In a potentially widespread error, the Internal Revenue Service has apparently transmitted tax return data for nonprofits that misreports organizations’ finances for 2022 — a glitch that could pose a barrier for charities seeking to secure donations or government grants.
The error was brought to the IRS’s attention last week by Jim White, executive director of the Nonprofit Association of Oregon, who noticed that the group’s 2022 forms had both 2022 and 2021 imprinted on them on ProPublica, a news site that posts nonprofit tax filings.
“It makes it look a little dodgy,” he said.
The foul-up is no big deal for the association, White said, but he fears that member nonprofits may be harmed. Wealth advisers, foundations, and donors look to nonprofit financials on third-party sites to make decisions on their donations. If the form looks suspect, it might cause some donors to take a pass on a nonprofit.
“Some of the damage has already been done because we don’t know what decisions people have already made based on old or bad data,” he said.
The mix-up has already caused headaches for Gina Avalos-Limardo, director of finance and operations at Forth Mobility Fund, a nonprofit that advocates for the widespread adoption of electric vehicles.
The organization is in the process of folding a trade association, called Forth, into the nonprofit Forth Mobility Fund and, to complete the paperwork, Avalos-Limar needed to get the U.S. Small Business Administration to approve the transfer of a $500,000 loan the trade association received during the pandemic.
The SBA could not find the nonprofit’s 2022 990 on the IRS website, Avalos-Limar said. And it appeared that the 990s posted by Candid, a nonprofit that collects nonprofit data, were outdated 2021 forms. The transfer of the loan has been put on hold, the agency told her, because it appeared that she had not done the required 2022 filing.
Said Avalos-Limar: “We are at a standstill.”
The posting of nonprofit information for the wrong year seems to have stemmed from the way the IRS transmitted data to organizations that post informational returns, like Candid and ProPublica.
It is unclear how many nonprofits are affected, said Shane Ward, vice president of data at Candid.
Ward said that when the IRS releases big batches of data to Candid and other organizations, it also provides digital style sheets that — when merged with the new data — format the information to make it look like a paper document. But the agency apparently used the wrong style sheet for an unknown number of 2022 tax forms. As a result, their 2022 form appears to be superimposed on a 2021 filing.
Candid received updated style sheets from the IRS last week and is attempting to determine the size of the problem, Ward said. The federal agency is in the process of replacing the bad data. He did not have an estimate for when the job would be completed, but said if nonprofits discover an error in their filing they can upload their 990 form with Candid here, or contact their customer service department here.
“We’ve been in fire-drill mode trying to scope it, get the fix, and get everything reprocessed as quickly as possible,” he said.
In a statement, ProPublica said that it uses publicly available stylesheets to turn electronically filed 990 data into 990 documents.
“The IRS, however, appears to have released a copy of the 2021 stylesheets for the 2022 990s, making those documents incorrect,” the nonprofit said in a statement. “When this was brought to our attention, we contacted the IRS, who said they would look into it. We have not heard anything further from them, but hope they resolve the issue quickly.”
It is not the first time the agency’s handling of data caused concern for nonprofits. In 2022, the IRS acknowledged that it had publicly posted information linked to 120,000 taxpayers linked to tax exempt organizations.
The IRS responded with this statement on February 28: “We are aware of the issue and we are in the process of correcting the erroneous stylesheets. We are also working on a communication plan to alert third party vendors that may be using the erroneous stylesheets to render images of Form 990s from machine readable data. This isn’t impacting the images of Forms 990 that appear on Tax Exempt Organization Search (TEOS) on irs.gov. “
