The Internal Revenue Service (IRS) is assessing whether or not to make electronic filing available to organizations that file Form 990, the annual information return most nonprofits are required to file. To help determine if there is enough interest among nonprofits to justify proceeding with the project, the IRS issued Announcement 2002-27 on March 13, requesting public comments on several issues, including:

• Factors that would encourage nonprofits to file Form 990 electronically;
• Factors that discourage electronic filing of Form 990, and what could be done to address those concerns;
• Whether or not an electronic filing system should be designed to "satisfy multiple filing or reporting requirements (for example, state reporting requirements or grant reports)", and
• Changes in the current Form 990 that would make electronic filing easier.

The announcement notes that currently "80% of Forms 990 and 990 EZ filed are prepared using software." However, the forms are filed on paper, requiring the IRS and others, such as GuideStar and state charity officials, to re-digitize the information for their databases. This is an expensive duplication of effort that could be avoided through electronic filing. Comments are due at the IRS by April 18, 2002, and can be filed electronically at tege-eo-efile@irs.gov, or sent to the attention of Theresa Pattara, T:EO IRS 1111 Constitution Ave. NW Washington, DC 20224. There is considerable interest in electronic filing of Form 990 in the nonprofit community, because it could make filing faster and cheaper, result in more accurate reporting and provide better information on the sector to the public. A coalition composed of the Council on Foundations , Independent Sector, GuideStar, the National Council of Nonprofit Associations and OMB Watch has created the Electronic Data Initiative for Nonprofits (EDIN), to identify and reduce the barriers to a smooth transition to e-filing. The National Center for Charitable Statistics is providing advisory assistance. The EDIN project will provide the nonprofit sector with ongoing information about the progress of electronic filing, and seek input on how it should be implemented. EDIN is encouraging nonprofits to participate in a survey on Form 990 being conducted by the National Center for Charitable Statistics (NCCS). The results will be compiled and analyzed by the NCCS, shared with the IRS, and posted on the web. The goal is to provide the IRS with quantitative data about the capacity within our field and ensure that the procedures and systems developed by the IRS take the needs and perspectives of all users, including nonprofits, their CPA firms, and other stakeholders into account. If you are a chief executive or chief financial officer, please participate in the NCCS online survey. NCCS has developed an electronic filing program for Form 990 that is now available in Pennsylvania and Colorado, and will soon be available in ten more states. For more information see the NCCS website.