IRS to Conduct Customer Satisfaction Research
about Form 990 e-file

As e-file products come on line, IRS conducts customer satisfaction research to secure customer feedback from both Users and Non-Users of the product(s). This fall, IRS will conduct a survey of a sample of exempt organizations and/or preparers to gather valuable feedback about e-filing. This survey will be conducted via telephone and will take approximately 15 minutes to complete. Future surveys may be conducted as product improvements are made and/or e-filing becomes available for additional forms.

In addition to providing key performance measures, the survey allows the IRS to monitor the product's performance over time and diagnose specific real or perceived strengths and weaknesses of the product. The survey will gauge User satisfaction with Form 990 e-file and look for ways to increase usage among Non-Users. The survey will also provide the IRS with quantitative data and analysis for use in making policy decisions to assist in moving toward the goal of 80% e-file usage.

The IRS conducted a survey of Form 1120 (corporate income tax) preparers this past summer and asked about their preparation of Forms 990/990EZ. We were able to determine from that survey that approximately 70% of the 1120 preparers also file Forms 990. Most filed paper returns, indicating they did not know they could file the Form 990 electronically.

We would encourage exempt organizations and preparers to participate in the survey, if called. Customer satisfaction and suggestions for improvement are critical to helping us improve our products and increase usage.

Exempt Organization e-File Statistics
Week ending October 24, 2004

Form 990 246 Form 990-EZ 279 Form 8868 (extension) 286

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Advantages and Obstacles to E-Filing Form 990

	“E-filing of the Form 990s is a truly efficient way to do business,” according to Edward J. Christie, Jr., Vice President/CFO at United Way of America (UWA), the national leadership organization for the almost 1,400 community-based United Way organizations, each independently operated and governed by local volunteers. As a movement of community leaders, United Way is dedicated to the mission of improving people’s lives and having measurable impact in every community in America. As part of UWA’s financial and governance standards, each local United Way files its own Form 990 and uses it as the basis for public reporting and accountability. UWA communicates regularly with its local CFOs via the Internet and during annual training sessions and encourages them to use e-filing, but according to Christie, some of the member United Ways have not yet fully realized the benefits of e-filing. “It’s simply a more efficient and accurate tool that ultimately produces greater transparency and consistency, but we’ve got a lot of work to do bring everyone in our system up to speed,” he says. “We’ll be looking at some of our upcoming training sessions to see where we include this topic as a discussion point and help encourage a systematic movement towards e-filing of the Form 990.” According to Christie, EDIN was the source that provided most of the organizations’ insight and information on e-filing and stated that UWA has been working on this issue for approximately two years. He also believes that the Federal-State consolidation is very important, since he believes that moving to one standard would alleviate time and cost burdens for local United Ways and allow them more time to focus on their communities – to tackle the issues that matter most.

“E-filing gives a more complete and accurate filing,” according to Gale Case, CPA, CFE, a Principal with Rothstein, Kass & Company, P.C. who has been advising nonprofit organizations on accounting issues for approximately 25 years. Some of his clients include schools, museums and animal rights organizations. In addition, Case served for nearly 10 years on the governing Council of the American Institute of Certified Public Accountants (AICPA) and is a past president of the California Society of CPAs (CalCPA). He currently chairs the board of California CPA ProtectPlus and the California Nonprofit Quality Reporting Collaborative.

Case acknowledged that an obstacle to e-filing is the “lack of software companies making products because there is a limited market demand.” According to Case, software companies will start to offer e-filing software for Form 990 when there is a stronger market for this software. “If competitors start to offer the software, then other companies will join in to maintain their client base,” stated Case.

One of the real advantages to e-filing Form 990 is the integrity checks, said Case. He explained that if the information provided is incomplete, then the sender will receive a message to supply the needed information. In this way, “it is a more complete and accurate filing,” according to Case.

With respect to the IRS, Case stated that “they should continue their work on
e-filing and devoting the necessary resources to promote it.” Moreover, Case emphasized that the IRS should continue their work with state charity officials and others in the nonprofit sector. In Case’s view, the IRS plays a significant role in advancing e-filing Form 990.

In Case’s view, as the accounting profession adjusts more and more to e-filing other types of tax returns, e-filing of Forms 990 will follow in a natural progression.

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NY AG’s Office Looks to Modernize
Charities Registration System
Foundations Fund Planning Phase Through Grants to GuideStar

This month, the New York Attorney General's Charities Bureau began a four-month planning phase of a multi-year project to modernize its registry of 50,000 non-profits. The project has five goals:

1. to implement e-filing, including participation in the IRS state
   retrieval system;
2. to provide immediate efficiencies, such as scanning and automating correspondence with filers, before e-filing becomes widespread;
3. to enhance oversight by developing capabilities for data reporting, flagging problem filers and integration with other data sources;
4. to redesign the Bureau’s business processes with input from
   registration staff to take advantage of technology upgrades; and
5. to allow free on-line access to non-confidential filings.

According to James Siegal, New York’s Registration Section Chief, “we recognize the need to improve service to filers, access to information and oversight of New York non-profits through more effective use of registration data.”

As a preview of improvements the new system will provide, Siegal described two recent data mining projects: “Earlier this year, we identified and corrected 3,400 filing delinquencies, collecting roughly $500,000 in back fees ($70,000 of which is annually recurring revenue),” Siegal said. “Our next step is to address unregistered organizations.” The Bureau cross-referenced IRS Master File data with its own registry, identifying 5,000 New York-based public charities and private foundations that file with the IRS but have not registered with New York. Siegal estimates that these organizations owe over $2 million in back fees.

“We have terrific partners on this project,” said Siegal. Funding is being provided by the Ford, Carnegie, Goldsmith, MacArthur and Surdna foundations through grants to GuideStar, which is administering the grants and advising on technical infrastructure. GuideStar contracted with public sector IT design consultants Dalberg Development to perform the planning work.

In early 2005, the Bureau plans to share what it learned from its planning work and seek funding for implementation.

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