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Regulation and Compliance > Federal Regulation > IRS

Watchdog Suing for Easier Access to Nonprofits’ Tax Forms

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A federal judge in California’s Northern District last week turned down a motion by the Internal Revenue Service to dismiss a lawsuit brought by an advocacy group to make charities’ tax forms easier to search.

The case has deep implications for transparency in the nonprofit sector.

Charities file Form 990 to inform the IRS about their revenue, expenses, programs, salaries and governance issues.

The advocacy group, Public.Resource.org, which aims to make government documents more accessible, sued to force the IRS to release Form 990s in a searchable electronic format, rather than as image files, which it says are hard to search.

The Chronicle of Philanthropy reported that the judge had rejected the IRS’ contention that Internal Revenue Code provisions governing the release of the forms, which are designed to protect confidentiality, supersede the Freedom of Information Act.

The FOIA says that federal agencies must provide records “in any form or format requested” if it is “readily producible” in that format.

Public.Resource.org had asked for specific tax forms of nine nonprofits that had been filed electronically.

The IRS said it wanted to continue releasing the forms as image files because it would be technically hard to change its process for removing confidential information, such as lists of donors.

The judge had signaled in an earlier hearing that he would deny the agency’s motion, The Chronicle reported.

Transparency for Nonprofit Operations

According to The Chronicle, nonprofit leaders, donors, researchers, regulators and others use the tax forms to obtain critical information about how the nonprofit sector operates.

In theory, the news site said, converting the forms involved in the suit to a more searchabe format should not be difficult since they were submitted electronically.

But no matter how the forms were filed, the IRS converted them into images that were “useless for such digital operations as searching multiple forms for information,” The Chronicle reported.

Watchdog groups and others that provide information on charities, among them GuideStar, Urban Institute and Charity Navigator, have to pay for manual entry of the data they receive from the IRS before they can make it publicly available — even if it was originally digitized.

The Chronicle reported that Carl Malamud, Public.Resource.Org’s leader, successfully prodded the Securities and Exchange Commission in the 1990s to post corporate filings online at no cost.

Now, it said, Malamud insists that Form 990 data about a sector that represents some 1.5 million tax-exempt groups and more than $1.5 trillion in revenue should be readily accessible for free.

The IRS declined to discuss the case with The Chronicle.

Check out Nonprofits to Foundations: Give Us More Transparency on ThinkAdvisor.


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