Generally, tax-exempt organizations have a requirement to have their annual Form 990 series and Form 990-T filings available for public inspection via the Internal Revenue Service website. For some organizations, however, certain information disclosed to the IRS is not required to be available for inspection. In these cases, the information is redacted. Unfortunately, last year the IRS discovered that some of the information reported on Forms 990-T was inadvertently made available to the public. The agency temporarily removed all filings to rectify the situation until it fixed the problem.
Form 990 assists potential donors in assessing a tax-exempt organization’s financial situation, allowing them to review the organization’s compensation for certain individuals, view how funds are being spent, and how the organization is carrying out its tax-exempt programs. The returns are also used by state charitable enforcement officers to ensure transparency and accountability, as well as to monitor any potential misuse of charitable resources.
A letter sent last November by the National Association of State Charity Officials urged the IRS to address the delay in the data release. Considering the number of operational and other complications encountered over the past few years, regulators want to make sure they have access to information related to the use of federal relief funds. The filings are also used by journalists and regulators to uncover any fraudulent activity.
There are, too, a number of charity watchdog organizations – ProPublica, Charity Navigator and GuideStar among them – that use the returns and data within to provide the public with various information. These websites include comprehensive ratings, analyses and other types of reporting. The delay in their ability to retrieve data released by the IRS affects these organizations and their capacity to provide the most recent information to the public.
Tax-exempt organizations themselves are also not happy with the delay. Form 990 filings can be complicated and involve a lot of effort to put together for a given year. Organizations, for the most part, want their returns to be out there for the public to see in a timely manner, especially since in the past couple of years every organization has had to adjust to circumstances surrounding the pandemic. It’s important for the public to see how a tax-exempt organization dealt with such drastic changes.
As this article is published, the IRS has indicated that it is making progress in releasing the returns and we have begun to start seeing these filings online.
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