Lawsuit Aims to Force IRS to Release Digital Nonprofit Tax Forms

A suit filed by an open-records group against the Internal Revenue Service could force the agency to release the tax forms of nonprofit organizations in searchable digital format instead of as images, the Chronicle of Philanthropy reports.

This week a federal district judge in San Francisco will consider whether to approve the agency's move to dismiss a lawsuit filed by Public.Resource.Org, an advocacy group that seeks to end the agency's practice of converting all Form 990s into PDF images, which renders the files useless for keyword searches and sophisticated data analyses. For years, watchdog groups, research organizations, and others have had to manually enter data received from the IRS — including information from previously digitized forms — to make them searchable. Public.Resource.Org founder Carl Malamud, who successfully pushed the Securities and Exchange Commission to post corporate filings online for free in the 1990s, argues that data about a sector that boasts a million and a half tax-exempt organizations and more than $1.5 trillion in revenue should be made readily available to the public at no cost.

Meanwhile, Malamud's organization has purchased data from the IRS and created a free public database of 990s going back to 2002, along with tools to help others build new services with the data. Journalist and open-records advocate Luke Rosiak used the tools to create Citizen Audit, a database that uses optical character recognition to enable keyword searches, as a cheaper alternative to GuideStar, which provides most Form 990 information for free but charges for sophisticated database searches and other premium services.

While the IRS declined to discuss the case with the Chronicle, the agency has argued in court documents that it would be difficult to remove confidential information from electronic files and that open-records laws do not require it to release the forms in any particular format. Last year, the IRS took steps to make partial data from the 990s — including sources of financial support, assets and revenue, spending on overhead and programs, and compensation to highest-paid officials — available electronically. But the two sides will be back in court this month after an attempt at mediation failed. Malamud told the Chronicle he would drop the lawsuit if IRS commissioner John Koskinen agreed to meet with him to discuss how his open-records work fits into President Obama's stated desire to open up government data.

Lucy Bernholz, visiting scholar at the Stanford University Center on Philanthropy and Civil Society, praised Malamud for stepping in where established nonprofit players have not. "They all see open 990s as coming, but they're not going to create conflict to get it done," said Bernholz. "It takes an outsider to really move things along."

Susanne Perry. "Lawsuit Would Force IRS to Release Nonprofit Tax Forms Digitally." Chronicle of Philanthropy 06/16/2014.