IRS finally agrees to do something about its $1.5 trillion nonprofit database

Radical archivist Carl Malamud writes, "Since 2008, Public.Resource.Org has been trying to get the IRS to release the database of the annual reports of nonprofits in a better way. The nonprofit sector in the U.S. represents $1.5 trillion in economic activity and over 9% of jobs."

Just like the SEC's EDGAR database does for for-profit, the IRS Form 990 is how our country insists that nonprofit report on their operations annually. By doing so, our markets become more transparent and more efficient.

But, this database has been a mess. The IRS has been distributing the Form 990 as low-resolution bitmap images, despite the fact that over half of nonprofits e-file their returns. An e-filed return is nicely formatted XML data, but the IRS has been imaging that information onto the form and releasing as a .tiff file, no different than paper scans. Ouch.

In 2013, after years of asking nicely, we filed suit in federal court asking the judge to mandate the release of this information. Earlier this year we won our court case, and the IRS delivered XML data for 9 specific returns. (Compare the PDF files with the XML! What a world of difference!)

The court victory was nice, but it was a win under the Freedom of Information Act, which means we had to ask for specific returns. And, it took Tom Burke, my lawyer, two years (and $217,000 in billable hours, which his firm donated to me pro bono) to get to that point. But, we don't want just 9 returns, we want the whole database released. Last week, we started a campaign to get lots of organizations to submit FOIA requests for e-file data, the hope being the IRS would see that they were going to be deluged with individual requests and it would be way easier just to release the database.

Today, the IRS released a statement saying they're going to do what we've been hoping for, saying they are going to release e-file data and this is a "priority for the IRS". Congratulations to the IRS on taking this important step! This was nice to see.

================== IRS Statement ==================

IRS works towards making e-filed Forms 990 available in machine-readable format.

The IRS has been actively considering the district court’s ruling in the Public.Resource.Org case, where the district court ordered the IRS to produce electronic versions of the publicly available portions of nine exempt organization returns (Forms 990) in MEF, Metadata Exchange Format (or machine-readable format). Machine-readable is not a format that the IRS has historically used to make Forms 990 available. The IRS did produce the Forms 990, but those forms were manually processed in order to comply with the court’s ruling.

The IRS has been actively considering how to incorporate new technology into its exempt organization return processing capabilities in order to better support the exempt organizations and those who use the Forms 990 data. The IRS has made substantial progress in developing a technology solution that, when perfected, will allow the IRS to provide electronically-filed Forms 990 in a machine-readable format. This solution will ensure that sensitive or personally identifiable information continues to be protected from public distribution. The IRS expects that this technology solution should be in place in early 2016.

Currently, when the IRS distributes Forms 990 series information under section 6104 or the FOIA, it includes all information and documents (other than information that must be restricted under section 6103 or is PII) submitted by the exempt organization. When the IRS begins to provide the e-filed Form 990 data in machine-readable format, as described above, it will stop including extraneous information provided by exempt organizations when they file their Forms 990 series. Extraneous information includes information that is not required by the Forms 990 series and related schedules.


Previously on Boing Boing: