Congressional Watchdog Releases IRS Report Card

December 18, 2014 Posted by Jessica Shofler in Congressional ax, IRS, News, Nonprofits

WatchdogHow are the recent congressional budget cuts affecting the IRS’s exempt organizations division? With growing concern about the effectiveness of IRS oversight of exempt organizations, the U.S. Government Accountability Office (GAO), an independent, non-partisan congressional watchdog, was asked to prepare a report to the Senate Committee on Homeland Security and Governmental Affairs about the division’s effectiveness. The GAO did just that – reviewing and analyzing IRS data and documents and interviewing IRS and Department of Justice officials, regulators, and specialists.

What did the GAO find? Sadly and not surprisingly, the agency determined that the decreased budget led to fewer employees in the exempt organizations division, which led to fewer exempt organizations being examined by the IRS (.81% in 2011 to .71% in 2013). The GAO also determined that due to the need to safeguard taxpayer data, the IRS has trouble sharing its information with state regulators to assist them with building cases against suspect charities. Finally, because many exempt organizations do not e-file, there is less digitized data available to ascertain analytics and it costs more in labor for the IRS to wade through the data received.

Based on its findings, the GAO made two recommendations to the IRS:

  1. Develop goals and performance measures to be used in assessing the impact of enforcement activities; and
  2. Clearly communicate to state regulators how they are able to use IRS information when examining charities.

Separately, the GAO is recommending that Congress consider expanding the requirement for exempt organizations to electronically file their returns so that more organizations are forced to do so.

The IRS agrees with the GAO’s recommendations. Do you? Read the whole report here.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits,1812 W Burbank Blvd, #7445, Burbank, CA 91506

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