Likely ruling could pressure IRS to provide nonprofits' e-filed forms

The push to force the Internal Revenue Service to release nonprofit tax forms in electronic, searchable formats moved forward this week.

U.S. District Court Judge William H. Orrick, of the Northern District of California, said he intends to rule against the IRS and in favor of plaintiff Carl Malamud, founder of Public.Resource.org. Orrick's action could be a landmark ruling for transparency of tax-exempt organizations.

“We're totally gratified by the motion order, but it is premature to celebrate,” said Malamud, the open records advocate responsible for getting Securities and Exchange Commission data online in the 1990s.

The IRS declined to comment. The agency could decide to appeal the decision once it comes out as a formal order.

Malamud still would have to pay $6,200 for the machine-readable tax forms from nine nonprofits.The ruling won't result in immediate changes in the way the IRS discloses public records.

But Malamud hopes the precedent-setting move pressures the agency to rethink and upgrade its processes — unchanged since more than a decade before nonprofits started e-filing in 2004. Ultimately, he wants everyone to have access to such searchable tax forms, from GuideStar.org to Google to the average citizen.

Malamud sued the IRS in June 2013, when the agency denied his public records request seeking tax returns in the format that nine nonprofits used for online submission.

The tax forms, called Form 990s, are public documents.

The IRS, though, argued that Malamud's request was excluded from requirements under the Freedom of Information Act because of “established IRS procedure.”

The procedure makes it difficult to search for words and figures or identify aggregate trends without painstakingly key-punching information found on millions of pages.

Advocates say that making those records more accessible and searchable could provide meaningful transparency and self-policing to the tax-exempt sector.

The Pittsburgh region's charities alone control $24.2 billion in assets and take in $16.6 billion in revenue, according to the National Center for Charitable Statistics.

The IRS policy is years behind a December 2009 directive by President Obama, who asserted that “the default state of new and modernized government information resources shall be open and machine-readable.”