorism-related convictions. And no enforcement mechanism has been spelled out for organizations that fail to comply or file false answers.
Whether the Treasury Department will issue a formal notice-and-comment rulemaking or pursue the change through a simpler administrative update to the Form 990 is also unknown. The path matters. A full rulemaking would invite public comment and legal challenge. A quieter form revision might move faster but face questions about its legal footing.
Taxpayers fund the nonprofit sector through generous tax exemptions. Asking the people who run those organizations to disclose serious criminal convictions is not overreach, it is the bare minimum a donor and a taxpayer ought to expect.
