IRS makes Form 990 machine readable following suit

By Dawn Geske | Jul 12, 2016

SAN FRANCISCO – In response to a lawsuit brought upon by a governmental transparency group, the Internal Revenue Service has now made its tax-exempt Form 990 available as machine-readable. filed the lawsuit against the IRS in the U.S. District Court for the Northern District of California, San Francisco Division, regarding its Form 990 being very unusable by tax-exempt organizations. The January 2015 ruling required the IRS to make the Form 990 available in a machine-readable format under the Freedom of Information Act.

The IRS is making the Form 990 available through Amazon Web Services, which will now allow the document to be searchable. While the Form 990 information was always available publicly, the document previously was only available as a PDF document that made it very difficult to view and search.

“A machine-readable 990 will make it much easier to collect, sort, analyze and compare important data,” Michele Berger, associate attorney at NEO Law Group, told the Northern California Record. “Consequently, it will allow the public to learn more about nonprofit and tax-exempt organizations, their finances, their boards, their compensation practices and their activities. Foundations and donors can make more informed decisions, and legislators and regulators can better understand the sector.”

The Form 990 is filed by tax-exempt organizations to provide information on finances, board members, executive compensation, fundraising and grants as well as other information about the organization’s programs and operational functions.

The IRS uses Form 990 to collect data on non-profit organizations, which in turn use it for research regarding market trends in the nonprofit sector.

Now, Form 990, Form 990-EZ and Form 990-PFs will all be made available in a machine-readable format. Forms filed with the IRS from 2011 to the present will be made available, minus information such as tax identification numbers to avoid data mishandling.

“Organizations that use the form will more easily be able to assess how their information compares to other organizations,” Berger said. “For example, organizations can compare executive compensation, unrelated business taxable income, lobbying expenditures, public support percentages and the adoption of various governance policies. Some of the analysis may be very helpful and some may not, for example, if it perpetuates myths like ranking nonprofits on the percentage of funds spent on overhead rather than on the impact they create.”

Making the forms machine readable will also help regulators look for inconsistencies reported through Form 990 and any financial problems the organization could be having such as embezzlement or unreported self-dealing. Making the Form 990 more readily available also has the potential to place these tax-exempt organizations under greater examination by the government, which didn’t exist previously.

With the move to make Form 990 machine readable, there is the potential for the IRS to make other forms it offers also machine readable. According to Berger, this could probably happen.

“The Forms 990 are already publicly disclosable," Berger said. "Releasing Form 990 as machine readable may have a much greater, positive impact than releasing documents that are private and unavailable to the public for analysis and comparison.”

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U.S. District Court for the Northern District of California U.S. Internal Revenue Service

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