The Council on Foundations supports mandatory electronic filing of Form 990s and publicly-available data about the nonprofit sector, while cautioning lawmakers to involve nonprofits in implementation and ensure adequate data protection.
Several years ago, the IRS began requiring electronic filing, or e-filing, of Forms 990 and 990-PF for certain classes of tax-exempt organizations; it also made e-filing an option for all filers. Many organizations already choose to e-file for the efficiency it affords, and each year increasing numbers of organizations are making the transition.
S. 1578, The Taxpayer Bill of Rights Enhancement Act of 2015, was introduced by Senators Grassley and Thune on June 16th, 2015. This legislation calls for mandatory electronic filing by exempt organizations of Form 990. The Council agrees that e-filing is preferable for most organizations and supports it. However, before mandatory e-mailing is implemented, lawmakers and regulators should consider the following:
- A task force from within the sector should determine which parts and schedules of the current Form and related instructions should be updated, enhanced, or eliminated, as recommended by the IRS Advisory Committee on Tax Exempt and Government Entities.
- Representatives from various types of nonprofits, including all types of foundations required to file, should have an opportunity to help shape how this policy is implemented.
- The security of personal information needs to be considered before making Form 990s machine readable.
- Mandatory e-filing may be a disproportionate burden for medium and smaller-sized organizations with few, if any, full time staff, and these organizations will need assistance in making the transition along with adequate time to prepare and allocate resources.
The Council will continue to track this legislation and keep its members informed of any new developments pertaining to mandatory electronic filing of Form 990.
- S. 1578, The Taxpayer Bill of Rights Enhancement Act of 2015 (114th Congress)
- H.R. 4691, Private Foundation Excise Tax Simplification Act (113th Congress)
- House Bill H.R. 1 – Tax Reform Act of 2014
- Council Summary of Tax Reform Act of 2014
Council Issue Paper:
Resources on this:
- Council's Comments to IRS, September 11th, 2015
- Washington Snapshot June 19th, 2015
- Council’s Comments to Senate Committee on Finance Chairman Baucus, January 17th, 2014
- Council’s Summary of SFC Working Groups Report