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

— by

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.

Advertisements

If This is What it Means to be “Conservative” — I’m Proudly a Bleeding Heart Liberal

Clearly, members of the GOP in the House are all about looking for ways to handicap ANY organization tasked with performing regulatory actions that might impede their ideological plans for the future of the United States of Republica.  A case in point is this recent  press release from Representative Amodei’s office.  My comments are in blue italics at various points throughout his release.  Some original text has been highlight in RED for emphasis.

Amodei: Appropriations Financial Services bill reins in IRS, ACA and Dodd Frank

Wednesday June 18, 2014

FOR IMMEDIATE RELEASE                                 Contact:    Brian Baluta, 202-225-6155

WASHINGTON, D.C. – The House Financial Services and General Government Appropriations Subcommittee today passed its fiscal year 2015 bill, which would provide annual funding for the Treasury Department, the Judiciary, the Small Business Administration, the Securities and Exchange Commission and several other agencies.

The bill totals $21.3 billion in funding for these agencies, which is $566 million below the fiscal year 2014 enacted level and $2.3 billion below the president’s request for these programs.The legislation prioritizes programs critical to enforcing laws, maintaining an effective judiciary system and helping small businesses, while targeting lower-priority or poor-performing programs – such as the Internal Revenue Service – for reductions.

Well now, that makes just a ton of sense.  IRS is tasked with collecting revenue necessary for the operation of various government operations … so let’s under fund them so we can then make a scapegoat of them when they can no longer effectively perform their regulatory and tax-collecting functions.

“Every day, I am asked, ‘Why don’t you do something?’ This bill ‘does something’ by removing funding from executive agencies that have become political tools of the administration,” said Amodei.   

Bill highlights:

Internal Revenue Service (IRS)– Included in the bill is $10.95 billion for the IRS – a cut of $341 million below the fiscal year 2014 enacted level and $1.5 billion below the President’s budget request. This will bring the agency’s budget below the sequester level and below the level that was in place in fiscal year 2008. This funding level is sufficient for the IRS to perform its core duties, including taxpayer services and the proper collection of funds, but will require the agency to streamline and make better use of its budget.

Interesting! They continually carp about the IRS not providing for an EMAIL BACKUP strategy as part of their business plan. Server BACKUPs are NOT FREE!  How much more will they stop BACKING UP because they no longer have sufficient funding to do their tax collection duties, let alone ancillary functions like BACKUPS, SYSTEM UPDATES, SOFTWARE IMPROVEMENTS, etc.?

In addition, due to the inappropriate actions by the IRS in targeting groups that hold certain political beliefs, as well as its previous improper use of taxpayer funds, the bill includes the following provisions:

Here we go again, perpetuating the falsehood that ONLY right-wing political groups were scrutinized, when it was actually liberal groups that were denied with some that had already been given tax-exempt status seeing that status revoked (e.g., EmergeAmerica affiliated groups).  NO politically-focused groups should be receiving TAX-EXEMPT 501(c)(4) status, PERIOD!

A prohibition on a proposed regulation related to political activities and the tax-exempt status of 501(c)(4) organizations. The proposed regulation could jeopardize the tax-exempt status of many non-profit organizations and inhibit citizens from exercising their right to freedom of speech, simply because they may be involved in political activity.

Sorry, but I don’t get to deduct my “freedom of speech” contributions to political endeavors.  Thus, NO politically-focused organizations should be able to have a free of tax right to free speech at the American Taxpayer’s expense!

A prohibition on funds for bonuses or awards unless employee conduct and tax compliance are given consideration.

A prohibition on funds for the IRS to target groups for regulatory scrutiny based on their ideological beliefs.

Congress passed a law that clearly states that to be considered 501(c)(4) organization, your activities must be EXCLUSIVELY-FOCUSED on “Social Welfare” activities.  Politically-focused activities are NOT social-welfare activities and thus, it IS the IRS’s responsibility to scrutinize and deny tax-exempt status to ANY organization (conservative, liberal or otherwise) not meeting that exclusivity provision.

A prohibition on funds for the IRS to target individuals for exercising their First Amendment rights.

More BS related to the previous proviso — the IRS is NOT prohibiting ANYONE from exercising their free speech.  The IRS is merely and rightfully determining whether a group is a group exclusively devoted to providing SOCIAL-WELFARE opportunities/activities and thus, whether that group is entitled to TAX-EXEMPT status!

A prohibition on funding for the production of inappropriate videos and conferences.

Really?  Oh, please, pray tell, what “inappropriate videos” might it be that the IRS is producing?

A prohibition on funding for the White House to order the IRS to determine the tax-exempt status of an organization.

Again, if you want to allow any organization wanting to conduct EXCLUSIVELY politically focused activities to never have to pay taxes, well then, you need to REPEAL the law that PROHIBITS them from being tax exempt!  You cannot have a LAW on the books that says one thing and then prohibit the IRS, which is responsible for administering that section of the law, from enforcing it!

A requirement for extensive reporting on IRS spending.

Affordable Care Act (ACA) –The bill also includes provisions to stop the IRS from further implementing ObamaCare, including a prohibition on any transfers of funding from the Department of Health and Human Services to the IRS for ObamaCare uses, and a prohibition on funding for the IRS to implement an individual insurance mandate on the American people.

Well, let’s see.  We elected President Obama and a Democratic Congress to get health care reform. Then, the Republican propaganda machine bought a Republican House.  Despite their efforts to gerry-rig the system, we still re-elected President Obama. Health care reform is one of the hardest things we’ve ever worked on. But no matter, they just keep trying to either LIE ABOUT REPEAL or DEFUND access to healthcare for the American People despite its need or popularity.

Securities and Exchange Commission (SEC)– Included in the bill is $1.4 billion for the Securities and Exchange Commission (SEC), which is $50 million above the fiscal year 2014 enacted level and $300 million below the President’s budget request. The increase in funds is targeted specifically toward critical information technology initiatives. The legislation also includes a prohibition on the SEC spending any money out of its “reserve fund” – essentially a slush fund for the SEC to use without any congressional oversight.

In addition, the legislation contains requirements for the Administration to report to Congress on the cost and regulatory burdens of the Dodd-Frank Act, and a prohibition on funding to require political donation information in SEC filings.

My my, lookie here — looks like an increase in funding.  But wait, isn’t this the organization that’s supposed to regulate Wall Street?  It’s a shame that the increase in funding is just for a bit of information technology so they can determine how their GOP-Donor base is affected by any sort of regulation.  It’s also despicable that they’ve included a proviso that PROHIBITS any reporting of information as to Corporate political donations.  If you and I donate, our freedom of speech is broadcast for all to see … but the Republican Donor-base has a special privileged secreted freedom of speech.  Apparently the Republicans believe their Donors are free to speak with their Dollars, but the general American public is underserving of being able to speak with their dollars in response.

Consumer Financial Protection Bureau (CFPB)– The bill includes a provision to change the funding source for the CFPB from the Federal Reserve to the congressional appropriations process, starting in fiscal year 2016. Currently, funding for this agency is provided by mandatory spending and is not subject to annual congressional review. This change will allow for increased accountability and transparency of the agency’s activities and use of tax dollars. The legislation also requires extensive reporting on CFPB activities.

The Republicans have done EVERYTHING conceivably possible to handicap, repeal, defund and decapitate the Consumer Financial Protection Bureau (CFPB).  This is yet their latest attempt to defund and cripple any and all Consumer financial protection at the behest of their Donor-base.

Are House Republicans Not Just OCD, But Bipolar as well?

— Vickie Rock, a Disgruntled Citizen

IRSscandalOver the past year, we’ve heard one claim after another ad nauseum from Republican members of Congress as to how the IRS is discriminating against Republican groups in obtaining 501c4 tax-exempt status. Frankly, that’s a status that NO group promoting political activity should be granted, period.

Not one single Republican/Tea Party group was actually found to have been denied 501c4 status or had such status revoked.  Yet that didn’t matter.  Rep. Issa and his minions in a flagrant display of classic Obsessive Compulsive Dysfunction kept spreading lies with the help of their FoxNews mouthpieces.  Truth be known, it was NOT  Teapublican leaning groups who had their 501c4 status denied/revoked, but Democratic groups, EmergeAmerica and their state affiliates, like EmergeNV.  (Emerge educates/trains/ prepares Democratic women to run for office.)

Last week, in the U.S. House, HR 3865, the “Stop Targeting of Political Beliefs by the IRS Act of 2014,” was passed by a 243-176 vote.  A sum total of 14 Democrats voted for passage of the bill, and it’s now being touted as a “bipartisan” effort. (Really? What’s the magic number to classify a bill as “bi-partisan”?  One, Two, Five, Fourteen?)  It’s unclear, though, exactly what, if anything, it’s intended or expected to correct.  It looks more like an intentional perpetuation of the conflict we’ve now been experiencing for the past year.

Democrats who voted FOR passage:

  • Barber (AZ)
  • Barrow (GA)
  • Costa (CA)
  • Cuellar (TX)
  • Gallego (TX)
  • Kirkpatrick (AZ)
  • Larsen (WA)
  • Matheson (UT)
  • McIntyre (NC)
  • Murphy (FL)
  • Owens (NY)
  • Peterson (MN)
  • Rahall (WV)
  • Sinema (AZ)

HR3865 mandates that the Internal Revenue Service (IRS) standards and definitions that were in effect as of January 1, 2010, that were being used to determine whether an organization qualifies for tax-exempt status because it operate exclusively for social welfare shall remain in effect for just ONE YEAR after enactment of this Act.  (What? Do they think between voter suppression and the promotion of bogus propaganda using these groups that they’ll be able to take both houses using, abusing and obliterating all other political contenders within the next year?)  The lack of clarity of these standards has resulted in confusion and difficulty administering the Code, as well as delays in the processing of applications for tax-exempt status. Passage would prohibit the Secretary of the Treasury from issuing, revising, or finalizing any regulation (including proposed regulations), revenue ruling, or other guidance not limited to a particular taxpayer relating to such standards and definitions.

So let’s see, HR3865 mandates that the IRS must keep the debatable and erroneous skim milk definition of “EXCLUSIVELY” currently being used by the IRS—that same definition that re-defined “EXCLUSIVELY” as “PRIMARILY”—that same definition that has yielded fodder for Rep. Issa’s bogus claims of retaliation against 501c4 groups of the Teapublican persuasion:

Exclusively:

  • limited to the object or objects designated: exclusive attention to what’s cited
  • limiting or limited to possession, control, or use by a single individual or group (those performing social welfare functions)
  • an exclusive right (as to sell a particular product, or in this case to be entitled to tax-exempt status to those performing social welfare functions)

Primarily:

  • for the most part; mostly; chiefly; mainly; largely; generally; some of the time

HR3865 looks to me to be nothing more than a king-size order of obsessive compulsive dysfunction with a rabid side order of bipolar dysfunction. Should the Senate be so foolish as to let this bill see the light of day and take a vote which yields passage, they’ll be able to rant,  rave and second guess each and every decision the IRS makes, claiming that somehow, the President is behind each and every one of those decision.  Maybe they’ll even go so far as to institute actual impeachment proceedings based on their bogus misinformation campaigns.  On the other hand, maybe they should just take a good hard look in their mirror instead and then make a serious decision to seek medical help.  The Affordable Care Act can help them deal with their dysfunctional behavior.

Related Posts:

IRS Finally Taking a Stand Against Citizens United by Fixing Their Interpretive Error

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have announced they will issue initial guidance regarding qualification requirements for tax-exemption as a social welfare organization under section 501(c)(4) of the Internal Revenue Code.  This proposed guidance defines the term “candidate-related political activity,” and would amend current regulations by indicating that the promotion of social welfare does not include this type of activity.  The proposed guidance also seeks initial comments on other aspects of the qualification requirements, including what proportion of a 501(c)(4) organization’s activities must promote social welfare.

There are a number of steps in the regulatory process that must be taken before any final guidance can be issued.  Given the significant public interest in these and related issues, Treasury and the IRS expect to receive a large number of comments.  Treasury and the IRS are committed to carefully and comprehensively considering all of the comments received before issuing additional proposed guidance or final rules.

“This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations,” said Treasury Assistant Secretary for Tax Policy Mark J. Mazur.  “We are committed to getting this right before issuing final guidance that may affect a broad group of organizations.  It will take time to work through the regulatory process and carefully consider all public feedback as we strive to ensure that the standards for tax-exemption are clear and can be applied consistently.”

“This is part of ongoing efforts within the IRS that are improving our work in the tax-exempt area,” said IRS Acting Commissioner Danny Werfel.  “Once final, this proposed guidance will continue moving us forward and provide clarity for this important segment of exempt organizations.”

TP501c4

Organizations may apply for tax-exempt status under section 501(c)(4) of the tax code if they operate to promote social welfare.  The IRS currently applies a “facts and circumstances” test to determine whether an organization is engaged in political campaign activities that do not promote social welfare.  Today’s proposed guidance would reduce the need to conduct fact-intensive inquiries by replacing this test with more definitive rules.

In defining the new term, “candidate-related political activity,” Treasury and the IRS drew upon existing definitions of political activity under federal and state campaign finance laws, other IRS provisions, as well as suggestions made in unsolicited public comments.

Under the proposed guidelines, candidate-related political activity includes:

  • Communications
  • Communications that expressly advocate for a clearly identified political candidate or candidates of a political party.
  • Communications that are made within 60 days of a general election (or within 30 days of a primary election) and clearly identify a candidate or political party.
  • Communications expenditures that must be reported to the Federal Election Commission.
  • Grants and Contributions
  • Any contribution that is recognized under campaign finance law as a reportable contribution.
  • Grants to section 527 political organizations and other tax-exempt organizations that conduct candidate-related political activities (note that a grantor can rely on a written certification from a grantee stating that it does not engage in, and will not use grant funds for, candidate-related political activity).
  • Activities Closely Related to Elections or Candidates
  • Voter registration drives and “get-out-the-vote” drives.
  • Distribution of any material prepared by or on behalf of a candidate or by a section 527 political organization.
  • Preparation or distribution of voter guides that refer to candidates (or, in a general election, to political parties).
  • Holding an event within 60 days of a general election (or within 30 days of a primary election) at which a candidate appears as part of the program.

These proposed rules reduce the need to conduct fact-intensive inquiries, including inquiries into whether activities or communications are neutral and unbiased.

Treasury and the IRS are planning to issue additional guidance that will address other issues relating to the standards for tax exemption under section 501(c)(4).  In particular, there has been considerable public focus regarding the proportion of a section 501(c)(4) organization’s activities that must promote social welfare.  Due to the importance of this aspect of the regulation, the proposed guidance requests initial comments on this issue.  The proposed guidance also seeks comments regarding whether standards similar to those proposed today should be adopted to define the political activities that do not further the tax-exempt purposes of other tax-exempt organizations and to promote consistent definitions across the tax-exempt sector.

###

Same-Sex Married Couples Finally Get Some Certainty

Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples

IR-2013-72, Aug. 29, 2013

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

The ruling implements federal tax aspects of the June 26 Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.

Under the ruling, same-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.

Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.

Legally-married same-sex couples generally must file their 2013 federal income tax return using either the married filing jointly or married filing separately filing status.

Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.

Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011 and 2012. Some taxpayers may have special circumstances, such as signing an agreement with the IRS to keep the statute of limitations open, that permit them to file refund claims for tax years 2009 and earlier.

Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.

How to File a Claim for Refund

Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return.

Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement. For information on filing an amended return, see Tax Topic 308, Amended Returns, available on IRS.gov, or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.

Future Guidance

Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.

Other agencies may provide guidance on other federal programs that they administer that are affected by the Code.

Revenue Ruling 2013-17, along with updated Frequently Asked Questions for same-sex couples and updated FAQs for registered domestic partners and individuals in civil unions, are available today on IRS.gov. See also Publication 555, Community Property.

Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on Sept. 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so, as long as the statute of limitations for the earlier period has not expired.