IRS Opens Up Form 990 Data, Ushering Nonprofit Sector into the Age of Transparency

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Making meaningful improvements to how the federal government uses the internet can take years, new laws, regulations, demonstration projects, testimony and dogged persistence by public interest advocates and reformers in the pursuit of change. Then, all at once, a dam breaks and a new resource blossoms into a commons online. June 15, 2016 was such a day, when the IRS has begun publishing electronic nonprofit tax returns online in a machine-readable format on Amazon Web Services.

Sunlight has long held that nonprofit e-file data should be open. Now it is.

“This is a huge victory for the IRS,” open government advocate Carl Malamud said in an email. “The service stepped up to the plate and has squarely faced the issue of privacy breaches in public nonprofit returns and are now releasing machine-processable XML data for those returns. This is a huge release: 1.4 million e-file returns dating back to 2011 available for free and a commitment to update the data store on a monthly basis.”

Over the past decade, however, the IRS has not embraced publishing the tax returns of charities — called Form 990s — as open data with joy and enthusiasm, despite the clear value of opening the $1.6 trillion nonprofit sector to transparency and innovation. In fact, Malamud had to win a federal lawsuit to get the tax agency to do what it should have been doing anyway.

After a federal court ordered the IRS to disclose Form 990s as open data in 2015, however, the agency subsequently announced that it would begin working to release all of the data from electronically filed nonprofit tax returns available in a machine-readable format online by early 2016.

In the months since, the agency has worked diligently to ensure that the privacy issues Malamud had found in the millions of files the IRS disclosed to Public.Resource.org. As of June 2016, the public can now access Form 990 data on Amazon Web Services for free. Notably, the datasets are hosted in Amazon’s public cloud instead of IRS.gov, offloading demand to a private sector company that’s become a global leader in hosting apps, services and data.

It’s also worth noting that this release also fulfills an element of one of the commitments in the third U.S. National Action Plan for Open Government, modernizing administration of the Freedom of Information Act, to “Proactively Release Nonprofit Tax Filings.”

Tax filings for nonprofit organizations contain data that is legally required to be publicly released. Accessing the filings generally requires a request from the public, which can include a FOIA request, and results in more than 40 million pages provided in a non-machine-readable format. The Internal Revenue Service will launch a new process that will remove personally identifiable information before releasing the public information within electronically filed nonprofit tax filings. The electronically filed tax filings will be released as open, machine- readable data, allowing the public to review the finances and other information of more than 340,000 American nonprofit and charitable organizations.

In our correspondence, Malamud hailed the work of many others to bring this moment to pass, from professor Beth Noveck, the former director of the White House Open Government Initiative who co-authored “Information for Impact: Liberating Nonprofit Sector Data,” to the pro bono work of Thomas R. Burke of Davis Wright Tremaine on the FOIA lawsuit, to the work of Scott Klein’s team on ProPublica’s Nonprofit Explorer and the Internet Archive.

“Nonprofit tax returns contain tremendous amounts of information about the activities of this important sector of our economy,” Noveck said via email. She continued:

With the raw data of nonprofit tax returns, it will become possible, for example, to see who is providing social services to whom and where and more easily spot the overlaps and gaps so that government and the social sector know where more investment is needed. It will become possible to build the tools to spot waste, fraud and abuse more easily than we can today. There’s rich and useful information, which can be visualized to help donors know more about where to give. When the sector itself has better business intelligence about its own activities, it can operate more effectively.

Many thanks to everyone who has collaborated to help bring the IRS further into the 21st century, not least the staff at the agency who we need to be trustworthy stewards of our private data. Protecting privacy when releasing open data is essential, and we commend the nation’s tax collector and regulator for its due diligence.

This is far from the first time Malamud’s determined efforts has led to a watershed in useful government data going online. Back in 1993, he used a grant from the National Science Foundation to obtain and publish Securities and Exchange Commission data online. In 1995, the SEC decided to publish the data itself. Two decades later, Malamud spent years buying, processing and publishing millions of nonprofit tax filings, converting scanned images and then making the bulk data available to the public.

“This is exactly analogous to the SEC and the EDGAR database,” Malamud said in an phone interview in 2013. “If you make the data available, you will get innovation.”

I expect that to be the case, given the track record of his predictions. For instance, journalists, auditors and congressional investigators will now be able to analyze the data to look for trends and patterns, finding and flagging issues. It’s also going to empower officials and watchdogs to track and reveal influence in the nonprofit world.

“This is useful information to track nonprofits,” Malamud said. “A state attorney general could just search for all executives that received loans from their employer.

More broadly, opening Form 990 data will not only improve how services like Guidestar and Charity Navigator work, but also provide the public with more equitable access and insight insight into how well their donations are being spent.

“My hope is that this will enable us to grow the nonprofit sector by enabling people to target their donations, to help the sector know better whom to serve and how, and, ultimately, to help the people who are the recipients of the good works of those in nonprofit organizations,” said Noveck.


CC-BY-SAThis work by Sunlight Foundation, is licensed under a Creative Commons Attribution 4.0 International License.

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Press Release re: ACA and 2014 Tax Season

Statements by Secretary Lew and Secretary Burwell on preparing for the upcoming tax season

In preparation for the 2015 tax filing season, the U.S. Department of Health and Human Services and the Treasury Department are putting in place resources to provide tax filers with the information and resources they need to get their questions answered.

Millions of Americans who get their health insurance through work are benefiting from the Affordable Care Act, and millions of others have signed up for the Health Insurance Marketplaces and received financial assistance to lower their monthly premiums.

Starting this year, consumers will see some changes to their tax returns.  While the vast majority of tax filers – over three quarters – will just need to check a box on their tax return indicating they had health coverage in 2014, people who have coverage through the Marketplaces, or decided not to enroll in coverage, should be aware of some additional steps that will be a part of the tax filing process starting this year.

Consumers will have questions about this new process and the Administration is committed to providing the information and tools tax filers need to understand the new requirements. In the coming weeks, the Administration will launch additional resources to help consumers prepare for tax filing season, including online tools to help individuals connect with local tax preparation services and determine if they are eligible for an exemption.

Treasury Secretary Jacob J. Lew and Health and Human Services Secretary Sylvia M. Burwell released the following statements today providing an overview of the consumer support and guidance their agencies will provide:

Treasury Secretary Jacob J. Lew:

“For the vast majority of Americans, tax filing under the Affordable Care Act will be as simple as checking a box to show they had health coverage all year.  A fraction of taxpayers will take different steps, like claiming an exemption if they could not afford insurance or ensuring they received the correct amount of financial assistance. A smaller fraction of taxpayers will pay a fee if they made a choice to not obtain coverage they could afford.  We are working to ensure that whatever their experience, consumers can easily access clear information since this is the first year they will see certain changes to their tax returns.”

HHS Secretary Sylvia M. Burwell:

“Last year, millions of Americans purchased quality, affordable health coverage through the Marketplace, and the vast majority received tax credits that cut their monthly premiums.  This benefit, which in many cases helped make the cost of health care less than the cost of a cell phone or cable bill, enabled these consumers to enjoy the benefits of coverage throughout the year.  In the coming weeks, HHS will work with other agencies, tax preparers and community organizations to arm these consumers with the information they need to know as they prepare to file their taxes.   We will also be providing helpful tools so that the millions of taxpayers who qualify for an exemption can receive one.”

While including health insurance information will become a routine step in filing taxes, this is the first time families will be asked to answer basic questions regarding their health insurance on their tax returns.  Most consumers – over three quarters – just need to check a box to indicate they have coverage.  Those with Marketplace coverage will receive a new form in the mail from the Marketplace – Form 1095-A – that they will use to reconcile their upfront financial assistance.  While those who can afford to buy health insurance and choose not to will have to pay a fee, individuals who cannot afford coverage or meet other conditions can receive an exemption.

In the coming weeks, consumer-friendly tools and resources will be made available for those tax filers who have health coverage through the Marketplaces, those seeking an exemption, and those looking for information about the fee for those who could afford to purchase health coverage but chose not to.  General resources can be found at www.IRS.gov/ACA or https://www.healthcare.gov/taxes/.  A sampling of some of resources already available, include:

To reach consumers with the information they need to prepare for the upcoming tax season, the Administration will employ a variety outreach strategies.  Outreach and consumer education efforts will include:

  • Direct outreach to Marketplace enrollees. Through email, phone, and text messages the Administration will reach out to people who got coverage through the Health Insurance Marketplace with personalized information that is most relevant to their tax status.  We will focus on providing targeted messaging to consumers who benefited from an advanced premium tax credit last year to help them offset the cost of their Marketplace premiums.
  • Community-based outreach and in-person assistance. Working with community organizations on the ground, nonprofit organizations, Marketplace navigators and other in-person assisters, we will provide guidance and resources to consumers looking for answers.
  • Partnerships with top tax preparers. The Administration will continue to work with top tax preparers to provide consumers with the information they need to prepare for tax season.