Money Back for Delayed 501(c)(4)s?

July 2, 2013 Posted by Jessica Shofler in IRS, News

The Taxpayer Advocate Service (“TAS”) is an independent organization within the IRS that helps taxpayers having trouble dealing with the IRS. With the slogan, “Your Voice at the IRS,” it’s only natural that TAS weigh in on the IRS’ recent 501(c)(4) review troubles.

While TAS doesn’t have any investigative authority, in a recent report to Congress  it laid out the how and why factors it believes contributed to the “questionable screening criteria and processing delays” of 501(c)(4) organizations.

Possibly the factor that could have the biggest impact on new 501(c)(4)s, TAS points out that the 501(c)(4) application form doesn’t address key political campaign activity questions. So instead of getting all the information necessary to review an application at the outset, the IRS is required to burden applicants by asking them additional questions, only prolonging the review process.

The report also notes that, unlike for 501(c)(3) applicants, 501(c)(4) applicants have no judicial review process if their applications are rejected or unanswered. TAS goes so far as to recommend that the IRS provide “apology payments” of up to $1,000 per taxpayer in cases where the IRS’ action or inaction caused excessive expense or undue burden.

Only time will tell whether any changes result from this report. In the meantime, let us know what you think about TAS’ recommendations. Is this too little too late? Are apology payments a good idea?

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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