IRS Reform Law Makes Electronic Filing of Form 990 Mandatory

Late yesterday afternoon, President Trump signed H.R. 3151, the Taxpayer First Act into law, the most comprehensive reform of the IRS in more than 20 years. The bill—which passed the Senate on June 13 and the House of Representatives on June 10—creates an independent appeal process for taxpayers, places limitations on private debt collectors, enhances information technology at the IRS, and makes permanent the Volunteer Income Tax Assistance (VITA) matching grant program.

This legislation also contains something that Independent Sector and many like-minded organizations have requested for years: language mandating that annual Form 990 information returns be filed electronically and made available in machine-readable format. It may not be front page news, but this is a significant policy victory for those who value transparency and accountability for nonprofit organizations and who seek to better understand our sector.

Independent Sector has long supported mandatory e-filing for 990 returns to improve reporting, research, transparency, and accountability for tax-exempt organizations. E-filing will ensure that data about the sector is available quicker and that the data is more accurate.

Statements released immediately by both the Chairman and the Ranking Member of the House Ways and Means Committee praised the bipartisan process that led to this achievement. In a political climate that can sometimes feel like it is ever spiraling downward, it is especially important to stop and recognize this victory that was a long time in the making. “How long?”, you might ask. Mandatory e-filing of Form 990 was recommended by the Panel on the Nonprofit Sector in its report to Congress in 2005. More than 14 years later, many of the Panel’s recommendations live on in the Principles for Good Governance and Ethical Practice. This one, however, is now the law of the land.

Congratulations nonprofit advocates!

Types: Blog, Policy Update
Global Topics: Administration, Congress, Public Policy
Policy Issues: IRS Oversight, Nonprofit Operations