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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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.

In the News—What I’ve Been Reading

Dean Baker | Economists and Future Living Standards

Dean Baker, Op-Ed: At this point everyone has heard the story of how Social Security and Medicare are going to bankrupt our children. There is a whole industry dedicated to promoting the idea that our kids risk having much lower standards of living than their parents or grandparents because of these programs. This story is routinely repeated in various forms by politicians and columnists who decry the fact that we don’t care enough for our children and that the elderly have too much political power. The remarkable part of this story is that there is no conceivable way that it is true and every economist knows it.

Monsanto Protection Act Proves Corporations More Powerful than US Government

Anthony Gucciardi, News Analysis: It’s called the Monsanto Protection Act among activists and concerned citizens who have been following the developments on the issue, and it consists of a legislative ‘rider’ inside (Farmer Assurance Provision, Sec. 735) a majority-wise unrelated Senate Continuing Resolution spending bill. You may already be aware of what this rider consists of, but in case not you will likely be blown away by the tenacity of Monsanto lobbyist goons.

Monsanto’s Death Grip on Your Food

Fritz Kreiss, News Report: Monsanto has yet another case pending in the court system, this time before the U.S. Supreme Court on the exclusivity of its genetically modified seed patents. Narrowly at issue is whether Monsanto retains patent rights on soybeans that have been replanted after showing up in generic stocks rather than being sold specifically as seeds, or whether those patent rights are “exhausted” after the initial planting. But more broadly the case also raises implications regarding control of the food supply and the patenting of life—questions that current patent laws are ill-equipped to meaningfully address.

My Food Fight: IBD vs. Monsanto

Dhruv Shah and Fritz Kreiss, News Report: “1 in every 250 persons in the UK are affected by inflammatory bowel diseases. Two years ago, I was diagnosed with a type of inflammatory bowel disease called Ulcerative Colitis. It affects up to 120,000 people in the UK, that’s about 1 in 500 and between 6,000 and 12,000 new cases are diagnosed every year.(i) For me it meant that I had to keep running to the bathroom up to 25 times a day. My large bowel at the worst of times would produce bloody mucus and I would have severe cramps. Due to the toxins created by the inflammation it also meant that I would be severely nauseous and could not hold down liquids, let alone food.”

Ten Years Later, U.S. has Left Iraq with Mass Displacement and Epidemic of Birth Defects, Cancers

Amy Goodman, Video Interview: In part two of our interview, Al Jazeera reporter Dahr Jamail discusses how the U.S. invasion of Iraq has left behind a legacy of cancer and birth defects suspected of being caused by the U.S. military’s extensive use of depleted uranium and white phosphorus. Jamail has also reported on the refugee crisis of more than one million displaced Iraqis still inside the country, who are struggling to survive without government aid, a majority of them living in Baghdad.

Right To Heal: Iraqi Civilians Join U.S. Veterans in New Effort to Recover from War’s Devastation

Amy Goodman, Video Interview: On the tenth anniversary of the invasion of Iraq, we look at how U.S. military veterans and Iraqi civilians have come together to launch “The Right to Heal” campaign for those who continue to struggle with the war’s aftermath. The video interview features U.S. Army Sgt. Maggie Martin, who was part of the invading force in March 2003 and is now director of organizing for Iraq Veterans Against the War. Also Yanar Mohammed, president of the Organization of Women’s Freedom in Iraq, joins the conversation and describes how the condition of women has deteriorated in Iraq.

Back to Work Budget is Defeated, But the Struggle Will Continue

Isaiah J. Poole, Op-Ed: The Congressional Progressive Caucus Back to Work Budget, as expected, did not prevail on the floor of the House of Representatives today. It went down to defeat, 84-327. In fact, it did not even win support from a majority of Democrats. But it did win a dramatic outpouring of support from ordinary Americans, which was demonstrated when one of the sponsors of the Back to Work Budget, Progressive Caucus co-chair Rep. Raul Grijalva, D-Ariz., held a stack of papers representing the more than 102,000 people who signed our petition calling for a “yes” vote for the budget and a “no” vote on the Republican budget of Rep. Paul Ryan, D-Wis.

The Plague of Wall Street Banking

Kevin Zeese and Margaret Flowers, Op-Ed: The economic news this week highlights what happens when governments are unable to confront the root cause of the financial collapse—the risky speculation and securities fraud of the big banks. What happens? They blame the people, cut their benefits, tax their savings and demand they work harder for less money. In the U.S. there have been no criminal prosecutions for securities fraud in the big banks. Just as the Justice Department has made it clear that the big banks are too big to jail because doing so jeopardizes the stability of the banking system; financial fraud investigator Bill Black points out that the SEC cannot institute fines that are too big for the same reason.

Dumb Wars, Now and Forever

Robert Scheer, Op-Ed: Yes, a majority of Americans, 53 percent according to this week’s Gallup poll, think it was “a mistake sending troops to fight in Iraq” 10 years ago. But the lessons of our folly will likely not stick for long. The memories fade as we now see in that same Gallup poll with perceptions of the Vietnam War. A majority of Americans ages 18-29 believe sending U.S. troops to Vietnam was “not a mistake.” By contrast, 70 percent of those 50 and older, the generation with contemporary knowledge of the war, think it was.

SOPAC Expedites New Seabed Mining Legislation for Lockheed Martin

Arnie Saiki, News Report: Currently, U.S. military contractor Lockheed Martin is negotiating with Fiji’s Bainimarama administration to fast-track and sponsor new legislation that would allow the private U.S.-based transnational titan to delve into experimental deep seabed mining. Because the U.S. has not ratified the U.N. Convention on the Law of the Sea (UNCLOS), U.S. industries cannot engage in deep seabed mining in international waters, outside of a country’s Exclusive Economic Zone (EEZ).

Meet PBO’s Appointment to Head the SEC

‎"She is someone who knows how to root out corruption, to find the information needed, and to get results. Wall Street had hoped for a business insider, but has instead gotten a vicious attack dog. This appointment comes on the heels of a newly empowered Securities and Exchange Commission, meaning that the administration has decided to get tough on big businesses who would seek to exploit people for profit."

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Making the World Safer for the Next Bernie Madoff

Lawmakers are pushing a bill that would hand the oversight of investment advisers to an organization with an inherent conflict of interest.

By Joe Newman

Joe Newman

Sometimes, members of Congress follow harebrained logic. If the consequences weren’t so serious, it would be hilarious.

Consider a House bill co-sponsored by Reps. Spencer Bachus (R-AL) and Carolyn McCarthy (D-NY) that would essentially let investment advisers regulate themselves.

This idea stinks. Everyone knows: You don’t let the fox guard the henhouse.

Bachus and McCarthy say their Investment Adviser Oversight Act of 2012 tightens up needed supervision of large investment advisers — the people you trust to handle your retirement nest egg.

It’s true that the federal oversight of investment advisers is sorely lacking. The Securities and Exchange Commission (SEC) only regulates investment advisers handling more than $25 million in assets, while the states oversee the smaller-scale ones.

(David Paul Ohmer / Flickr)
(David Paul Ohmer / Flickr)

Yet the SEC is so understaffed it has never examined 40 percent of the investment advisers under its jurisdiction. The agency reviewed only 8 percent of the more than 12,600 investment advisers it oversees last year.

And while new rules will shift about 2,000 mid-size advisers (those who oversee up to $100 million in assets) to state jurisdiction at the end of June, some industry analysts saythe move will do little to ease the SEC’s workload.

Here’s where this bill’s logic gets silly. Rather than address the SEC’s shortcomings by boosting its budget, it shifts responsibility for the investment advisers under SEC jurisdiction to an organization controlled and financed by Wall Street. That would probably be the Financial Industry Regulatory Authority. This group, known as FINRA, suffers from an inherent conflict of interest because it collects membership fees from the very securities firms it oversees. This arrangement undermines its ability to regulate Wall Street — and its own credibility.

Compounding this conflict of interest is the financial group’s troubling lack of transparency and accountability. Even Big Business lobbies such as the Chamber of Commerce have complained that unlike the SEC, FINRA isn’t required to comply with the Freedom of Information Act, which allows it to keep many of its records hidden from journalists and watchdog groups, including my own.

Even when it does produce documents, there can be problems. An SEC administrative order issued last year found that the Financial Industry Regulatory Authority had altered minutes of its staff meetings before turning the documents over to the SEC. The agency found that it was the third time in eight years that it had tried to mislead the SEC this way.

In a letter my organization sent to the House Financial Services Committee last month, we pointed out recent examples of ties between current and former FINRA officials and firms that were later investigated or charged with fraud involving major investor losses.

Who tops that list? Bernie Madoff, the man who bilked investors of at least $64 billion in the largest Ponzi scheme ever. Not only had Madoff served as chairman of the NASDAQ stock exchange in the early 1990s, his brother, son, and niece all had ties to either FINRA or its predecessor, the National Association of Securities Dealers (NASD).

While there was no indication that family members helped Madoff avoid scrutiny, it’s clear that FINRA and the SEC ignored tips that would have exposed Madoff’s scheme years earlier.

Harry Markopolos, the private financial fraud investigator credited with discovering Madoff’s scheme and reporting it to the SEC, was asked by a congressional committee if he ever considered taking his findings to NASD or FINRA.

Not a chance, Markopolos said.

“What I found them to be was a very corrupt, self-regulatory organization, that if you took a fraud to them, they would ignore it as soon as they received it,” Markopolos testified. “They were there to assist [the] industry by avoiding stricter regulation from the SEC.”

And while Madoff’s scam didn’t’ trigger the financial crisis, what did bring us to the brink was risky, questionable behavior by Wall Street traders.

Incredibly, as we continue to claw our way out of the hole that Wall Street’s greed put us in, some lawmakers want to rig the system in the financial industry’s favor.

Congress should reject the Bachus-McCarthy Investment Adviser Oversight bill. This is no time to loosen Wall Street oversight.


Joe Newman is the director of communications for the Project On Government Oversight. www.pogo.org  — Distributed via OtherWords (OtherWords.org)