In July 2000, P.L. 106-230 was enacted. It created a reporting and public disclosure process for Section 527 organizations that operate outside FEC jurisdiction and that engage in political activities at the local, state, or federal level. Under P.L. 106-230, Section 527 organizations are to notify IRS of their formation and file periodic reports with IRS. At IRS, the Exempt Organizations section of the Tax-Exempt and Government Entities (TE/GE) division is responsible for public disclosure of data on Section 527 organizations and oversight of them. IRS developed two forms to collect required data from Section 527 organizations. IRS released Form 8871 within 12 days of the law’s passage and Form 8872 within 17 days. An entity forming as a Section 527 organization must notify IRS within 24 hours by filing electronically and in writing, using Form 8871 (Political Organization Notice of Section 527 Status). Section 527 organizations also must file either electronically or in writing with IRS periodic reports of contributions and expenditures— using Form 8872 (Political Organization Report of Contributions and Expenditures). In an election year, these reports are required (1) monthly or quarterly, as selected by the filing organization; (2) not later than 12 days before an election if filing on a quarterly basis; and (3) not later than 30 days after a general election. Appendix II contains copies of these IRS forms. Form 8871 on the notification of Section 527 status is to include the name, address, business address (if a different address), and e-mail purpose of the organization; names and addresses of officers, highly compensated employees, contact person, custodian of records, and members of Board of Directors; and name and address of, and relationship to, any related organizations. The Form 8872 on the Section 527 contributions and expenditures is to include the name and address of a contributor and amount of each contribution and, if the contributor is an individual, the occupation and name of the employer and name and address of a recipient of an expenditure and amount of the expenditure and, if the recipient is an individual, the occupation and name of the employer. IRS is required—with no specified timeframe—to publicly disclose in its offices all data reported on Forms 8871. The law mandates that IRS disclose on the Internet within 5 business days of receipt of the Form 8871 a list of organizations filing the form and data on the name, mailing address, and electronic mailing address of each organization as well as the custodian of records and contact person. For Form 8872 data, the law did not require any disclosure over the Internet, providing the Secretary of the Treasury with discretion on when and how to publicly disclose such data. Given such requirements, IRS created a Web site within about 10 weeks of the law’s passage to publicly disclose data on Forms 8871 and 8872. Figure 1 shows the timeframe for developing the Web site. Our objectives were to determine the extent to which IRS (1) discloses to the public in an accessible manner the data that Section 527 organizations file with IRS; (2) oversees Section 527 organizations’ compliance with the specified filing requirements; and (3) develops a strategic plan for carrying out its new responsibilities. In addition, you asked us to provide statistical data on IRS’s oversight of other tax-exempt organizations. For all three objectives, we reviewed P.L. 106-230 and relevant rulings on Section 527 organizations. We also reviewed P.L. 107-155, a related law on campaign finance reform that was passed during our work, and talked with FEC and IRS officials to determine its potential impacts on IRS disclosure and oversight. Specifically, for our objective on disclosure, we interviewed IRS officials and reviewed documentation to understand how IRS implemented its disclosure responsibilities immediately after passage of P.L. 106-230, how implementation of these responsibilities changed over time, and what plans IRS had. We also sought to understand how IRS officials interpreted their disclosure responsibilities under the law and implemented their discretionary authorities provided in the law. We interviewed IRS officials on the timeliness of IRS’s public disclosure of the Section 527 forms; we did not verify their statements. To understand similarities and differences in the IRS’s and FEC’s implementation of their disclosure responsibilities, we interviewed responsible FEC officials and reviewed FEC documentation. To determine whether IRS discloses Section 527 data in a manner accessible to the public, we tested IRS’s Section 527 disclosure Web site for accessibility and user-friendliness. We developed the test instrument by reviewing the literature on Web site accessibility and consulting with GAO experts. We tested whether the disclosure Web site had (1) a structure and navigation system that was consistent, intuitive, and transparent; (2) information content that clearly described the site’s scope, content, services, and mission; (3) functionality that allowed links within the site to work well and the site to respond quickly; and (4) interactivity in which search and retrieval mechanisms on the site worked well for users. Our test used 12 GAO analysts who were not familiar with the Section 527 Web site. While the analysts do not represent all public users, they can serve as a proxy. Appendix IV contains a copy of our test instructions and results. We also interviewed 18 public users involved in campaign finance reform issues about the extent to which the Section 527 Web site met their needs. We identified these individuals and groups using an Internet search and referrals from other public interest groups, congressional staff, and individuals who are knowledgeable about campaign finance. Since we did not know the universe of public users, we could not select a random sample. As a result, the views of those we interviewed do not represent all users. Appendix V lists the groups we interviewed. For our second objective on IRS oversight of Section 527 organizations, we interviewed responsible IRS officials and reviewed documentation on IRS’s processes, plans, and initiatives. This included interviewing officials at the Ogden Service Center, which receives, processes, and reviews Forms 8871 and 8872, and obtaining documentation on the procedures to be followed. We analyzed information we obtained on the number of forms that IRS received from Section 527 organizations and IRS’s actions to ensure that the forms were timely, complete, and correct. We did not verify the information provided by IRS. Finally, as with our work on disclosure, we interviewed responsible FEC officials and reviewed FEC documentation to understand similarities and differences in the IRS’s and FEC’s implementation of their oversight responsibilities. For our third objective on strategic planning, we also reviewed IRS’s Strategic Planning, Budgeting and Performance Management Process, and general planning principles, such as those in GPRA, to determine how such a planning process and principles could guide IRS’s planning on implementation of its responsibilities for P.L. 106-230. We also talked with IRS officials about any plans related to Section 527 forms or organizations. For the statistical data on IRS’s oversight of other tax-exempt organizations, we analyzed IRS data on the number of applications, audits, and revocations of tax-exempt status (see app. III). We relied on the publicly available data on the IRS Web site as well as data provided by IRS on its audits. We conducted our review from June 2001 to May 2002, in accordance with generally accepted government auditing standards. According to IRS officials, IRS has disclosed on its Section 527 Web site all data reported on Forms 8871 and 8872. However, this Web site falls short of disclosing data to the public in an accessible manner because the site is difficult to use and lacks electronically searchable and downloadable data. According to users we interviewed, these limitations hinder their efforts to understand how money flows among political organizations. IRS has begun to address some shortcomings of its disclosure Web site. However, the changes do not make the site easy to use or increase the amount of electronically searchable data. Furthermore, IRS has no plans to seek public users’ views on how to improve disclosure. Enhancing the Section 527 disclosure Web site is not a top IRS priority in part because officials believe that IRS has fulfilled its public disclosure role as mandated by law. IRS officials said that IRS discloses on the Internet through its Section 527 Web site all of the data reported on Forms 8871 and 8872 by Section 527 organizations. Although IRS is required to disclose all such data to the public, it is not required to disclose any of the Form 8872 data on the Internet and is only required to disclose on the Internet a portion of the data on the Form 8871. IRS officials said that IRS chose to disclose both forms in their entirety on the Internet to facilitate public access and minimize the burden that would be created by redacting certain data from the forms before posting to the Internet. IRS officials discussed how quickly IRS posts the forms to the Section 527 Web site. The law requires the Form 8871 data to be posted to the Internet and otherwise made available to the public within 5 business days of receipt. The law specifies no timeframe for disclosing the Form 8872 data. IRS officials said that IRS generally posts electronically filed Forms 8871 and 8872 within 48 hours of receipt and paper Forms 8871 within 5 business days. IRS officials said that they post paper Forms 8872 to the site within, on average, 3 to 4 business days of receipt. Accessibility of the data disclosed on the Section 527 disclosure Web site is impaired. The site is neither easy to use nor provides data on Section 527 organizations in a format that can be readily searched. The disclosure Web site is difficult to navigate, interact with, and understand. In addition, much of the Section 527 data on the site is neither searchable nor downloadable. Representatives of public interest groups said these shortcomings in IRS’s disclosure Web site seriously hinder their ability to access and use IRS data to form a complete picture of campaign financing activities. Our tests generally indicate that it is difficult to find the Section 527 disclosure Web site within IRS’s overall Web site, and to search and understand data in the site.