Electronic Filing of Nonprofit Tax Returns Signed Into Law

Electronic Filing of Nonprofit Tax Returns Signed Into Law

President Trump has signed the final version of a bill requiring the electronic filing of nonprofit tax returns and the release of those forms to the public free of charge in a searchable, machine-readable format.

A provision in H.R. 3151 (the "Taxpayer First Act"), a bipartisan Internal Revenue Service reform measure that was passed by Congress in June, makes e-filing of Forms 990 by exempt organizations mandatory beginning with the 2020 tax year. A delay in implementation may be granted for small organizations, organizations for which the U.S. Department of Treasury determines that the law would cause an undue burden, and organizations filing Form 990-T.

The requirement is intended to make it easier and cheaper for researchers and the public to access information on 501(c)(3) organizations, according to the Aspen Institute Program on Philanthropy and Social Innovation (PSI). Since 2008, the institute has worked to improve the quality, timeliness, accessibility, and efficiency of the nonprofit data collection system through its Nonprofit Data Project, which is funded by the Bill & Melinda Gates and Charles Stewart Mott foundations and includes representatives from Candid (formerly GuideStar and Foundation Center), the Center on Nonprofits and Philanthropy at the Urban Institute, the Indiana University Lilly Family School of Philanthropy, and the Center for Civil Society Studies at Johns Hopkins University.

(Ed note: In January 2015, in a ruling on a lawsuit filed by Public.Resource.Org — an open-records advocacy group founded by Carl Malamud — a U.S. district judge ordered the IRS to release tax returns of nine nonprofit organizations in machine-readable digital format. The IRS appealed the ruling in March but the U.S. Department of Justice dropped the appeal and the agency released the Forms 990 in a machine-readable format in June.  A year later, in June 2016, the IRS announced that it had made more than a million electronic 990 tax forms available as machine-readable data through Amazon Web Services' Simple Storage Service — including certain Forms 990 filed by nonprofit organizations with the IRS since 2011, Forms 990-EZ filed by smaller nonprofits, and Forms 990-PF filed by private foundations.)

"Form 990s contain valuable information on the missions, governance, and finances of nonprofit organizations. Until fairly recently, these forms — even those that were electronically filed — were only available and sold by the IRS as static, non-searchable images, which greatly limited their usefulness," Cinthia Schuman Ottinger, PSI’s deputy director for philanthropy programs, wrote in an email. "After years of advocacy by Aspen and its partners, and legal action by open data guru Carl Malamud, e-filed Form 990s were released in a machine-readable format by the Internal Revenue Service in June 2016. Currently, approximately 65 percent of Form 990s are electronically filed and available for free on Amazon Web Services. With the passage of the Taxpayer First Act, researchers and the public will now have easier access to all public Form 990 data."

Cinthia Schuman Ottinger. "President Signs Nonprofit Informaton/Transparency Bill Into Law!" Aspen Institute 07/02/2019.