House Passes Bill to Require E-Filing of Nonprofit Tax Forms

House Passes Bill to Require E-Filing of Nonprofit Tax Forms

The U.S. House of Representatives has passed a bill that would require nonprofit organizations to electronically file their tax returns and make those forms available to the public in machine-readable format.

The bill, H.R. 5443 (4 pages, PDF), which seeks to "amend the Internal Revenue Code of 1986 to require electronic filing of the annual returns of exempt organizations and provide for making such returns available for public inspection," passed the House on a voice vote Tuesday and is headed for the Senate. Currently, about 60 percent of nonprofits file their Form 990s electronically, said Cinthia Schuman Ottinger, who leads the Nonprofit Data Project at the Aspen Institute. Schuman Ottinger and her Aspen colleagues, in partnership with GuideStar, the Urban Institute, the Lilly Family School of Philanthropy at Indiana University, Foundation Center, and the Johns Hopkins Center for Civil Society Studies, have been pushing for the adoption of "open" nonprofit data standards for years.

"By expanding electronic-filing and providing more complete, searchable information on the nonprofit sector, this legislation would enable the public to use Form 990 data for research, fraud reduction, informed charitable giving, and other valuable purposes," said Schuman Ottinger in a statement.

If enacted, the new law would have the greatest impact on midsize charities, the Chronicle of Philanthropy reports. While organizations with at least $10 million in assets already are required to file 990s electronically, those with gross receipts of less than $50,000 file the 990-N, a short form known as the "e-postcard." Smaller charities and those that demonstrate that the requirement would pose an undue burden could have up to two additional years to comply.

In 2016, following years of advocacy and a lawsuit by, the IRS began releasing electronically filed 990 tax forms as machine-readable data through Amazon Web Services' Simple Storage Service. Since then, Schuman Ottinger has held several "Data-thons" to make the information more user-friendly.

"From a research perspective, e-filing is a game changer," Jesse Lecy, a professor of nonprofit studies at Arizona State University, told the Chronicle. "It’s opening up new frontiers."

Cinthia Schuman Ottinger. "Big News: House Passes Nonprofit Information and Transparency Measure." Nonprofit Data Project, Aspen Institute 04/17/2018. Alex Daniels, Peter Olsen-Phillips. "House Bill Would Require Charities to File Tax Forms Electronically." Chronicle of Philanthropy 04/18/2018.