Lawsuit Would Force IRS to Release Nonprofit Tax Forms Digitally

Suzanne Perry at the Chronicle of Philanthropy on how “Open Data Could Shine a Light on Pay and Lobbying”: “Nonprofits that want to find out what their peers are doing can find a wealth of information in the forms the groups must file each year with the Internal Revenue Service—how much they pay their chief executives, how much they spend on fundraising, who is on their boards, where they offer services.
But the way the IRS makes those data available harkens to the digital dark ages, and critics who want to overhaul the system have been shaking up the generally polite nonprofit world with legal challenges, charges of monopoly, and talk of “disrupting” the status quo.
The issue will take center stage in a courtroom this week when a federal district judge in San Francisco is scheduled to consider arguments about whether to approve the IRS’s move to dismiss a lawsuit filed by an open-records group.
The group wants to obtain some specific Forms 990s, the informational tax documents filed by nonprofits, in a format that can be read by computers.
In theory, that shouldn’t be difficult since the nine nonprofits involved— including the American National Standards Institute, the New Horizons Foundation, and the International Code Council—submitted the forms electronically. But the IRS converts all 990s, no matter how they were filed, into images, rendering them useless for digital operations like searching multiple forms for information­.
That means watchdog groups and those that provide information on charities, like Charity Navigator, GuideStar, and the Urban Institute, have to spend money to manually enter the data they get from the IRS before making it available to the public, even if it has previously been digitized.
The lawsuit against the IRS, filed by Public.Resource.Org, aims to end that practice.
Carl Malamud, who heads the group, is a longtime activist who successfully pushed the Securities and Exchange Commission to post corporate filings free online in the 1990s, among other projects.
He wants to do the same with the IRS, arguing that data should be readily available at no cost about a sector that represents more than 1.5 million tax-exempt organizations and more than $1.5-trillion in revenue.