IRS Releases Electronically Filed Form 990 Data

Numbers in several rows

At long last, the IRS has released large amounts of electronically filed Form 990 data in machine-readable format. Approximately 60 percent of the e-filed returns have been made available now on Amazon Web Services, and the IRS intends to provide monthly updates.

Efforts to get the IRS to do this have been underway for almost as long as there has been e-filed data, culminating in a successful lawsuit brought by Public.Resource.Org against the IRS after it refused to comply with a Freedom of Information Act request for the electronic Form 990 records of nine organizations.

Why Has It Taken So Long?

There are several reasons why this has been so long in coming. First, when the Congress directed the IRS to develop a system to accept e-filed Forms 990, it did not direct it to develop a system to make that data easily accessible, either internally or externally. In essence, this data has been gathering dust for years. Second, there was some sentiment inside the IRS that by releasing e-filed data, the service would be treating e-filers differently from paper filers, and that this might be a disincentive to e-file.

The release of this data is a milestone for a number of reasons. It will increase transparency in the sector by making the Form 990 data more widely available to researchers and data scientists who can provide new clarity on what the data can (and can’t) tell us about the American nonprofit sector. It will also lower the costs of human transcription of the data that have been borne by many organizations (including GuideStar).

Finally, because all of the publicly disclosable data from the forms will be available (as opposed to only that which has been economically viable to transcribe in the past), we will get a first look at data that has never been analyzed.

This release, though welcome, is only a start, however. Only very small organizations (through the filing of Form 990-N) and very large organizations are currently required to file electronically. It is certainly possible that the release of this data will find that the IRS fears of it being a disincentive to e-file were not unfounded.

That is why it is critical that the Congress find its way to make e-filing mandatory for tax-exempt organizations. There have been fits and starts toward this goal over the past decade, but the legislative climate has always undermined these attempts.

Senate Bill Can Widen Information Floodgate

Senate Bill 2750, the so-called CHARITY (Charities Helping Americans Regularly Throughout the Year) Act is a bipartisan bill sponsored by Sen. John Thune (R-SD) and Sen. Ron Wyden (D-OR) that was introduced on April 6, 2016, and referred to the Senate Finance Committee. The bill has 10 co-sponsors (6 Republicans and 4 Democrats) as I write this.

Among other things, the bill calls for mandatory e-filing of the Form 990 series and codifies the required public release of the e-filed data. The bill does allow for up to two years of relief for organizations with revenues of less than $200,000 and assets of less than $500,000 in order to let them make the transition to e-filing. There should be very little in this bill that is controversial, and it will be a great victory for transparency and accountability of the sector should it become law.



Image of Chuck McLean

The preceding is a guest post by Chuck McLean a founding employee of GuideStar. Chuck is responsible for conducting research for GuideStar and for customers interested in nonprofit sector data. He also works to identify new data sources and ways to present data effectively to GuideStar users. Chuck produces the annual GuideStar Compensation Report, which analyzes the salary and benefits of thousands of nonprofits throughout the country.