Exempt Organization e-File Statistics
Week ending September 12, 2004

Exempt Organization e-File Week Ending 09/12/04 Year-to-Date Annual Projections Percentage Received Accepted Returns/ Extensions - Total 5 711 800 89% Form 990 4 192 300 64% Form 990-EZ 1 247 100 247% Form 8868 0 271 400 68%

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“Nonprofits Are Geared Up For E-Filing”

There is a definite change of heart with respect to the willingness of nonprofits to
e-file Form 990s, according to Geralyne Mahoney, CPA, a member of EDIN’s Ad Hoc Working Group on Nonprofit Electronic Reporting. “Clients want e-filing because accountability is such a huge issue now,” emphasizes Mahoney, chair of the Nonprofit Division at Burr, Pilger & Mayer LLP. “Nonprofits do not want to have their tax returns extended, they want to display accountability by filing timely,” states Mahoney. “The nonprofit community is more proactive than ever before in regard to public disclosure.”

Mahoney has been advising nonprofit organizations on accounting issues for over 20 years. Some of her clients include private foundations, arts organizations, schools and health and human services organizations. In addition, Mahoney chairs the American Institute of Certified Public Accountants (AICPA) Nonprofit Financial Executives Forum and is a past board member of the California Association of Nonprofits (CAN).

	CCH

Even though Mahoney’s clients want to e-file their Form 990s, they will need to wait a little while longer. Burr, Pilger & Mayer uses CCH’s ProSystem fx software for all their accounting needs. Although Mahoney's clients have indicated that they want to e-file their Form 990s, they will have to wait until next yearm when CCH releases an e-filing package for the 990s in January 2005.

Although Burr, Pilger & Mayer would pass on to their clients additional charges they would incur by using CCH’s e-filing software, most nonprofits realize that the potential increase in donor giving from easily accessible financial and programmatic information would outweigh any additional charges, says Mahoney.

The IRS needs to coordinate with the states for a one-click federal-state retrieval system to alleviate the costs to file in multiple states and to reduce the burdens of complying with different state guidelines, says Mahoney. This would alleviate the additional cost to file with each state and to adhere to different state guidelines.

Mahoney adds that the day will come when the IRS requires e-filing, which will force CPAs to comply and she believes the IRS has a responsibility to work with software companies to make reasonably priced e-filing products, which will lessen the burden of the additional costs to nonprofits.

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Success of Federal-State System Depends on Infrastructure;
“Need coordination to ensure that what we do now works with systems in the future,” says MA Charity Official

	Next Steps for the URS “Almost all jurisdictions with state registration systems have cooperated politically with the Unified Registration Statement (URS). That means they have agreed to participate in the process. States do not have to give up their reporting requirements or their own rules because everyone’s registration requirements are embedded within the URS.” The URS is an aggregated and consolidated application format that has been developed over the past six years. Out of approximately 43 jurisdictions, 40 have agreed to accept the URS as an alternative to their own state registration form. A particular state does not need to retrieve all data on the URS, just the information important to that particular state. “The URS is an efficient management tool for filers because they can go to one place and find all state registration requirements. Filers tell us they find the URS to be relatively simple because the instructions are clear and user-friendly. Also, the states report that URS filings are of high quality, presumably because multi-state filers are more exact when filling out the URS since they only need to do it once but need to use it repeatedly.” “ The next step for the URS is to create a similar system for annual financial filings and registration renewals. These subsequent filings are not yet officially covered by the URS. We also want to create an analog to the Desktop 990 that deals only with state reporting. Filers would be able to use the software to better manage their own data and reporting.” Robert Tigner General Counsel Multi-State Filer Project

In June, Capitol Hill and State Attorneys General addressed the issue of streamlining charitable reporting and disclosure. Both the Senate Finance Committee Staff Discussion Draft (PDF file) and the National Association of Attorneys General (NAAG) Resolution (PDF file) discuss the importance of increased cooperation and coordination between the IRS and state officials.

According to Jamie Katz, Assistant Attorney General in the State of Massachusetts, success depends on establishing the proper infrastructure. “My systems need to be ready to be compatible with other states and the IRS,” says Katz. Moreover, Katz adds that human resources need to be in place to handle both e-filing and regular mail filings by charities and “we need coordination to ensure that what we do now works with systems in the future.”

Katz sees some challenges ahead with respect to the Unified Registration Statement (URS). The URS represents an effort to consolidate the information and data requirements of all states that require registration of nonprofit organizations performing charitable solicitations within their jurisdictions. The National Association of State Charities Officials (NASCO) and the National Association of Attorneys General (NAAG) are responsible for the URS. In Katz’s view, the challenge is that there are so many jurisdictions with different state filing requirements. However, he does believe that a large number of states can work together. He adds that a Federal-State system “matters more to large nonprofit organizations; it really matters less to smaller nonprofits.”

With respect to the IRS working with states, Katz says that he is obtaining more information and contacts from the IRS. In general, “there is more dialogue going on as well as education efforts.” For example, Massachusetts has substantially increased its referral of cases to the IRS. The IRS, where it has had the authority to do so, has increased communications to provide information to the Massachusetts Attorney General’s Office. In addition, the IRS is now regularly inviting Massachusetts representatives to trainings and IRS officials are appearing at trainings provided by the Massachusetts Attorney General’s Office, and more informal, regular communications now occur as IRS officials discuss specific issues with Massachusetts regulators.

In his work, Katz sees a real interest in e-filing Form 990s by nonprofits. “Certainly many charities want to comply with multiple state reporting requirements more efficiently while making their information public in a timely manner.”

	ATX

The availability of e-filing software is key to widespread adoption of electronic filing of the 990s. This fall, the National Center for Charitable Statistics (NCCS) at the Urban Institute expects its free Desktop 990 software to be approved for e-filing. In addition, EDIN has just learned that ATX will join CCH in providing 990 e-filing software for 2004 returns. “With the anticipation of passing ATS testing, beginning on Nov 3, we will be ready to accept 990 e-files on the same day the IRS goes live in accepting those return types electronically,” says Jane Coulter, e-File product manager for ATX II, LLC.

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