Political Organizations:

Data Disclosure and IRS's Oversight of Organizations Should Be Improved

GAO-02-444: Published: Jul 17, 2002. Publicly Released: Aug 16, 2002.

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Tax-exempt organizations seeking to influence political elections--called Section 527 organizations--are estimated to spend millions of dollars annually in federal elections. These organizations use unregulated "soft money" for issue advocacy, such as sponsoring an advertisement that supports or opposes a candidate's position on an issue. Although all states require these groups to publicly release data on their finances and activities, no central source for such data exists. In July 2000, Congress passed legislation requiring Section 527 organizations to provide data on their purposes, officers, contributors, and expenses to the Internal Revenue Service (IRS) for public disclosure. IRS has established a website for this purpose, but GAO found that the website is difficult to use, and most of the disclosed data are not electronically searchable and downloadable--which can inhibit timely analysis of the relationship between political organizations and the influence of soft money on federal campaigns. IRS has done little to oversee Section 527 organizations' compliance with the law's filing and reporting requirements. As a result, IRS can provide four assurances that the data it disclosed on its website are timely, complete, and correct. IRS officials said that oversight has been limited because of (1) competing demands for resources, (2) the focus on educating Section 527 organizations and on publicly disclosing the data, and (3) having the lack of electronic data on Section 527 organizations. IRS has not developed a strategic plan to ensure that the law's requirements are met.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: GAO found that although IRS has established a website to provide data on the purposes, officers, contributors, and expenses of Section 527 organizations, the website is difficult to use, and most of the disclosed data are not electronically searchable and downloadable--which can inhibit timely analysis of the relationship between political organizations and the influence of soft money on federal campaigns. GAO recommended that IRS develop results-oriented plans, including timeframes and resources needed, for improving the usability of the website. IRS unveiled a revised website on July 1, 2003. The revised website can perform three kinds of searches, download the whole database of electronically filed Forms 8871 and 8872, and perform electronic filing functions.

    Recommendation: To improve public disclosure of data filed by Section 527 organizations and IRS's oversight of their compliance with P.L. 106-230, the Commissioner of Internal Revenue should develop results-oriented plans, including timeframes and resources needed, for improving the usability of the disclosure Web site after consulting with the full range of users of the data.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: IRS had developed some plans, but had to make changes with the enactment of P.L. 107-276, which changed the reporting requirements for section 527 organizations. IRS had planned to finish upgrading its compliance oversight system by December 2004, but expedited its work given concerns about S. 527 organizations during the presidential election. On August 19, 2004, IRS announced new steps to improve reporting disclosure and oversight. For example, IRS will contact those who file late/incompletely or who significantly amend a previous filing. The goal is to improve the accuracy and completeness of public disclosure by S. 527 organizations.

    Recommendation: To improve public disclosure of data filed by Section 527 organizations and IRS's oversight of their compliance with P.L. 106-230, the Commissioner of Internal Revenue should develop results-oriented plans, including timeframes and resources needed, for overseeing whether Section 527 organizations fulfill their filing requirements.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: GAO found that the IRS website on Section 527 organizations was difficult to access and use. In response to GAO's recommendations and other pressures, IRS revised its website in July 2003, which allows for improved access and searching as well as improved downloading and analysis. Users can more easily access and search paper and electronic filings of Forms 8871 and 8872, as well as paper filings of Form 990 by political organizations.

    Recommendation: To improve public disclosure of data filed by Section 527 organizations and IRS's oversight of their compliance with P.L. 106-230, the Commissioner of Internal Revenue should develop results-oriented plans, including timeframes and resources needed, for increasing the availability of electronic data on Section 527 organizations to improve the public accessibility of disclosed data as well as to support IRS's oversight efforts.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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