TaxAlerts Tax Article
June 2013 | Written by: Karen Reed, EA
On May 14th, the office of the Treasury Inspector General released a report that set off a firestorm of controversy and resulted in a Congressional investigation and the resignation of IRS Commissioner Steve Miller. The issues raised in the report relate to the process the IRS uses to approve applications for tax exempt status under Internal Revenue Code section 501(c)(4).
Organizations recognized by the IRS as 501(c)(4) groups are allowed to engage in only a limited amount of political activity. The TIGTA report found that IRS personnel were using the names or policy positions of organizations as the criteria for identifying applications to review for excessive political activity. In addition, the IRS was requesting unnecessary information for many potential political cases and subjecting the applicants to long processing delays. The report concludes that the process and methods the IRS used to review the applications was inappropriate.
The IRS has acknowledged the inappropriateness of its methods, offering the explanation that the process had been used as a shortcut to centralize similar cases so that they could be worked on in a fair and consistent manner. Because of the increased inventory of applications, the Agency said, this method had been found to be more expedient than selecting cases to review based on the information in the applications.
The IRS says the issues raised in the TIGTA report do not relate to audits, otherwise referred to by the agency as examinations.