In February 2015, my blog reported on three developments in the move toward electronic filing of Form 990, the annual IRS reporting form required from nonprofit organizations. Now, a fourth can be added. Is this enough to actually get an e-filing requirement enacted?
The “Form 990” actually is a family of forms – the regular Form 990 is used by organizations with annual gross receipts of $200,000 or more or total assets of $500,000 or more. The Form 990-EZ is filed by exempt organizations with gross receipts of less than $200,000 and total assets of less than $500,000. The Form 990-N “postcard” is electronically-filed and includes limited information from organizations with annual revenues of $50,000 or less. There is also a Form 990-PF, filed by private foundations. Finally, there is a Form 990-T for use by organizations that need to report “unrelated business income.”
Currently, the IRS provides only TIF images of the forms – a picture – so using the data requires manual entry into a database. This is expensive and time-consuming, delaying access to usable data and risking transcription errors. It seems clear that e-filing would result in more accurate and complete data available much more quickly.
At the beginning of 2015, there was progress in Form 990 e-filing:
- President Obama’s 2016 Federal Budget proposal to make electronic filing of the Form 990 mandatory and to release the data in an open, computer-usable format;
- The federal court decision requiring the IRS to make electronically-filed data available under the Freedom of Information Act in a machine-readable format; and
- The recommendation by the Government Accountability Office (GAO) to mandate electronic filing of the Form 990 (see TAX-EXEMPT ORGANIZATIONS).
There is bipartisan legislative support, as open Form 990 data was also included in the December 2014 tax reform discussion drafts from both the House and the Senate. The nonprofit sector itself has been on record as supporting e-filing for years.
And now the latest development – the Advisory Committee on Tax Exempt and Government Entities (ACT), an advisory committee to the IRS, made the following recommendation its number one priority in its annual report released in June 2015:
“The IRS Exempt Organizations Division should encourage and support a Congressional mandate to require electronic filing of the Form 990 series and should also take interim steps to encourage and provide incentives for voluntary e-filing of the Form 990 series for exempt organizations that are not subject to the mandatory e-filing requirements. The IRS should recommend to the Department of Treasury the elimination of the $10 million asset threshold for electronic filing of the Form 990 found in the Internal Revenue Code Section 6011 regulations.”
The full report issued on June 17, 2015, also included the results of a sector-wide survey of Form 990 data users and filers. The sections of the form covering compensation received more survey comments than any others, and a further ACT recommendation called for a task force to consider updates, enhancements, and/or deletions to the form.
So, if there is this much bipartisan legislative and administrative support, as well as judicial and nonprofit sector support, for e-filing and data in a computer-friendly format, will there actually be action on these recommendations? Only time will tell.