April 26, 2022

The Service Shifts Towards Self-Reliance

By Ariana Warren, CPA, Senior Manager, Tax & Business Services

The Service Shifts Towards Self-Reliance Nonprofit & Social Sector

The events of 2020 impacted many aspects of our daily lives. As we settle into the new normal, industries are responding in kind, navigating new challenges, providing and delivering new services, and adjusting to consumers’ rising expectations.

The Internal Revenue Service (IRS) is rising to the occasion. The agency is truing-up its processes to match the world as it now is – and to further advance transparency.

As part of its continued rebranding efforts, the IRS is making moves to become a more reliable, full-service resource provider — particularly where nonprofits and charities are concerned. Over time, the IRS has added filters, search tools, and self-housed documentation to its charities and exempt entities landing page to better guide new entities and to provide more complete support to existing organizations and philanthropists.

Another shift happening within the IRS is a move away from Amazon Web Services (AWS), which provides IT service management and an intangible data storage location that is omnipresent and easily accessible. Beginning with tax years ending after December 31, 2021, the IRS will no longer update the Form 990 series data on AWS. While the IRS has not sited a specific reason for moving away from the platform, it is worth noting their use of AWS began in response to an audit conducted by the Department in the Treasury in 2017. It was cited that the IRS needed to conform to an enterprise-wide cloud strategy compliant with Federal guidance.

Electronic filings of the federal Form 990 series will now be solely available to the public via the Tax-Exempt Organization Search webpage hosted and maintained by the IRS. The site allows anyone to find compliance returns for charitable organizations and search these organizations using their EIN or organization name. Users can filter results by city, state, and country. On this same page, the IRS has also made multiple databases available to the public, including Publication 78, auto-revocation, IRS determination letters, the Form 990-N postcard, and the Form 990 series. Prior to the shift towards self-hosting, the AWS system could only be accessed by those with an active account and most of these filters were non-existent until very recently. Instead, practitioners and agents had to rely on the IRS’ Business Master File (BMF) which generally includes antiquated information.

This shift away from AWS allows information storage and retrieval to happen in a singular location. The IRS will no longer be dependent on an external host or provider. Data no longer needs to be exchanged or transmitted elsewhere for access or hosting. Note that the change to host and provider information retrieval via the IRS’ landing pages is specific to the Form 990 series as these documents are intended for public access. This aids the IRS in offering better service by removing the barriers created when searching multiple databases or having to rely on reaching an IRS agent with access between the databases. There is an increase in trust of the non-entities as the IRS is the preeminently trusted source that grants tax exemptions. New levels of access and transparency are at our fingertips without the need to verify or vet data across multiple resources.

These changes allow for more transparency around an exempt organization’s compliance status. It is an interesting shift in perspective from an agency that seems to be redefining its role and the value it offers. Going forward, the simplified access to data should mean the BMF is updated more frequently and documentation issues are resolved promptly. The Exempt Organization search tool is certainly a valuable first step, especially as reaching an IRS agent by phone is currently an arduously daunting task.