News and analysis
July 15, 2014

Activist Challenges IRS Over Release of Social-Security Numbers on Tax Forms

Carl Malamud, the open-records advocate who has sued to get the Internal Revenue Service to release nonprofit tax returns in a format that can be read by computers, has escalated his battle with the agency over another issue—its failure to remove Social Security numbers when selling those filings.

His ammunition: flash drives that contain more than 9,000 Form 990 informational returns that his organization, Public.Resource.Org, bought from the IRS that include Social Security numbers in what he calls a violation of federal privacy laws.

He sent the computer storage devices, with Social Security numbers blacked out, last week to IRS Commissioner John Koskinen, Treasury Secretary Jacob Lew, the White House, the National Archives, other government officials, and members of Congress, along with cover letters asking them to address serious technology and records-management problems at the IRS.

He also sent certified letters to 36 nonprofits telling them that they had violated the law by including Social Security numbers in the Forms 990 they sent to the IRS. One group that received a letter, Phi Beta Kappa Alumni of Greater Houston has regularly included the numbers along with the names of students who receive its scholarships.

William Monroe, the group’s president, said he and his colleagues had been confused by the unsigned letter and were not sure it was legitimate.

After the Chronicle offered some background, Mr. Monroe said that if the IRS does not require the Social Security numbers, it will stop including them.

In his letters to Washington officials, Mr. Malamud variously described the IRS database of tax-exempt organizations as a "mess" or a "disaster" but also "a vital source of market information for one of the most important economic sectors."

The law is "very specific that knowingly distributing a database that contains hundreds of thousands of Social Security Numbers is illegal," he wrote to Mr. Koskinen. "The IRS has chosen in the past to ignore the problem, though everybody I’ve talked to at the IRS, Treasury, and Congressional staff have readily acknowledged that the problem exists."

An IRS spokesman, Bruce Friedland, said the agency was reviewing the letter and planned to respond.

Free Database

Public.Resource.Org obtains the Forms 990 on DVDs that the IRS releases monthly and converts them to PDFs.* It created a free online database with millions of filings going back to 2002 to improve public access to information about nonprofit finances, programs, and governance policies. Mr. Malamud shut it down last month to protest "inaction" by Congress and the IRS in dealing with the technology and privacy issues.

A 2012 study found that nearly one in five nonprofits had included Social Security numbers of donors, employees, directors, or others on their 990s, prompting the IRS to warn organizations to discontinue that practice. Lois Lerner, former head of the agency’s tax-exempt unit, said last year that the IRS cannot legally remove any information from the 990s unless it appears in Schedule B, a form that lists a nonprofit’s donors and is not made public.

Nonprofit-information groups like GuideStar and the Foundation Center also buy DVDs from the IRS and must remove Social Security numbers before making them public.

Erin Donar, a Treasury spokeswoman, said the agency had received Mr. Malamud’s information and "will respond appropriately." She did not comment on the Social Security issue but noted that the Obama administration has proposed requiring all nonprofits to file Forms 990 electronically and to make the filings available in a machine-readable format.

A federal judge last month denied an IRS motion to dismiss Public.Resource.Org’s lawsuit, which asked the agency to release Forms 990 that have been filed electronically in machine-readable format, rather then converting them into image files first.

*Note: this language was changed from the original to clarify that Mr. Malamud turns the IRS data into PDFs.

Send an e-mail to Suzanne Perry.