Requiring Electronic Filing of Annual Returns of Exempt Organizations

Floor Speech

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Mr. KELLY of Pennsylvania. 5443, currently under consideration.

Mr. Speaker, I rise today in strong support of H.R. 5443. This bill, in short, would ensure that all nonprofits file their tax forms electronically so that the charitable community can better assist those in need.

First, I want to thank Congresswoman Stephanie Murphy today for cosponsoring this important legislation with me.

This provision is identical to one that my colleague on the Ways and Means Committee, Congressman Blumenauer, and I introduced in a larger tax package, the CHARITY Act, along with Senators Thune and Casey on the Senate Finance Committee in 2017.

Before I discuss this bill in greater detail, I want to look across the room to my great friend, Mr. John Lewis. It was in 2015 that Mr. Lewis and I crossed the Edmund Pettus Bridge. It was at that time that Mr. Lewis stopped and spent some time with my grandson George. And as we were walking across the bridge, George, who was 8 at the time, said: ``Grandpa, we are actually going to do this. We are going to go across the Edmund Pettus Bridge with Mr. Lewis.''

I said: ``That's right, George, we are.''

He said: ``Well, Grandpa, this is the 50th anniversary.''

I said: ``Yes, George, it is.''

He said: ``Well, can we come back for the 100th anniversary?''

I said: ``George, we will do that together. You and I will come across the bridge at the 100th anniversary.''

He said: ``Grandpa, how old are you right now?''

I said: ``Well, George, I am 65.''

He said: ``Grandpa, it may be hard for you to get across that bridge.''

I said: ``Georgie, don't worry. If I can't walk, you can push me across.''

That was a great weekend for George. And for Mr. Lewis, I have always felt he is such an iconic figure in this House for people who stood up for civil rights. That weekend was one of the most gracious weekends and best weekends with my son my grandson had. So I can't tell you how much I appreciate being with you on the floor today.

When it comes to charity, the American people are truly unique. In fact, Americans are the most generous in the world according to the new Almanac of American Philanthropy. In a first-of-its-kind survey, the almanac found that Americans out-donate Britain and Canada 2-to-1 and nations like Italy and Germany 20-to-1. What is more, more than half of almost every single income level in America donates to charity. That is remarkable, and it makes me proud to be an American and proud of our Nation's history of philanthropy.

In its earliest form, the word ``philanthropy'' comes from the Greek term ``philanthropia,'' which simply meant ``love of mankind.'' The meaning has evolved over time, but, from the earliest days of human civilization, we have depended upon kindness directed towards strangers and others. We define ``philanthropy'' today as the practice of organized, systematic giving to improve the quality of human life through the promotion of welfare and social change.

Throughout every age, American philanthropists have demonstrated the power of giving to create great and meaningful change. In my own congressional district in western Pennsylvania, we have many wonderful organizations that demonstrate the power of giving each and every day. In Erie, Pennsylvania, we have The Erie Community Foundation, the United Way of Erie, and the Black Family Foundation.

As a businessman and leader in the energy sector, Pat Black and his family started a small, private foundation in 1993. Here is one individual who took it upon himself to create a charitable organization to give back to his community. And we have many other good corporate citizens in Erie, as well, such as Erie Insurance. More than half a century ago, Erie Insurance's founder, H.O. Hirt, had a lifelong concern for others who were less fortunate, and today Erie Insurance and its employees follow Mr. Hirt's example and continue this tradition of giving of food and clothing and other drives that help out in the community.

And since it is tax filing week, all these charitable organizations must file their tax forms, called 990s, which brings us back to why we are here today on the floor considering H.R. 5443. Our bill would make it mandatory that 990s be filed electronically going forward. Electronic filing, or e-filing, is not only more efficient; it costs taxpayers less and the IRS less to administer. This requirement will boost transparency in the tax-exempt sector by requiring all nonprofits to file their returns electronically.

Today, approximately 60 percent of all 990s are filed electronically, but the remaining 40 percent are still paper filed and not released as open data. In addition to requiring e-filing of the 990 form be mandatory for tax-exempt organizations, the bill would make such returns available to the public in a machine-readable format.

So why is this important? Better 990 information, when searchable and available to the public, allows for better scrutiny and better transparency. Jacob Harold, president of GuideStar, which collects and disseminates information from nonprofits' returns, says: ``The more easily people can access that data, the better.''

A readable, searchable format that will help improve efficiency and accuracy and reduce fraud, e-filing has served as a highly effective tool in exposing scam charities, and it will make it easier to catch these few bad actors who are using tax donations for personal gain only.

For example, in 2015, the Federal Trade Commission, the District of Columbia, and all 50 States filed a lawsuit against four scam cancer charities calling themselves the Cancer Fund. Their owners had used over 95 percent of the $187 million in charitable donations for their own personal benefit. This lawsuit took almost 4 years because of the difficulty of analyzing thousands and thousands of pages of data that were filed on paper.

Our bill will correct that. Hundreds of millions of dollars from generous Americans were wasted because their donations were going to a fraudster and not helping researchers to find a cure for cancer. To take money away from cancer patients is just plain wrong and immoral. Our bill wants to make sure this doesn't happen in the future.

Now, how would that happen? Changes could be brought sooner against these scam charities, in less than 1 year instead of 4, if the return information had been available electronically. There are countless examples that prove that this can be the case. The State of Michigan is a great model for just how valuable access to machine-readable data is. To date, Michigan has shut down the most number of scam nonprofits out of all 50 States. This is because of the Michigan attorney general's ability to manipulate and analyze researchable data.

This bipartisan bill would help expose these shams nationally by ensuring nonprofits are e-filing annual returns. Therefore, I urge my colleagues on both sides to support this important good-government, antifraud bill.

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Mr. KELLY of Pennsylvania. Mr. Speaker, in closing, I yield myself such time as I may consume.

Yes, it is true, Americans are a charitable group. In fact, we are the most generous people in the world. Our Nation's history of philanthropy, charities, and loving people are the envy of the world. In 2016 alone, Americans gave $390 billion, with 63 million Americans, 25 percent of the adult population, volunteering their time, their talent, their energy, and their dollars to make a difference.

As a recent commentator noted, Americans have it in their DNA to be philanthropic. Of all the countries, we are the most generous. Because I know my colleagues have it in their DNA to support our Nation's unique philanthropic history and charitable community, I urge them to vote in favor of this important legislation.

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