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Carl Malamud Wins Legal Battle Vs. IRS

As we discussed in a recent news article, Carl Malamud’s open-records group, Public.Resource.Org, has been pushing to make charity tax forms available in a computer-friendly format. A federal judge ruled this week in favor of Malamud’s group while rejecting the IRS’s argument that such a change would place a burden on its limited staff and resources.

The IRS has 60 days to produce the Forms 990 in a machine-readable formation for several nonprofits named in Malamud’s suit. The IRS has the same 60 days to file an appeal of the judge’s ruling. Mr. Malamud has offered to aid the IRS in setting up a government-run electronic database. Malamud stated that his goal “is that the administration not take this as a loss but as an important opportunity to release this information.”

Several owners of charity-information services have spoken up about Malamud’s legal victory. Ken Berger, president of Charity Navigator, is in support of this ruling as his group currently retypes information found on charity tax returns into spreadsheets and databases. With the changes, Berger’s group will be able to work more efficiently and reach a larger number of nonprofit organizations.

GuideStar’s vice president, Chuck McLean, spoke in favor of the effort to open up Form 990 data, but also recognizes that these changes can affect GuideStar’s business. “On the one hand, if this happens, we won’t have to spend a million bucks a year keypunching data,” said Mr. McLean. “But it will then be a much more competitive environment in terms of how that data is used. We will be competing with everyone else to provide the best products and services that use that data.”

Jacob Harold, GuideStar’s President and CEO, believes these changes are great for the nonprofit sector as a whole. And while these changes may have an impact on GuideStar’s business, Harold was quick to put these changes in perspective. “As we go forward the entire field needs to move beyond a focus on the 990 towards a broader, multidimensional view of nonprofits…with data coming from many sources,” stated Harold. “The future of nonprofit data is about far more than the [Form] 990.”

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

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