The IRS, via a letter to Rep. Bennie G. Thompson, D-Miss, Chair, House Homeland Security Committee, reported that the agency had inadvertently made available for bulk download certain XML Form 990-T data that should not have been disclosed.[1]

The letter describes the inadvertent release of data as follows:

This notification follows the IRS discovery that some machine-readable (XML) Form 990-T data made available for bulk download section on the Tax Exempt Organization Search (TEOS) should not have been made public. This section is primarily used by those with the ability to use machine-readable data; other more widely used sections of TEOS are unaffected.[2]

The website contains full XML files of Form 990 information filed electronically with the IRS by §510(c)(3) organizations which is subject to public disclosure. The information is “kind of” readable but is designed to be used with software that interprets the XML schema to bring the data into a database that would be queried for data or produce a more “human friendly” version of the data to be read.

The page[3] looks like this:

If you download the CSV file you get a file that can be read with most spreadsheet software (including Excel) that lists all organizations whose data is found in the following 8 ZIP files, along with their EIN and return ID. Each of the ZIP files contains a large number of individual XML files with the data in XML format from individual organizations.

However, the IRS managed to inadvertently add Forms 990-T from certain organizations that weren’t §501(c)(3) organizations and whose data is not subject to public disclosure. The letter describes the data and the issue with the disclosure of some Forms 999-T not subject to disclosure:

Form 990-T is the business tax return used by tax-exempt entities, including tax-exempt organizations, government entities and retirement accounts, to report and pay income tax on income that is generated from certain investments or income unrelated to their exempt purpose. The IRS is required to publicly disclose this information for 501(c)(3) organizations; however, similar information was inadvertently published for a subset of non-501(c)(3)s, which are not subject to public disclosure.[4]

The letter describes the steps the IRS has now taken, as well the fact that the IRS will contact all impacted entities in the coming weeks:

The IRS took immediate steps to address this issue. The agency removed the errant files from IRS.gov, and the IRS will replace them with updated files in next few weeks. The IRS also will be working with groups that routinely use the files to update remove the erroneous files and replace them with the correct versions as they become available. The IRS will contact all impacted filers in the coming weeks.[5]

A Tax Notes Today Federal article regarding the leak contained the following information about the nature of the items made available:

The mistakenly released data don’t include Social Security numbers, detailed account holder information, or Forms 1040, according to the IRS. However, in some cases the data include individual names or business contact information, the agency said.[6]

Any entity that has filed Form 990-T and is not a §501(c)(3) organization may have had data that was exposed to the public in this case. That would include individual retirement accounts with reportable amounts of unrelated business taxable income. Advisers may want to prepare such clients for the fact that they may receive notice that data was made available to the public and review what was reported on the Forms 990-T involved to see if any of the disclosed data may require action to be taken to protect the taxpayer from identity theft or similar risks.

[1] Letter from Anna Canfield Roth, Acting Assistant Secretary for Management, Department of the Treasury to Rep. Bennie G. Thompson, D-Miss, Chair, House Homeland Security Committee, September 2, 2022, https://www.taxnotes.com/tax-notes-today-federal/exempt-organizations/treasury-informs-congress-inadvertent-form-990-t-disclosures/2022/09/06/7f1v0 (subscription required, retrieved September 10, 2022)

[2] [2] Letter from Anna Canfield Roth, Acting Assistant Secretary for Management, Department of the Treasury to Rep. Bennie G. Thompson, D-Miss, Chair, House Homeland Security Committee, September 2, 2022

[3] https://www.irs.gov/charities-non-profits/form-990-series-downloads

[4] Letter from Anna Canfield Roth, Acting Assistant Secretary for Management, Department of the Treasury to Rep. Bennie G. Thompson, D-Miss, Chair, House Homeland Security Committee, September 2, 2022

[5] Letter from Anna Canfield Roth, Acting Assistant Secretary for Management, Department of the Treasury to Rep. Bennie G. Thompson, D-Miss, Chair, House Homeland Security Committee, September 2, 2022

[6] Fred Stokeld, “IRS Inadvertently Disclosed Taxpayer Data From Exempt Org Forms,” Tax Notes Today Federal, September 6, 2022, https://www.taxnotes.com/tax-notes-today-federal/unrelated-trade-or-business/irs-inadvertently-disclosed-taxpayer-data-exempt-org-forms/2022/09/06/7f1ts (subscription required, retrieved September 10, 2022)